Personalization: Powering and Empowering Relevance
On the heels of our most recent white paper, “Time is the New Loyalty Currency,” we turn our attention to how brands leverage customer data to deliver on – if not exceed – the expectations of our customers.
I remember the first time I received a piece of direct mail with my name printed on the front: “Congratulations, KAREN FIELDS, you have won $1,000,000!” While most recipients focused on the prospective million-dollar windfall, this budding marketer zeroed in on her name in print. I was no longer just a “valued customer” or a “whom it may concern,” I was being called by name, and it caught my attention.
That was decades ago. Since that time, as a marketer and a consumer, I’ve watched personalization evolve beyond name and address into something far richer and more substantial.
TECHNOLOGY IS OPENING DOORS FASTER THAN EVER
Thanks to technology, advanced data collection and analysis capabilities, the hyper-relevant, highly individualized customer experiences that marketers have longed for since the 1980s are increasingly viable (see Peppers & Rogers The One to One Future). Businesses, in theory, are able to use all the data a customer has shared across every touchpoint and deliver a customized, individualized response across the entire customer experience (CX). And, today, brands can continue to go one step further and deliver relevance: personalized touches that are contextually appropriate.
PERSONALIZATION + CONTEXT = RELEVANCE
By leveraging customer data at the individual level, brands are no longer limited to building relationships with segments, cohorts or personas. They are now able to build a personalized one-to-one relationship with the customer. This is true personalization. And the pay-off is significant. According to Forbes, companies who adopt data-driven marketing are six times more likely to be profitable year-over-year, giving them a significant advantage over the competition.
PRIVACY: THE CHALLENGE WE NEED TO OVERCOME
Delivering on personalization is not without its challenges. Customers continue to grapple with the balance of a truly personalized customer experience in exchange for sharing their data (the quid pro quo of permission – “I’ll share my data with you if you use it to improve my CX”). In fact, 52% of consumers and 65% of B2B buyers say they’re likely to switch brands if a company doesn’t personalize communications to them. However, security and privacy concerns still make them wary of sharing the information necessary to facilitate the level of personalization they desire. According to the first wave of the 2018 rDialogue Brand Loyalty Study, almost one-third of respondents don’t want brands to have too much personal information about them. The difference between being relevant and being creepy is permission and brand trust.
PERSONALIZATION AND RDIALOGUE’S LOYALTY 3.0 MINDSET
At rDialogue, our definition of loyalty marketing is simple: Pay attention to customers and act accordingly. As we’ve written about previously, it’s the very foundation of rDialogue’s Loyalty 3.0 – where instead of customers showing loyalty to brands, the axis has been flipped to where brands must first show loyalty to customers. In essence, when brands use customer data to be more relevant and add more value to each customer’s experience, they inherently create room for data value exchange. This encourages customers to share more data to foster a deeper relationship with the brand. In fact, our recent research study points out that over 40% of customers are willing to share their information in exchange for receiving relevant discounts and offers.
It’s clear that delivering personalized loyalty and experiences is a multi-dimensional challenge that takes into account the uniqueness of each customer, their relationship with the brand and their own psychological construct of a satisfying brand relationship. These drivers of loyalty that make up Loyalty 3.0 allow our clients to better align strategies with customer need/wants, ultimately allowing a brand to build and execute a successful loyalty/customer experience strategy. No one driver delivers loyalty on its own, but the combination of drivers and aligned value proposition enables real loyalty to be built and achieved through delivering a better customer experience.
We will use your data wisely to deliver relevant, informative information. Delta Air Lines keeps track of passengers and proactively provides necessary information. Delta also makes the journey easier by introducing customers to their destination with recommendations, airport layouts and other information through pre-flight emails and through its app.
64% of travel program members don’t mind when brands use their information to market to them, provided these communications are contextually relevant. – rDialogue Research Study 2018
We will provide you with offers and rewards that are relevant to you. Offering financial incentives was at the heart of the earliest loyalty programs, and it’s still an attractive and fast way to strengthen a customer relationship. More and more programs are finding new ways to expand the value of their loyalty currencies, giving members added choice of rewards. For example, American Express partners with Amazon, allowing members to use their points to pay for purchases on Amazon, expanding redemption opportunities well beyond its own catalog.
70% of retail program members agree that they get a good value for their money when they use points for purchases.
68% of travel program members are pleased with the idea of paying with points because they think that paying with points is like giving themselves a gift.
We will respect your time by catering to your individual preferences. Our research study continues to support our theory that time has evolved into the most significant (and undervalued) loyalty currency. 83% of consumers are looking for more convenient experiences, and businesses like Starbucks are serving up exactly that. For example, Starbucks Rewards members can order directly from a push notification or text message and pick up their favorite drink at the nearest location. Tender (payment) speeds things up too.
56% of all customer value it when brands use technology to make their experiences seamless.
77% of travel loyalty program members say it’s extremely important for brands to save their time/make it easy to purchase.
You’ll get preferential treatment because you’re one of our best customers. When you truly love a brand, you start to feel less like a customer and more like a brand advocate—or an extension of the brand. Sephora does an excellent job of welcoming its best customers into the inner circle, treating them more like trusted companions than customers. Using Beauty Insider data, Sephora rewards its customers with tailored experiences—offering up relevant beauty tips, sending “Restock your stash” emails when supplies might be running low, and helping you test out new make-up using Sephora Virtual Artist – an AI/AR feature available on the Sephora app.
