Personalised marketing is an illusion. Unless….

Personalised marketing is an illusion. If we ever really had personalised marketing, then the closest we ever got to it was the apocryphal small town storekeeper of yesteryear who would know each and every customer by name, know what was happening in their lives at any given point and would be able to make well-intentioned product recommendations for each of them individually.

Most of the readers of this article will be too young to know if that situation ever really existed, although we could ask our grandmothers. But if it ever did, then it would have relied on two key elements. Firstly, in a small town where everyone knows everyone, the local shopkeeper was probably as close to a real friend of the shopper as is possible in a commerce situation – that is, if he or she was not actually a friend. Secondly, in a situation where there was probably only one store in each small town, the local shopkeeper really did see and know every purchase that each shopper made.

Why personalised marketing is so difficult today

If we fast forward to the modern day, you quickly realise just how impossible that situation is to replicate today. Firstly, while you may know certain data points like a customer’s name, date of birth, or address, and may capture some survey, social or psychometric data, and even infer intent from pages visited on your site or third party sites, you will never ever really know a customer. All you can do is put that customer into a bucket with other customers who appear to share the same characteristics and send messages based on event triggers. Even though machine learning should make that those predictions better over time, it is essentially working with the law of averages to send messages that ought to be more relevant, but might not be.

And now when a customer can buy in-store, online, via a mobile phone, using a logged in or guest account, or direct from a social network, and use different email accounts and payment methods, it is clear that even with the best of technology and data partnerships, you will only ever see a tiny proportion of all the purchases any one person makes over a year. That makes it impossible to know for sure that your customer is really your customer, and you will never know if your customer already bought a similar product from a competitor.

Adding to the complexity of all this is that fact that your customers are all humans. They all have emotions, good days and bad days, feel happy and sad, and so on. Even monitoring and responding to their tweets in 7.3 seconds will only give you a window into less than 1% of their lives. For example, no algorithm will probably ever know that maybe today is not the best day to send Brenda an offer to buy cat food because, undetected by your data warehouse, today was the day her beloved pet cat passed away.

The people who really know your customers

But there is someone who does really know your customer. Someone who knows what they like, what they are looking for, how they are feeling at a particular time, and knows about their significant life events like births, deaths and marriages and probably knows what they already bought. That is the friends, family, neighbours and colleagues of that customer.

While no level of technology or data will allow you to know your customer better than the people who know and interact with that person on a daily basis, this does not mean that personalised marketing is a waste of time.

What it does mean is that every bit of personalised marketing that does succeed should be used as an opportunity to enlist those customers who reacted positively to that targeted message to refer people they know who would also be interested in your proposition.

Let’s meet Carla

For example, let’s assume you are a large beauty brand or retailer and your CRM has identified a customer – let’s call her Carla – who is a regular buyer of your products, who has left a positive review and tweeted about your products. Now rather than just sent her an email inviting her just to buy again based on her predicted buying cycle, why not send her a communication inviting her to recommend the products you offer to her friends and family.

Provided the communication is clear, she can easily refer across any communication channel of her choice and there is something interesting in it for her and any person she refers, then Carla will start to think which of her friends would also like to try your products. Pretty quickly she thinks of her friend Leanne as being ideal and sends her a personalised message via email, WhatsApp, Facebook Messenger or SMS saying ‘Hi Leanne, I just know you would love this product and thanks to me you can get a special introductory price and a free sample if you buy through my link’.

And guess what? Not only is Leanne very likely to read Carla’s message, act upon it and buy the product, but because Carla already knew she would love the product, she is also more likely to become a repeat purchaser and brand advocate as a result.

What this means for personalised marketing

The latest generation of referral marketing software means that not only can you enlist your Carlas to bring you ideal customers like Leanne, but you can also get your Leannes to bring refer their friends and so on, greatly scaling the reach of personalised marketing. But in order to do this effectively, you require a subtle mixture of smart rewards and gamification to empower all your customers to make personalised recommendations to their friends and family. This is exactly how our clients, not just L’Oréal, feelunique, Space NK and Glossybox in the beauty space, but right across the telecoms, gaming, grocery, casual dining, publishing and banking and insurance verticals, are enabling the perfect personalised marketing.

When you consider that our clients see emails sent by customers to their friends opened almost four times more than any emails the brand or retailer sends, with click through and conversion rates almost eight times higher, it is little wonder that this adds up to CPAs of up to 80% less than from any other online channel.

So without effective referral marketing, all that investment in personalisation technology is unlikely to fulfil its full potential.

If you would like to chat more about this, we would love to talk to you.

This article originally appeared in MarketingTech on 1 April 2016.

Image: Creative Commons Chris Hsia

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