No
customer left behind: How to drive growth by putting personalization at the
center of your marketing
Successful
personalization at scale requires four elements working in tandem. Here’s how
marketing leaders build the operating model to make that happen.
Personalization
is ready for its closeup moment. Technology
and customer expectations are converging to propel personalization—the process
of using data to customize the timing, content, and design of every experience
in real time—from a promise to a reality.
Personalization at scale can drive between 5 and 15 percent revenue growth for
companies in the retail, travel, entertainment, telecom, and financial-services
sectors. One global retailer, for instance, saw sales from its brand-owned
stores triple in just a year thanks to a successful personalization initiative.
For this reason, more than 90 percent of
retailers say personalization is a top priority. But only 15 percent of these
companies believe they are actually doing a good job at it.1Consumers
who have been stalked by irrelevant ads or bombarded with outdated offers would
agree.
While many companies have scored a few
modest successes with their personalization experiments and initiatives, few
know how to do it on a large and consistent scale across all channels.
Most companies focus exclusively on data, analytics, and agile, while
investing very little in the necessary organizational and operational rewiring
of how people work. Personalization is still treated like a nice add-on to a
company’s existing marketing function.
We believe, however, that driving
substantial and sustainable growth through personalization requires embedding
it into the marketing operating model. To do this, companies must move beyond
the initial excitement of “one-to-one marketing” and into the low-thrill but
crucially important realm of organizational change.
What is
the personalization operating model?
An operating model driven by personalization requires four elements to
work together effectively:
1. Data foundation: Building
a rich, 360-degree view of customers in real time
2. Decisioning: Mining
data to identify and act on signals along the consumer journey
3. Design: Crafting
the right offers, messages, and experiences at speed
4. Distribution: Delivering
and measuring these experiences across platforms and feeding new insights into
the data foundation
The real source of value in this operating
model is how each element interacts with the others. Insights from the data
allow the business to know how to design offers in response to customer
signals. The more this operating model works, the more it improves by
continually feeding more data into the model and refining its activities.
While each of these individual elements
has been well chronicled, none is particularly effective in isolation. Only by
developing and deploying an integrated personalization operating model that
enables a faster and more effective way of working can businesses hope to
capture their full growth potential.
How to
develop your personalization operating model
Building a personalization operating model
requires business leaders to invest in five foundational elements: processes,
tools and tech, governance, KPIs, and talent . Implementing and embedding these
elements is complex, requiring dedicated commitment, focus, and problem
solving. We want to isolate a few of the most common pitfalls that cause
companies to falter and suggest solutions for how to address them.
1. Process: Commit fully
What can go wrong: Not long ago, the CEO and CMO of a travel company
decided to make a big push into personalization. Despite selecting a strong
group of seven people and working in an agile way, they had little to show
after six weeks. The problem was that the selected employees weren’t working in
the same place and, after attending the daily stand-ups, were going back to
their normal jobs.
Solution: Since an agile working team is the core component
of a personalization program, it’s essential to get it right. At the most basic
level, this means assigning a small group of carefully selected
people—including a campaign manager and staff from creative, digital media,
analytics, operations, and IT—to be full-time members of each agile team.
Personalization is going to fail if it’s a side job. Unified around a shared
goal, the team also needs authority and stature to succeed. Process
improvements should include:
·
Giving decision-making rights to the team
and empowering them with critical resources, such as a promotional budget
·
Staffing the team of 8 to 15—no more than
can be fed by two pizzas—with “doers” not managers
·
Colocating team members so they can work
side by side all day
·
Appointing a team leader who helps
everyone work toward a shared vision and goals
·
Developing new service-level agreements
(SLAs) with internal and external departments, partners and vendors to make
sure they can match the timelines of the agile team
The travel company colocated its
personalization team members and removed many of their other responsibilities.
In addition, it gave the team immediate access to creative-design resources from
the marketing department (through new SLAs), speeding up the creation and
testing of new marketing campaigns. As a result, the number of pilots launched
in a given month more than tripled.
2. Governance: Be clear about boundaries and decision rights
What can go wrong: A global telecom provider recently put a
personalization team in an agile “war room” only to find out that
business-as-usual (BAU) channel functions, such as e-commerce, were launching
conflicting tests. Without clear boundaries, decision rights, and
responsibilities, creating personalization teams can result in unexpected
clashes with other parts of the business.
Solution: A control-tower function is needed to manage the
inevitable collisions between multiple agile teams and BAU groups. This new
function is run by a manager and a small staff of people who have
responsibility for tracking, anticipating and solving problems, and maintaining
a centralized testing pipeline with common prioritization logic. They are also
responsible for navigating and facilitating the very real organizational and
political conflicts that arise from having multiple cross-functional teams
within a legacy organization.
In practice, that means developing
agreements with legacy groups on testing and release protocols, meeting
regularly with affected functions to maintain good relations, and being
transparent through regular communications to breed trust.
3. Tools and tech: Give people new shoes so they can run faster
What can go wrong: A consumer-goods company started its personalization
transformation the right way. Management had aligned on the strategy, defined
the consumer priorities it wanted to execute on, and committed the right set of
doers and leaders to drive the change. The first pilots launched rapidly, but not
long after, the scaling up of successful pilots stalled. The IT department had
promised a new set of tools that would enable a perfect 360-degree view of the
consumer, the creation of campaigns across channels with few easy clicks, and a
fully automated decisioning engine to reduce manual list-pull work and
targeting frictions. When this didn’t happen on time, the agile team was forced
to measure campaign performance manually, which often didn’t generate results
until 7 to 12 days after a campaign was completed.
Solution: Numerous off-the-shelf tools exist to help the process
of personalization run with the numerical precision of a finance department.
