Personalized Marketing that really works

The progress of Personalization in Marketing

Personalization has always been an important factor in marketing. If you just imagine the apocryphal local store owner in a small town, who would greet customers by their first name and give them recommendations as how to cook foods, and even slip a little something extra in the shopping basket as a thank you for their regular custom. Or the restaurant owner who would always somehow find a table for a regular customer even at the busiest of times. It’s great marketing, as it’s a way to make the customer feel really special and valued, and creates a bond with the business and fosters loyalty. But until the advent of modern personalization technology, it was difficult to replicate the intimacy a local store owner could have with his or her customers at scale.

Initially, much of the personalization available online was limited to adding a customer’s first name to an email or in an account area after logging in, or Amazon’s famous ‘people who bought this, also bought that’ or how YouTube suggested the most watched videos down the side of the screen. But now the options range from holistic and high end solutions like Adobe’s Marketo Engage, Salesforce Marketing Cloud, Oracle Marketing, Sitecore, Coveo, Dynamic Yield, Monetate and others, down to a host of smaller and more affordable solutions available via platforms like Shopify.

These technologies allow business owners to personalize marketing messages, offers, and user experiences both on-site and off-site using data, predictive analytics and, increasingly, AI. And actions can be taken from first party data from logged in customers based on previous purchases, buying cycles, communication preferences etc, as well as combining predicted data from unidentified site visitors by analyzing the channel or keyword that brought the visitor to website, the visitors browsing patterns in the current or previous visit or any other of a host of signals that a business can gather. You only need to think how helpful and accurate the very personalized recommendations from Netflix or Sky’s NowTV can be, as they are based on each individual’s previous watching habits, ratings and other feedback, such as whether a series was watched to the end or abandoned half way through.

The benefits of Personalization

Clearly personalization has benefits not just for the business, but also its customers. As not only can a customer receiving a personalized message or offer feel more valued and understood, but it can also make everything more efficient. For example, if a customer is searching for information about Safaris in Africa, it makes more sense to see options for Safaris on the webpage rather than have to wade through pages of information about beach holidays or city tours that try to appeal to the median and unidentified visitor. And a website visitor simply looking to repurchase can save time by quickly locating a previous shopping basket and selecting order again.

So it’s not surprising that McKinsey found, in its report Next in Personalization 2021, that 71% of consumers reported that they expected brands to deliver personalized interactions and 76% said that they were frustrated when this didn’t happen. And furthermore, 72% of consumers reported that they expected brands to recognize them as individuals and know their interests.

But the benefits of personalization are not just limited to interaction with the brands’ websites and apps, as when you think that the average consumer is reportedly deluged with between 6,000 to 10,000 ads every day, personalization is how an advertiser can hope to cut through the noise and deliver relevant information and messages to consumers. And, of course, consumers are much more likely to engage with channel and, say, open an email, if they know that the information contained within it likely to be relevant, useful and timely.

But clearly the benefits of getting more relevant information in front of consumers at the right time, should be expected to help the bottom line for businesses, with McKinsey reporting that companies that excel in creating intimacy with their customers grow faster than their peers and the closer they get to their customers, the bigger the gains. And when looking at companies that grow faster, they identified that they drove 40% more revenue from personalization than their slower growing counterparts. Overall, they estimated that the benefit of shifting US companies to top-quartile personalization performance, could generate a staggering additional US$1trn in value.

Hear from Jacob Tice, Senior Marketing Specialist at Trupanion why customers referred with a compelling first hand testimony and via a personalized referral link are more valuable:

See the full video here.
 

What kind of personalization do customers want

In the McKinsey report mentioned above, consumers were asked to identify positive experiences with brands that made them feel special, and these included some that might surprise you, including being asked how a purchase was, receiving a ‘how to’ video or being asked to write a post purchase review. The benefits of personalization identified included:

• Making it easier to navigate instore and online
• Getting relevant personal recommendations
• Tailored messaging
• Targeted promotions
• Celebrating milestones
• Timely communications tied to key moments
• etc.

“When you’re able to get that compelling first-hand testimonial and you’re able to use, say, a referral link or something like that where your friend gives you a method to enroll, those memberships last longer. That that trust is built much more quickly. Those are our stickier members who are going to stay with us a long time and they’ll refer their own friends. You know, it becomes this kind of chain of referrals that people build over time. In terms of tenure, lifetime value, they become advocates for the brand themselves. All of that is kind of heightened when they have been brought in by a friend or a loved one. Our cost per acquisition for a referral pet is significantly lower than we see in other channels.
Jacob Tice, Senior Marketing Specialist at Trupanion

The benefits of personalization for brands

On the other side of the coin, effective personalization can benefit brands by lowering customer acquisition costs, increasing average order values, increasing customer loyalty and the likelihood that a customer will take other positive actions that benefit the brand, such as leaving a review, uploading user generated content or referring a new customer.

