What is the Most Effective Form of Personalization?

As we’ve discussed in Part 1 of this series, personalization can mean a multitude of things.

In data-driven marketing, personalization can be as simple as manipulating a graphic or letterhead to relate directly to your customer, like a sporting goods store putting a customer’s name on a football player’s jersey to promote a sale. In our opinion, this is least effective; it’s a “been there, done that”.

Personalization can also be more complex, like when a company utilizes segmentation — breaking the market down into specific demographics — and more advanced data collection to make the most effective use of their marketing efforts.

However, there’s a term in use which is represented to be the “Holy Grail” of marketing, and that is “1-to-1” marketing. This extremely advanced level of data-driven marketing and personalization theoretically goes beyond the specificity offered by segmentation into an entirely new realm of customer understanding. But is it real?

What is 1-to-1 Marketing?

1-to-1 marketing implies a deep understanding of the customer as an individual using extremely specific data like search habits, online order histories, and information in CRM systems and on personal social media platforms, like Facebook or LinkedIn. This customer profile is fleshed out further using more generic types of data common in segmented marketing strategies, like a potential customer’s zip code, age, family status, level of education, etc.

Ideally, using this information as the core element of a data-driven marketing strategy allows a marketer to predict, target and promote with unique messaging, timing and offerings based upon your individual attributes and data points. Successfully doing so should indeed be the most effective way to reach prospects with a very high relevancy about specific product or services. This is the crux of 1-to-1 marketing.

As an example, I am reminded of a scene from the Tom Cruise 2002 action film, Minority Report. Tom’s character is desperately trying to escape pursuit as he runs through a futuristic mall in which “smart” mannequins actually can sense the identity of the customer and morph both their clothing and sales pitch, specifically calling out the customer name (to Cruise’s dismay) and explaining why their offer is so well suited to him. Now THAT is 1 to 1 marketing.

Well it is 2016 now and that futuristic vision has yet to be realized.

The 1-to-1 Marketing Problem

The problem, and the reason 1-to-1 marketing may not even be an attainable marketing strategy, is no one really knows how to do it. Predictive modeling has always been a difficult marketing task, and drilling down to the individual level is daunting indeed. However, the proliferation of data, or Big Data, is one of today’s hottest topics.

The publicity surrounding big data leads many to believe 1-to-1 marketing is being routinely accomplished today. And we disagree. Sure, retailers are using couponing applications based upon past purchases in what might be considered 1-to-1, but this is a very narrow and specific slice of loyalty marketing.

On the other hand, the vaguely related use of “if you like/bought this, you might also like this” is not 1-to-1 marketing at all. It is instead a relational suggestion built around products, not around the individual. In fact, it is more of a segmentation strategy than it is 1-to-1 since it relies on the collective buying patterns of a group to make recommendations.

Companies like Amazon, Google and Facebook, can take advantage of consistent input by their users through search habits, order histories and other user details. While this data may be invaluable, it’s hard to determine whether or not companies like Amazon can use this information to do anything but offer the user similar products based on their searches and the identical purchases of other users. For instance, if a customer was searching for a memory foam mattress, perhaps Amazon would suggest a memory foam pillow or perhaps a memory foam mattress pad, based on the searches and purchases of other users. Still, it’s hard to say this is truly 1-to-1 marketing.

Let’s not forget, Amazon, Google and Facebook are some of the biggest companies in the world, all dealing with personal data and real time, streaming user input day in and day out, simply as a fortunate byproduct resulting from the nature of their business. This same data is not as easily available to most companies. The analytics are monstrously complex, and wildly expensive.

What is Segmentation?

The compromise between simplistic personalization and 1-to-1 marketing, and the likely best practice for companies interested in more relevant data driven marketing, is segmentation.

Segmentation groups prospects and customers by shared data attributes AND to personalize the outreach with individual information that will give your approach a more personal touch.

Segmentation allows you to take the perspective of 1-to-1 marketing, in that a campaign is based upon a shared persona of a group of like candidates. Personas are another interesting aspect to effective direct marketing. My Marketing Director may disagree, but I see personas that are often utilized in marketing automation (yes, marketing automation is also not 1-to-1 marketing) as equivalent to a segment.

In short, with segmentation being a perfectly sufficient option for nearly all marketing strategies, 1-to-1 marketing may fall short when it comes to ROI for the average company, and with great options like segmentation, perhaps the “Holy Grail” of direct marketing isn’t worth the quest…yet.

Is it a Question of Semantics?

Perhaps, but for those interested in pursuing more relevant, data-driven marketing strategies, a thorough understanding of what is being accomplished through better use of data and how it is being accomplished is critical. Created within that understanding is a better realization of what and how to collect, maintain and organize data. Without good, dependable data the rest really does not matter.

Get Help Driving Your Data-driven Marketing Forward

Data is a powerful marketing tool. Strata specializes in highly targeted and personalized data-driven marketing programs that align to our clients’ specific strategies, goals and budget. We also offer complete support services including data acquisition and management, design, digital and print. Explore our marketing services offerings and contact us today to learn how we can help you increase response and ROI in your direct marketing.

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