I recently took part in a panel discussion on personalization in the retail industry. The panel included representatives from the cosmetics and athletic wear industries, along with a brewery, and an online retailer. One thing that stood out to me was that each of them had a slightly different interpretation of what personalization meant to their business.
Over the years I’ve been involved in several projects resulting from a C-level directive that “we need to personalize the customer experience.” My first question when engaged on such projects has been to dig deeper on the word “personalize.” In almost every case it had never been defined.
How Do You Define Personalization?
So what is the definition of personalization? On dictionary.com you’ll find multiple possible definitions, but perhaps the two most applicable to the digital customer experience are:
- The act or process of making a general statement, work, etc., into one that is particular to an individual.
- The act or process of tailoring something to meet an individual's specifications, needs or preferences.
Another definition I found online was:
- Personalization means using audience and data analytics to meet the individual needs of a consumer.
Let’s look more deeply at these definitions, starting with the latter. I have some issues with that definition, as effective personalization should not just be about using analytics. Yes, analytics can help you in obtaining some insights into customer behavior, but only what someone did, not why. The data can help you group people with similar actions, from which you may be able to extrapolate ideas around similar needs. But effective personalization is not just about targeting a data-defined demographic. It is more than that. Personalization should be built around developing empathy. It’s about understanding your customers.
All three of the definitions use the word “individual.” That is the ideal end goal for true personalization: developing a truly customized 1:1 interaction with the customer based on their individual actions and needs. But is it a practical one for companies that have thousands (or more) customers? In that instance we may need to do some sort of audience segregation, but not one based just on data, but one based on a common need, or a common context. In short, we need to provide an experience that resonates to a group of people with a common state of mind or purpose.
It Comes Down to Customer Understanding
Which brings us back to what we mean as a company when embarking on a personalization program. Are we truly going to try to engage with every customer in a 1:1 interaction? This takes a lot of resources and tools to do correctly: collecting, managing, and integrating customer data, and understanding the individual customer's needs and the context or their interactions. Or, conversely, should we create a series of different experiences for groups of customers based on a similar need? This could be based on a broader series of criteria that encompasses many individuals.
I’ve also seen cases with small to mid-sized businesses that can’t support the resources needed for true personalization. Instead, they’ve developed the illusion of personalization by understanding their customer base and what interests them, thereby delivering broad messages in a way that tangentially resonates with each individual customer — making it feel personal.
Once we understand what we mean by “personalization” and how it applies to both our business needs and our customers’ experiences, we then can take steps in the right direction. We are getting better at it as we begin to understand the benefits it can bring, but at the core we will not get it right until we truly understand what our customers want to make their lives better. And that means developing understanding and contextual awareness, not slicing and dicing of data.
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