From the perspective of a brand, the benefits of personalization can be that:

• Marketing messages sent via a customer’s preferred communication channel (email, text, app etc.) and at times when a customer is mostly likely to react to a message (weekend afternoons etc.) will more likely be read;
• Messages that consistently provide value by being tailored to the needs of a customer are more likely to be opened and read;
• Messages tailored to the individual needs of a customer (based on previous interaction history etc.) are more likely to generate actions like click throughs;
• Landing pages and welcome screens personalized for the individual customer are more likely to encourage actions like purchases;
• Personalized recommendations are more likely to encourage purchase and/or increase average basket sizes;
• Recognizing personal events like a customers birthday or X years of being a client by offering a reward can create proximity with the brand and lead to higher brand affinity and higher lifetime customer values;
• Ensuring consistency with the same personalized messages across different communication channels can avoid confusing your customers;
• Sending personalized messages and offers based on a customer’s purchase history can help encourage re-purchases by arriving at the right time;
• Sending messages relevant to the location of your customer can encourage action, like a special deal at a local store;

As you can see, effectively implementing a personalized marketing strategy can provide many benefits for your business.

Hear from Asya Kuznetsova, Product & Growth at Wise that, because in referral progams ‘people invite lookalike people’, you can use this to target the customers you want.

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Why Referral Marketing is the perfect personalized marketing strategy

Unfortunately, despite all the advances in technology, there’s unlikely to ever be a perfect personalization technology. That’s simply because while a brand can gather lots of data about a customer over time and can make assumptions based on data and AI, it will never have the full picture and all the data about any one customer. That’s because:

• Few customers buy from one brand exclusively, and a brand is unlikely to know if a customer bought from a competitor;
• Even inferring that a customer is ‘in market’ due to browsing history will ignore the fact that a prospective customer may have already bought elsewhere;
• Customers can and do buy online and offline, use different devices and browsers, different emails and payment systems;
• Some customers, sensitive about what personal data is held about them, can either deliberately obfuscate their data trail by blocking or clearing cookies, or can request that data held about them is deleted.;
• etc.

“The baseline is that people invite lookalike people and the second one is that your referrals should only target customers [you want]. Otherwise, it would not work, you would just shoot at everyone and get almost no one.”
Asya Kuznetsova, Product & Growth – Wise

However, similar to the example of the apocryphal local store owner above, there is one source of information that does know your customers and prospective customers really well: their friends and family. That’s why the perfect personalization channel is, in many ways, referral marketing.

That’s because a good friend or family member will likely know what that person is like, what they want, when they want it and be aware of their current personal situation (did they just get engaged to be married etc.?). They probably know what they bought already and what they like to buy and if they want something now. And messages from friends and family members do tend to get opened and read. And as they come from a trusted source, tend to be trusted much more than any communication from a brand. Our recent The Referral Myth Debunked research found that most respondents said knowing that their friend also appreciated the brand was very important in the context of a referral, showing the importance of personalization and social proof.

Hear from David Hixon, Executive Director – Head of Product & Lifecycle Marketing at Ally Bank on why engaged customers tend to refer other high value and engaged customers:

See the full video here.
 
And, furthermore, recent research from UC San Diego and the University of Pennsylvania found that referred-in customers were not only more valuable due to their own increased spending, compared to customers acquired from other channels but were themselves more likely to refer in new customers. And the likelihood of a referral was increased by a further 20-27% by simply reminding that customer that he or she was also referred to the brand.

“What we’re learning is that the people that are more engaged are the people that are more likely to refer. And then the people that are coming in through those referrals are also then more likely to engage. So it’s this circle of life. The people that we like are the ones that are going to refer. And they’re just going to refer more people that we like. [And] we’ve done a lot of math to compare it against the distribution of new customers that come in BAU, how many of them go on to become engaged and a valuable customer to us. Those numbers are much higher for the customers that come in through referral than those that come in through the BAU channels.”
David Hixon, Executive Director – Head of Product & Lifecycle Marketing – Ally Bank

How to Personalize Referral Marketing

However, as you might expect, much of what we’ve already discussed about personalization can also be used to improve the performance of a referral program. For example:

• Similar to how you can improve the performance of marketing emails by sending these via the communication channel and at the time favoured by your customer or prospective customer, by allowing your referrers to send referral recommendations to their friends and family using their preferred native apps, this means that they are likely to use the channel with which they normally communicate with that person, for example Whatsapp. Not only can this avoid issues with data protection rules and regulations, like GDRP or the CCPA (as you don’t require the referrer to give you any details of the friend), the messages are more likely to be opened and read;
• By allowing referrer’s to write personalised messages, you can get much more impactful communications. For example, compare these two messages:
  

  ‘Hi Leanne, this is the great deal I told you about last week. The one where you get extra rewards if you use the product for regular payments’

  or

  ‘Hi, your friend Carla thought you would be interested in Acme’s new payment card. Acme offers you….”

  Which do you think would be most effective?

• Using the referrer’s name and/or photo throughout the referral journey can make everything more personal, for example reminding Leanne that she’s getting this deal thanks to Carla;
• Similarly, where you use a personalised URL or code, incorporating the friends name as part of that (e.g. Leanne-17) can make it both more personal and easier to remember;
• Allowing the referrer and the referred-in friend to choose the rewards and incentives they want can make the experience more relevant.

Next Steps

If you’d like to know more about how to make your Reward Marketing and/or Referral Programs more personalized and more successful, please reach out. We’re happy to share what we know.