Editorial
The Gist
- Data-driven personalization. Integrating AI and data allows businesses to create scalable, personalized customer experiences that grow stronger with each interaction.
- Empowering customer journeys. Personalization strategies that focus on empowering customers at every touchpoint drive loyalty and long-term satisfaction.
- C-suite collaboration. Personalized customer experiences require C-suite collaboration, particularly between CMOs, CDAOs and CIOs, to harness data and drive personalization effectively.
"Personalized" by Mark Abraham and David Edelman is a crucial read for CMOs and all other C-suite leaders aiming to integrate AI into their customer experience, as well as CDAOs and CIOs who want to understand what their CMO and business partners need from them.
In today's competitive landscape, businesses must focus on delivering a personalized customer experience to meet individual needs. The book emphasizes the many advantages of personalization and tailoring experiences. This approach involves delivering new kinds of value to customers based on using information about them in a permissioned, trustworthy manner. Effective personalization, according to the authors, requires comprehensive information at hand to provide a seamless, customized experience.
Personalization involves creating scalable experiences that improve with each interaction which enables customers to get what they want more efficiently, writes Abraham and Edelman. It's increasingly about speed and scale.
However, businesses must leverage vast amounts of data to understand, shape and optimize the customer journey. Personalization is crucial today because customers want instant, seamless and customized access to products and services.
Personalization drives growth and customer satisfaction, leading to superior value creation, according to research from Boston Consulting Group. Top personalization leaders achieve 15% higher total shareholder returns. This aligns with MIT-CISR's findings in "Future Ready," showing an average revenue growth of 17.3% and net margins 14% above the industry average.
A future-ready firm integrates data and experiences, which embodies personalization. According to Abraham and Edelman, there are five promises companies implicitly make to their customers when they personalize: Empower me, know me, reach me, show me and delight me.
Empower Me: Delivering a Personalized Customer Experience Across Every Touchpoint
Empowering customers involves utilizing their information to help them achieve their goals by providing an exceptional experience in their chosen channel, at the moment they need it. This means delivering the expected value and fostering a closer bond with customers — not as an isolated event but as part of an ongoing relationship.
The effectiveness of empowerment depends on the number of touchpoints a company has with each customer and how quickly these interactions are integrated into the company's personalization efforts. It's crucial to let customer priorities, not technology, drive your personalization strategy.
Success requires mapping key customer needs across the extended journey and starting with use cases that address these needs. Making rapid progress on priority use cases is essential, but many companies struggle because there's no single, company-wide leader. Effective personalization also involves testing various incentives, copying versions, prompts in call centers and using different calls to action immediately after an order is placed. The goal is to empower customers in all stages of the customer journey — awareness, consideration, purchase, post-purchase and loyalty.
Today, AI has the power to deliver a personalized customer experience in the right channels and manners. Building direct customer relationships with a 360-degree view of each customer, using experimental design for targeting and activation and orchestrating the next best actions are crucial.
Know Me: Using Data to Enhance the Personalized Customer Experience
Knowing the customer is fundamental to personalization. It is where customers share their data and permit its use for their benefit. This exchange creates a system of privileged insights, where customers gain value and engage more, as described in "Beyond Digital."
Customer data is the essence of knowing the customer, starting with the collection, integration, enrichment and management of data. Privacy concerns must be addressed, and value is amplified with AI tools that turn unstructured text into codable data.
Abraham and Edelman recognize that managing data starts by recognizing its messy nature, disparate sources and differing definitions. Three principles for managing customer data are:
- Formulate a data strategy.
- Build the right customer data platform.
- Implement the right people, processes and governance.
Related Article: How to Leverage Customer Insights to Shape Product Strategy and Growth
Reach Me: Creating Timely and Relevant Personalized Customer Experiences
The promise of personalization lies in being relevant and timely. This begins by having the customer's permission to contact them through relevant channels, and it relies on always-on intelligence to identify the right experience, moment and channel for delivery.
Personalization focuses on reaching the right customer at the right place and time. This requires a sophisticated personalization tech stack, including targeting intelligence, experiment design and activation, and next best action orchestration.
Sophisticated firms today employ AI reinforcement learning to determine the optimum number of messages, and many are discovering that less is often more. Smart organizations invest in the contactability of their customer base, tailor their targeting approach using data and technology, prioritize scaling personalized responses, automate activation steps and consider cross-channel orchestration to enhance customer experience.
Show Me: Bringing Personalized Customer Experiences to Life with Tailored Content
Personalization creates customer experiences that bring a company’s promises to life. Achieving personalization at scale hinges on the company having the right content, delivering it rapidly and managing it strategically. Leaders create reusable content that can be tailored to customers’ preferences.
With generative AI, creation can be increasingly automated from modular content. Generative AI accelerates the creation of customized marketing campaign variants for unique audiences. Modern content management systems need to read, store and describe every granular bit of content as data. Content delivery should bring together these components for each customer. Everything starts by crafting a content strategy and embracing the shift to AI-generated content creation, which enhances personalization and leads to dynamic content.
Meanwhile, digital asset management systems should house extensive databases of photos, videos and logos to manage the growing volume of source material. Personalization leaders prioritize customer interactions at the right moments in the journey. They let processes drive performance, strategically think about segments and angles, establish governance processes, bring in the right skills and create cross-functional teams including analytics and data scientists.
