Personalisation - Is it worth the effort?

By Adam Ramshaw (Director)
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There’s only so much time in the day and dollars in the budget! When trying to decided how to apportion both, one of the topics I frequently get asked about is personalisation: “is it worth the effort?” In my opinion the answer is YES for two key reasons.

Before going into those reasons I should probably define personalisation – I’m not talking here about simply including the addressee’s first name in a form letter. Customers expect that these days. The personalisation I’m talking about is adapting your business to the needs and desires of each individual customer.

On to the reasons; the first major benefit of personalisation are the significant savings to your marketing budget and increased profitability to your bottom line. Put simply, personalisation increases the effectiveness of your marketing spend. Personalisation targets your marketing at the right customers in the most appropriate way, increasing conversion for the same or less marketing costs.

The second major benefit is meeting customer expectations and reducing customer churn. In today’s multichannel, multicontact marketplace, customers expect companies to understand their needs and know which communication channels they prefer for different products and services. Many customers will become frustrated if you not understand what they want and will ultimately defect to your competitors.

However life wasn’t meant to be easy and personalisation is not only a fundamental component of customer centric strategies, it is also the most challenging to implement. To truly deliver personalisation, a company must be able to record all customer interactions, understand a customer’s preferences and needs, then change the way it does business so that it meets those individual needs. No simple task.

So how do you go about implementing personalisation? A lot of companies have failed in the implementation of a personalisation strategy because they do not have the basic foundations in place. Before implementing personalization, you need to assess if you’re in a position to implement it successfully. The foundations of an effective personalisation program include:

1) Reliable customer data

It is common for organisations to have a lot of customer data - however it is usually inaccurate, outdated or incomplete. As a result, the information is not able to be utilised effectively to analyse customer needs and create customer profiles. A recent Forrester research study (“Personalizing Financial Services”) reported that 68% of the 50 financial services firms interviewed said “getting good data” was the biggest challenge in personalisation.

So the first step is to evaluate the reliability and quality of the customer data to which you already have access. If you don’t have perfect data, and no-one does, don’t despair, all is not lost. Start with what you have by identifying the data sources, determine how often they get updated and find the overlaps in your data sources. Then simply ask your customers for the information that you need to start building customer profiles.

My biggest tip on the data collection front is to use the softly, softly approach: ask your customers a small number of questions in each contact but ask often. Over time you will build a comprehensive picture of each customer.

2) Defined customer’s needs

Only through detailed profiling, will you have the ability to analyze and focus on your customers’ needs and wants in order to deal with customers “where, when and how they prefer.” In profiling customers it is critical to use needs based segments not product based segments.

For example, a bank may change its segmentation from those defined by the number and type of products held to a needs basis. The new segments might include “beginners”, youths with the future potential of high incomes or “empty nesters”, couples with children that have left home, want to invest for their retirement and have the available disposable income.

3) Set objectives and success criteria to monitor progress

As Peter Drucker says, “If you can’t measure it you can’t manage it”. In the long term, the successful implementation of a personalisation strategy will ultimately result in higher profitability for your company. However, short term success metrics need to be created in order to determine whether the implementation is on the right track to achieve the overall objectives.

Every company has a different set of indicators and you need to develop a some that are relevant to you and your business but some examples that show you’re moving in the right direction include:

• Has the spend per customer increased?

• Have costs to service customers been reduced?

• What improvement in customer retention rates have been achieved?

4) Build a cross functional team for implementation

For a personalisation strategy to be successful, it must be consistent and unified across all customer touch points. All areas of the organization need to be involved from the beginning of the implementation to ensure consistent implementation. The first step in this process is to identify and bring together a team of stakeholders and implementers from all the business silos so that together they can define and implement the personalisation strategy.

Personalisation will have a real impact on your business and my last suggestion is a reoccurring theme for me. Don’t try to do it all at once – it just wont happen. Pick some smaller achievable goals and give it a go, you never know how successful you can be until you try.