What shoppers really want from personalized marketing
What
customers want and what businesses think they want are often two different
things. Here’s what customers are looking for.
Anyone who has gotten an unsolicited and irrelevant
offer related to something they’ve done online knows that creepy feeling
that someone is watching me. This kind of reaction is the third rail
of today’s drive to personalize interactions with customers.
That’s a problem
because, when done right, personalization can be a huge boon for retailers and consumers. Targeted communications that are
relevant and useful can create lasting customer loyalty and drive revenue
growth of 10 to 30 percent. The challenge is to personalize in a way that
doesn’t cross lines and delivers genuine value and relevance. But how do you
know?
To better understand
what customers really value, we asked 60 shoppers to create mobile diaries of
their personalized interactions with various brands over two weeks. With over
2,000 entries in total, we were able to see what kind of personalized
communication works for customers and what doesn’t.
Here are the five things
that customers said they value when it comes to personalized communications:
1. Give me relevant recommendations I
wouldn’t have thought of myself.
One of the most popular
personalization techniques is to remind shoppers of items they browsed but
didn’t purchase. Using a common digital-marketing feature
called retargeting, these reminders appear as ads on other websites
the shopper visits or are delivered via email. Although an established
technique, it is one with great potential for missteps and can easily come off
as creepy or annoying if not executed thoughtfully. Shoppers don’t want to be
constantly reminded of products they’ve already bought or searched for,
especially if the ads appear either too soon, too frequently, or too late in
the process.
One shopper found no
value to an appreciation email she received after purchasing a puffy jacket. It
recommended other similar jackets she might like. Regarding this product,
you only need one. Why send an email for other similar coats? she asked.
To provide something a
customer might be interested in, companies need to use more sophisticated
recommendation algorithms to offer complementary products or services instead
of just the things the shopper has already browsed or bought. This might
entail, for instance, suggesting a cocktail dress for someone who has just
bought or searched for stiletto heels. Customers who browse at Nordstrom.com
often get product recommendations for similar items in different product
categories the next time they visit Facebook. Another effective tactic is
communicating in a way that people actually talk to each other. The e-commerce
clothing retailer Revolve, for instance, nudges shoppers this way: If you
can’t stop thinking about it, buy it <3.
Finally, with any
retargeting message, it’s important to observe who responds and who doesn’t,
adjust the frequency accordingly, and cap the number of impressions for
everyone, especially those who never respond—continuing to retarget these
shoppers will only be annoying.
2. Talk to me when I’m in shopping mode.
When to send a message
is just as important as what it says. Figuring that out requires taking a close
look at behaviors, patterns, and habits.
A clothing retailer
found that shoppers who visited one of their physical stores or the online
store were more likely to open and respond to messages that were delivered
either later on that same day or exactly a week later. Sending messages at
those particular times meant the company was reaching people when they were
either still thinking about shopping, or at a time when shopping for clothes
made the most sense for their particular schedule. Previous order data can
provide useful cues about activities such as ordering a gift for someone’s
birthday or anniversary.
Getting the timing
wrong virtually eliminates the chance for a purchase while potentially annoying
the customer. For example, an Internet service provider figured out that a
consumer had moved. But the company waited too long to reach out. It’s now
been a month since I moved, so obviously I already have my Internet service
hooked up, the customer said.
3. Remind me of things I want to know
but might not be keeping track of.
A highly effective way
to become relevant to shoppers is through tracking specific events and
circumstances they are likely to want to know about. This might take the form
of a reminder when someone may be running out of an item purchased earlier,
when a desired item is back in stock or on sale, or when a new style is
launched for a product or category the shopper has repeatedly bought.
Retailers, however,
should be careful to provide shoppers with a trigger for the targeted message.
One shopper told us she received an Instagram ad for cat-themed socks, which
she had purchased from the same retailer a year earlier. The shopper knew the
retailer was trying to get her to repurchase, but there was no attempt to
connect with her beyond the appearance of the ad.
4. Know me no matter where I interact
with you.
Consumers expect
retailers to connect digital messages with their offline experiences. For many
organizations, this is particularly challenging, because it requires
collaboration between disparate areas of the organization, such as store
operations, event managers, PR, digital marketing, and analytics. Yet if done
effectively, communications that seamlessly straddle both online and offline
experiences—and provide real value—can make a customer feel a retailer really
knows them.