Related Article: 6 Ways Generative AI Is Changing Content Management
Delight Me: Continuously Improving the Personalized Customer Experience Through Agile Testing
Delighting the customer is about continually enhancing personalized experiences with each customer interaction. This requires embedding a test-and-learn culture and measuring performance improvements weekly. Delighting customers requires significant internal coordination and quickly understanding individual customer preferences.
To achieve this, companies must design customer journeys with numerous touchpoints across channels, which relies on collaboration and agile working methods. They need to quickly test and scale up successful experiences. Common challenges include functional silos and people-related issues, which are central to personalization efforts. Addressing these challenges involves agile working processes, automated measurement and embedding customer analytics. Companies should employ agile working methods, streamline processes and set measurable goals. They should measure customer interactions and long-term customer lifetime value, all tracked in real time.
A customer-centric organization requires resources and talent, reimagining marketing as an integrated function, creating new customer-centric roles and ideally appointing a senior owner for customer experience design. Elevating the data and analytics function includes choosing a chief data and analytics officer (CDAO) with teams focused on improving customer use cases. This necessitates new tools for data democratization and tapping leaders to spearhead personalization across the enterprise.
Building a Personalized Customer Experience Through Smart Integration
Creating an effective personalization tech stack involves many components, and having top-tier point solutions alone isn't enough. The true advantage lies in integrating these solutions into a cohesive, intelligent system that continuously improves through innovation, testing and feedback loops.
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Modularity is key. You need a modular architecture that supports interoperability with standardized connections and data exchanges. Smart integration not only enables faster and deeper learning but also serves as a competitive advantage. Research indicates that 70% of time is spent managing processes rather than enhancing customer experience. Therefore, the goal for marketing should be to integrate, harmonize, augment and simplify its technology and operations to focus more on improving the personalized customer experience.
Evolving Roles in the C-Suite
CEOs need to set the mandate for personalization and provide a clear rationale for how it enhances the brand’s value proposition. The CIO should be tasked with transforming the infrastructure to support these initiatives, and the CDAO should activate the core of personalization. Although relatively new, CDAOs are becoming integral, acting as product managers for the company’s data and digital interaction channels.
To succeed, Abraham and Edelman say organizations require the right talent, including data engineers and data scientists. CMOs must view personalization beyond the purchase decision, pushing for agile experimentation and continuous improvement. This collaborative effort across the C-suite ensures a strategic, well-supported approach to personalization that drives brand differentiation and customer engagement.
Measuring the Impact of Personalized Customer Experience
Personalization focuses on serving the customer by providing quality, value for money, convenience and, above all, speed. Given the significant investment required to scale personalization efforts, it's crucial to collect metrics demonstrating that these investments are making a difference, thereby justifying continued support. Key metrics to measure include:
- Customer satisfaction
- Customer loyalty
- New product trials
- Traffic
- Transaction frequency
- Average order value
- Conversion rates
- Repeat purchase rates
Additionally, measuring customer relationship value and engagement, as well as monitoring the transition to brand advocates, is essential. Assessing both top and bottom-line impacts, along with second and third order payoffs, provides a comprehensive understanding of personalization's effectiveness. These insights ensure that personalization strategies are aligned with business goals and deliver measurable results.
Navigating Risk and Privacy
Being in the risk and privacy software business, it is reassuring to see an increasing focus on responsible data use. Consumers desire their data to be used responsibly and enhance their lives, particularly through creating a personalized customer experience. Therefore, companies must act with responsibility, eliminating risk while empowering and delighting customers. This requires organizations to prevent misuse and manage the risks associated with customer data collection and use.
Misuse of data can erode trust between the company and its customers. Organizations must address gaps in data permissions, be transparent about why they collect data and how it's used, and clearly communicate the value it offers to consumers. Ensuring accurate targeting, maintaining privacy and preventing cybersecurity breaches are crucial. Furthermore, companies must manage the risks associated with data sharing, ensuring they uphold consumer trust and compliance with privacy regulations.
Related Article: The Data Privacy Toolkit: First Steps Toward a Privacy-Centric Future
Competing With Personalization
There is a clear quantitative link between personalization, customer satisfaction, growth and value creation. To achieve this, start by clarifying your objectives and setting your personalization ambition. This includes defining your organizational goals, prioritizing use cases and creating a rallying cry to unite your team.
Securing the foundation involves cultivating agility to compete on speed and challenging your team to learn 10 times faster. Embed personalization into the corporate agenda by choosing the right leader, challenging leaders throughout the organization and setting shared goals and aligned targets.
Crafting the Future of Personalization
"Personalized" explores the critical role of personalization in modern businesses, emphasizing its impact on customer satisfaction, growth and value creation. The book outlines the importance of integrating AI into marketing strategies, managing customer data responsibly and fostering a culture of continuous improvement and agile collaboration.
Key imperatives include empowering, knowing, reaching, showing and delighting customers through personalized experiences. The authors stress the need for a cohesive tech stack, strategic leadership and measurable metrics to ensure effective personalization, ultimately driving competitive advantage and brand differentiation.
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