“We now see marketers use experience templates created by their agile
development teams and user experience designers to shorten the loop
between idea, launch, and measurement from months to days, and even sometimes
hours,” says Liad Agmon, CEO of Dynamic Yield, a leading-edge
decisioning-engine platform that delivers cross-channel personalization.
Automating list pulls, enabling versioning
with dynamic templates, and creating easily searchable creative-asset libraries
can reduce daily frictions while real-time measurement capabilities accelerate
testing and learning. At the core of the personalization tech is a centralized
decisioning engine, or “brain,” that is capable of interacting with each
outlying system to consistently make real-time decisions based on consumer
signals. This technology can coordinate content offers across audiences and
channels in real time and help teams adjust them based on feedback.
In addition, companies are investing in
customer-data platforms to unlock the data trapped in multiple silos. These
investments have the additional benefit of freeing up teams from low-value
activities so they can focus more on developing great customer experiences.
4. Key performance indicators (KPIs): Focus on both small and
big outcomes
What can go wrong: The personalization team at a national retailer
quickly developed a set of personalized triggers targeting customers during key
moments when it seemed there was a strong intent to make a purchase. The
campaign was successful and drove incremental sales. But subsequent campaigns
drove limited value because the team either couldn’t agree on its focus or tried
overly broad targets that led to multiple conflicting initiatives.
Solution: Personalization teams need a single, shared goal
focused on solving a specific consumer challenge, such as the acquisition of an
under-represented consumer segment like millennials, a boost in cross-selling,
or improved engagement with new customers in their first 30 days. Without these
kinds of strategic, consumer-centric KPIs, teams will fail because, without a
shared purpose, they will focus on too many customer segments and moments in
the journey.
At the same time, personalization teams
can’t focus solely on the desired end result. The best teams identify near-term
drivers that are going to help them get there, and assign bounties for
employees as incentives to encourage user behavior (the dollar amount of the
bounties varies greatly based on sector and goals of the program). These
drivers could be the capture of a customer’s email address, a download of the
brand’s app, log-ins to the site or mobile app, or a sign up for the loyalty
program. A multibrand, multi-category retailer, for instance, used advanced
machine-learning techniques to identify all the drivers of value and then
assigned a dollar amount to each of them, which counted toward the team’s goal
and each member’s personal compensation.
5. Talent: Foster long-term talent development and find
all-around “athletes”
What can go wrong: For nearly a year, high-performing doers driving a
company’s personalization agenda had been part of a dynamic and agile start-up environment.
But there was little opportunity for advancement within the mostly
hierarchy-free structure of the team, and no one was eager to simply return to
his or her old job. The result was a rapid decrease in motivation over time,
leading in some cases to a departure to work for other companies. Figuring out
what to do with valuable employees is a challenge few companies spend enough
time on.
Solution: Personalization teams should become the means to a
promotion for highly skilled employees or a way for those with high-potential
to build meaningful skills. In this way, war rooms act as mini business
schools, enabling the acquisition of new skills, fluency in an agile way of
working, and the understanding of how to act in a customer-centric way. When it’s
time to move on to new challenges, team members should move up into a different
team with a bigger mandate or be promoted into a leadership position within
marketing or another department, such as strategy or merchandising. Effective
career-path management should become the priority of the chief human-resources
officer, with a focus on creating competitive compensation programs.
Creating attractive career paths and
leadership opportunities also helps in recruiting the different types of
all-around “athletes” needed to staff agile personalization teams.
Traditionally in marketing, for instance, there is one person who builds logic
into the email system for campaigns, someone else who pulls the recipient
lists, and another who does the quality assurance. On an agile personalization
team, this is all the domain of one person.
6. Leadership: Make personalization a long-term reality
What can go wrong: After a few months of engaging with the energy and
excitement of a personalization transformation, one company leader started to
step back from the day-to-day management in favor of focusing on the next big
thing. He was still involved but mainly tuned in to periodic updates about how
the war room was progressing against its throughput and impact targets. Without
active and ongoing leadership, a personalization program is likely to falter
and suffer a slow death.
Solution: To ensure success, senior leaders need to make
personalization not just a company priority but a personal one. They must
demonstrate visible support and enthusiasm for it day in and day out for the
many months it takes to really complete the transformation by:
·
Maintaining a presence
in the war room. Having leaders show up unannounced
to daily stand-up meetings powerfully reinforces the message that this is the
place to make things happen.
·
Sharing ownership. Each leader in the steering committee (regional
heads, the CMO, COO, etc.) should pick one or more personalization initiatives
to champion each month. This means asking the team leader about it in
one-on-one meetings, following up with various people within the organization
to highlight its importance, asking about progress in broader group stand-ups,
and publicly celebrating some of the early wins, even before the initiative is
fully scaled.
·
Empowering your teams. Although steering committees are still needed to
oversee the performance and impact of personalization teams and to recommend
course corrections, most decisions need to be ceded to the teams. The job of
senior leaders is to empower teams by holding them accountable for outcomes and
removing the obstacles and roadblocks that prevent them from achieving these
outcomes.
To make sure management stays engaged
beyond a few months, companies can embed goals (such as test throughput rates,
incremental sales, customer retention) into a leader’s performance review.
The road to personalization at scale is
bumpy, and senior leaders need to be in the car to help navigate unexpected
twists and turns, not waiting at the end of the road for the car to show
up—with your company’s future growth locked in the trunk.
By Julien Boudet, Brian Gregg, Kathryn
Rathje, and Kai
Vollhardt
https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/no-customer-left-behind?cid=other-eml-alt-mip-mck-oth-1808&hlkid=cfebdd1d03c94f8d8a84653ad0cab1de&hctky=1627601&hdpid=4a80af03-ea92-46a3-a316-5bf53d19f517
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