When cross-channel
communication involves using information that customers have not actively
provided, retailers should try to supply information that consumers will find
truly valuable. Starbucks, which uses location information from customers’
mobile phones, asks people who are about to place an order at a store that’s an
hour away from their current location if they really want to place their order
now, since the order will be ready (and getting cold) well before they arrive
at the store. Most customers do not object to such location tracking because it
offers them information they are likely to find helpful.
5. Share the value in a way that’s
meaningful to me.
Loyalty programs and
direct-purchase information can tell retailers what types of products an individual
customer buys, how often he or she buys them, when they buy, and what product
categories they never purchase. Many companies, however, fail to take full
advantage of this information to personalize their discounts and communications
to their loyal customers. Customer offers are an important way to build customer loyalty and prevent churn. Personalizing them (and often
gamifying the experience) is a highly effective way to not only inspire
purchases but also encourage new buying behaviors.
Starbucks’ bonus
star challenge is one such example. The company selects three particular
items for loyalty customers to buy within a given week in order to qualify for
bonus points that equal a free drink. These items are carefully chosen for each
individual customer: two products they purchase frequently and one that leads
them into a new, high-value category. If a customer, for instance, frequently
purchases breakfast items, their discovery product might be a lunch item. If
they tend toward healthier selections, the new item might be a salad.
What to do to ensure you’re not being creepy
Any successful personalization effort hinges on the creation of messages and experiences
offering a high degree of value to the customer. But how do you determine
what’s valuable? To help answer this, we use a simple formula:
This formula shouldn’t
imply an exact science when it comes to personalization. But it does highlight
the key issues that executives need to address.
Customers see value as
a function of how relevant and timely a message is in relation to how much
it costs, meaning how much personal information has to be shared and
how much personal effort it takes to get it. Importantly, trust in the brand
will boost overall value, though that can grow or recede over time, depending
on the customer’s satisfaction with various interactions with the brand.
In navigating this
value equation, we have found addressing the following questions helpful:
Are you infusing empathy into your customer
analytics and communications design?
To truly build empathy
for customers, companies must understand their diverse attitudes, shopping
occasions, and need states and build them into an attitudinal segmentation.
Such attitudinal segmentation then needs to be layered onto the customer
database in order for companies to be able to act on it to deliver on relevant
and personalized messaging. This is a step many marketers miss.
Additionally, companies
should be crafting their customer analytics and communications based on the
customer’s journey (the set of interactions a customer has with a brand to
accomplish a task). We’ve found that focusing on the satisfaction customers
have with their journeys overall drives far more growth than customer
satisfaction with individual touchpoints.
Are you listening carefully for feedback on
customer acceptance?
Leaders in
personalization are constantly testing and learning to improve their
communication and engagement with customers and to identify potential issues
early. They do this by digging into both upstream (likes, opens, clicks) and
downstream (conversions, unsubscribes, ROI) engagement metrics. They use this
information to get a better understanding of the value of the customer, for
instance, how much the customer will spend relative to the cost of moving them
from less engaged to more engaged.
On the flip side, they
can also evaluate the economic impact that negative activity, such as
unsubscribes and app notification blocks, has on a customer’s lifetime value.
This allows them to more accurately appraise campaigns. For example, if one
particular communication brings in twice the revenue but also elicits twice the
unsubscribe rate as another communication, they will be able to determine which
one is more valuable.
While data and advanced
analytics play a crucial role in understanding shopper behavior, qualitative listening tools are
also critical. Regular engagement with an ongoing shopper panel, for example,
and ethnographic research and observation can offer valuable, in-depth,
attitudinal feedback on the impact of personalized communications. Close
monitoring of social media helps with the quick identification and resolution
of potential problem areas.
There’s no question
that doing effective personalized marketing at scale is a sizable challenge.
Companies that deliver customers timely, relevant, and truly personal messages,
however, can build lasting bonds that drive growth
Julien Boudet, Brian Gregg,
Jane Wong, and Gustavo Schuler October 2017
https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/what-shoppers-really-want-from-personalized-marketing?cid=other-eml-alt-mip-mck-oth-1710
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