How relevant are your marketing campaigns? Ask any business-to-consumer marketing professional what they think of mass mailing, mass emails, or SMS blasts, and they'll inform you that there's been a shift away from these indiscriminate approaches in favor of more targeted campaigns. They'll most likely add that the driving force behind this shift is the fact that customers are more demanding: Consumers today want to be recognized as individuals and expect communications to be apropos to their unique lifestyles, preferences, and needs.
Despite marketers' knowledge of the value in personalized campaigns, they are not going far enough to actually make their campaigns individually applicable to consumers. Response rates to campaigns are inexorably declining, and direct marketing effectiveness is waning. CEOs are -- quite rightly -- putting their marketing directors under pressure to deliver more value from marketing investments.
The antidote to marketing fatigue
Consumers are fed up with being bombarded by overwhelming quantities of irrelevant marketing material -- through email, mobile, direct mail, phone, or other channels -- and their attitude is reflected in the declining response rates.
In 2009, Forrester Research conducted a report entitled, "Marketers: Stop the Abuse! Adopt Preference Management." It found that two-thirds of U.S. consumers believe there is too much advertising today. In addition, 62 percent say they get too much direct mail, 66 percent responded that they get too much email marketing, and 67 percent get too much telemarketing.
These results suggest that people are suffering from a bad case of marketing fatigue. If marketers are truly attempting to personalize customer and prospect communications, then the unfortunate conclusion is that their methods aren't working.
Typically, when marketers talk of personalization, what they mean is segmentation-based personalization, meaning that all the customers belonging to a segment selected by the marketer will receive the same message and offer. Sure, the customer's name might appear at the top, but that's where the personalization ends. Customers demand more than that to be enticed to engage with a brand.
Marketers who do not pay heed to the customers' appeals and continue to target them with extraneous messages and campaigns do so at their peril; campaigns carried out in that manner are counter-productive and unlikely to pay back. Pushy sales pitches turn customers off; personal, interactive conversations draw them in.
The one-to-one personalization era begins today
One-to-one personalization has long been designated as marketing nirvana -- an idyllic state where a brand can hold rewarding, long-term relationships with millions of customers. In this utopia, targeted offers are presented as a part of natural customer marketing conversations. One-to-one campaigns align with the customer's current situation, as well as their expressed -- and implied -- wants and needs. Messages are timely and applicable to the customer, and they deliver the desired results for the marketer. But just how far away are marketers from this Holy Grail?
Here are the five degrees of personalization that exist today within marketing organizations:
- Mass emailing is where the same message is sent to everyone.
- Name-based personalization (or light personalization) is where the customer's name is placed at the top of the same message sent to all recipients.
- Segment-based personalization (or medium personalization) goes one step further: It creates one message for large, pre-selected target groups.
- One-to-one personalization (or heavy personalization) is comprised of content drawn from a dynamic up-to-date customer profile. As a result, the message is pertinent to the individual receiving it.
- Interactive one-to-one personalization applies the one-to-one concept to interactive channels. This enables content to be delivered through web pages and online assistants (avatars), for example, to be personalized in real-time while being consistent with messages delivered through other channels.
The reality is that when marketers say they are practicing personalization, they are usually referring to light or medium personalization. Yet, again and again it's been shown that as personalization increases, marketing fatigue falls and conversion rates increase. One 2008 study by the Aberdeen Group found that a move from segmentation-based marketing to one-to-one personalization can make a tangible difference. The survey found that, when shifting from segmentation-based personalization to one-to-one, conversion rates improve by 22 percent and customer retention rates improve by 60 percent.
The way ahead
We've established what many of you might already know: To reach customers in ways that prompt positive responses, campaigns must be relevant. Still, we have a long way to go before we can reach the pinnacle of interactive one-to-one personalization. The good news is that it is possible, but companies must be willing to implement the processes, best practices, and marketing automation technology to ensure content is well-timed and targeted to each customer's circumstances. Once consistent and coherent marketing dialogues are established across all channels, conversion rates will leap, and the summit will be reached.
Stephan Dietrich is president of Neolane Inc.
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