70% of retail program members value it when brands give them exclusive access to benefits.
We will know and remember you and what you like. Spotify does a commendable job of paying attention to the songs a customer requests and skips, the times of day they listen, and other habits and preferences. With the info collected, Spotify introduces customers to new artists they may like, and rewards them with personalized daily mixes, and end-of-year compilations.
55% of travel program members value it when brands send them personalized communications based on past purchases or information they have shared.
THE PATH FORWARD
At rDialogue, we’ve spent the past 13 years observing, researching, and helping clients navigate the customer marketing landscape. In defining personalization’s role in creating lasting relationships with customers, we’ve created what we’ll call the Foundation of Personalization.
This Foundation of Personalization is iterative and requires four components:
1. DATA COLLECTION
What do we know about customers today? Brands must have an organizational pursuit of customer information (identifying, behavioral, demographic, attitudinal, and contextual) to provide insights into how to better serve customer needs.
What will/can customers do in the future based on what they have done in the past. Not all customers are equal and they should be treated as such. Analytics allows brands to better understand opportunities across the customer base. And with the rise of artificial intelligence and machine learning, understanding and actioning the opportunity is getting easier.
Delivering the right offer/message in the right channel at the right time provides the brand relevance which deepens brand/ customer relationships. Brands need to step up and give customers instant gratification instead of delayed gratification and personalization is the key to achieving that.
Driving engagement from the customer allows the brand to capture more data, that is then fed back into the data loop, that in turn creates a stronger bond with each individual customer.
TRUST. IF YOU BUILD IT, THEY WILL SHARE.
There’s no argument, gathering customer data is imperative to this approach. But with companies being hacked, data being sold or shared and personal information out in the open, customers are justifiably hesitant about sharing information with companies. So much so that, according to our recent research study, more than two-thirds of customers are no longer willing to store their credit card/payment information in their preferred brand’s mobile app.
The other challenge is that brands aren’t using the data that customers are sharing. In a study by CMO Council, only 7% of survey respondents (businesses) say they’re always able to deliver real-time, data-driven experiences across physical and digital touchpoints. This is a huge miss. Customers expect a brand to use their shared data to: 1) pay attention to them (what they want, need, desire) and 2) act accordingly. If a customer does decide to share data with marketers, and they cannot use it to deliver relevance, it becomes useless data—and a source of mistrust.
It is no surprise in today’s environment that our research shows that nearly one-third of consumers don’t want to share any data with brands - they don’t trust marketers to do anything with it.
To convince your customers to share personal information, you have to earn their trust by demonstrating loyalty to customers, rather than expecting loyalty from customers. This will build trust and makes customers willing to opt-up (i.e. share more data) rather just opt-in. Here’s how:
1. BE TRANSPARENT.
Explain to customers how you are going to utilize their information and protect their privacy. Apple does this very well. Their end-user licensing agreements clearly explains how and when they use any data inputted into their systems. The whole privacy section of their website is in the brand aesthetic and voice, so it feels personal and makes it easy to understand. By teaching consumers how and when the company will be using the information, they help alleviate stress associated with having to trust strangers with your personal data.
2. OUTLINE WHY THIS IS BENEFICIAL TO THE CUSTOMER.
In this customer-first, permission-based age, customers have an expectation that if they are sharing data with a brand, the brand must deliver a more customized experience. When asking customers to share info, think back to those five drivers—match to what we have in the drivers section: learning, financial, time, access, know me—and make sure that customers understand what’s in it for them.
3. GIVE THE CUSTOMER CONTROL.
A consumer should always be able to easily alter the amount of information they are giving a company. By making it simple for a consumer to opt out of sharing data, you flip the power dynamic. You give your customers a sense of control and authority over the information exchange. They are not being bullied into giving up their personal information—the choice to share information is entirely theirs.
4. DELIVER ON YOUR PROMISES.
The final step is for you to deliver increasing value to your consumers. The customer has held up their end of the bargain: They’ve agreed to share their information with you. Now it’s up to you to use that information in a way that benefits the customer. Companies need to continuously reinvent how they are using data and prove to consumers that it is being put to good use.
57% of customers are willing to share personal data in exchange for personalized offers or discounts. A similar proportion will share their data in exchange for product recommendations that meet their needs (52%) and personalized shopping experiences (53%). - Salesforce
Personalization and Loyalty 3.0 are fed by data; clearly, customers today are more willing to part with their money than with their data. It’s up to brands and business leaders to make customer centricity and relevance a priority not just for marketing, but for the entire enterprise.
Our customer loyalty survey was conducted in March 2018 and included a panel of 1,335 North American consumers aged 18 and older, designed to reflect the US population. In this study, we explored six key areas: brand loyalty, programmatic loyalty, retail brands and their programs, travel/hospitality brands and their programs, and consumer perceptions around data and personalization, and adoption and usage of mobile payments.
All data, unless otherwise noted, are from the 2018 rDialogue Brand Loyalty Study.