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Personalization used to be something that was nice to offer your customers. Today, it’s an expectation.

In the world of hyper-personalized experiences driven by tech giants like Amazon, Starbucks and Spotify, the personalization bar has been set high. Recent data from Salesforce showed that 72% of consumers and 89% of business buyers expect brands to understand their unique needs and expectations, and 66% of consumers are likely to switch brands if they feel as if they are being treated like a number.

This makes it clear that personalization is a strategic priority. Here are six challenges in the journey to get there.

Omnichannel Strategy: Eliminate Your Silos

Silos are a problem when it comes to personalization. But, in order to execute on an omnichannel strategy you have to embrace the challenges silos bring, according to Maria Efstathiou, personalization program strategist at Nvidia, a maker of processing units and chips for the gaming and professional markets.

"It is a lot of work currently to weave together the channels we have in our landscape," she said. "We have a lot of code we execute within our omnichannel campaigns to enable personalization. We must prioritize campaigns for personalization because we do not currently actually have the bandwidth to personalize for all campaigns on the calendar."

The challenge is not just that data is spread across many touch points and that it’s difficult to unify it. In many businesses, the data from various departments is also kept separate, effectively siloed, as each department focuses on its own goals and objectives.

This is where omnichannel strategy becomes critical. The silo effect needs to be eliminated to facilitate effective collaboration between departments.

"Siloed data can often lead to a limited view and understanding of the customer’s intent," said Edward Chenard, chief data officer with Cyberian Data. "This lack of understanding can lead to creating content that is less relevant and engaging for the customer. An omnichannel approach to data collection is better although still not a perfect solution. It can help better understand the customer journey across devices and time better."

Related Article: How Silos Are Killing Your Omnichannel Strategy

Manage Data Privacy Regulations, Compliance and First-Party Data

Laws such as the European General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) have been enacted over the last few years to regulate collection and use of customer data. More regulation is on the horizon. But that doesn't need to be an obstacle. At Nvidia, strict GDPR compliance has actually been an advantage, said Efstathiou.

"Our team who oversees GDPR compliance is critical to our success," she said. "They take the responsibility for what we can and cannot do on our program, ultimately."

Other compliance obstacles include restrictions on the use of third-party data, such as third-party cookies. While first-party cookies that originate on the website a customer is using are becoming a valuable source of tracking information, third-party cookies will likely continue to be a important source of data on users’ evolving interests and needs.

"Third-party data supplements our understanding of those patterns and trends so we can forward-plan where appropriate," said Efstathiou.

Second-party data, such as data purchased from another business, and third-party data, like surveys and customer demographics provided by an outside source, can be useful for marketing campaigns.

But those sources are not as valuable as first-party data collected directly from customers and should not be used for personalization efforts. Nvidia uses first-party data to determine exactly what a customer is seeking, something cookies can’t provide.

"Our product portfolio is large and our site structure cannot possibly micro-segment every niche specialty in the marketplace, so we cannot effectively and comprehensively know what the visitor wants just by cookie-ing them. We need them to share with us, much like when a customer says what they really want in order to get the best service," Efstathiou said.

Related Article: When Customers Control Their Data

Overcome Bad Data Stewardship

Chenard has not felt a great impact from recent data privacy legislation. The bigger challenge is lack of understanding at the corporate level.

"Many are not aware of the impact bad data stewardship can have on customer perceptions," he said. "Better understanding and training are really needed at the C-suite and development team levels. Too often a discussion with legal is more of a formality than an active part of the development process."

Integrate Data from Across Customer Touch Points

Because one of the goals of personalization is to provide a consistent experience wherever the customer is, it requires the brand to utilize data from all channels, such as purchase history, customer service inquiries, mobile app usage, social network brand presence, feedback and email.

Acquiring, analyzing and making real-time decisions based on this data is a challenge. Partnership and alignment is the first step, said Eva Tseng, a senior manager in testing optimization and personalization.

"If you think of what it takes to have a unified view from various customer touch points from data collecting, merging, processing and usage, this responsibility is spread out across the organization," she said.

"I’ve seen lots of companies run into challenges making this first step during my career, [such as] making sure technology, marketing, analytics, BI, channel departments (online to offline) are aware of the critical first step and how it impacts the company’s success as a whole. The alignment has to be initiated from top to bottom so it creates efficiency and overcomes priority barriers."

Focus on Outcomes, Not Technical Challenges

Phil Kemelor, an independent marketing and data analytics consultant, said it’s more important to be clear on the desired personalization outcome rather than the technological challenges presented.

"Is it a direct online action? Is it generating a lead that can only be closed with additional interaction from a call center sales team? When the outcome is understood, the challenges of collecting and analyzing can be more easily identified, agreed upon and prioritized," he said.

It’s not a technology issue, he added. Each technology and platform, whether it’s CRM, digital analytics or social engagement, has its advantages. "Consider the strength of each platform in providing the follow-up content or messaging to close the business," Kemelor said.

Live Up to the Expectations Set by Tech Giants

Amazon is one example of a brand that delivers hyper-personalized experiences to customers. If a customer receives a marketing email from Amazon and clicks through to the Amazon website, they are shown content specifically relevant to them.

Recent orders, items they recently browsed and other details that pertain to them specifically, not people like them, are presented in a manner that makes the customer’s shopping experience easy and intuitive. In many ways, it has set the bar for others. Chenard sees high consumer expectations as a driver of innovation.

"Disruption always drives a change in consumer behavior," he said. "With that comes new demands for how people want to engage with brands. However, the pandemic has changed how we gather information offline and online. That means thinking outside the box again to find ways to validate what the data is showing us."

Companies that are ahead of the curve are driving industry-wide technology development, Tseng said. More companies are focusing on personalization and customers are benefiting from the convenience and power of the personalization experience pioneered by the likes of Amazon and Netflix.

"Expectations and standards will be higher for the rest of the players in the industry," she said. "Whoever can respond quickly, test and learn, and fine-tune along the way to tackle the personalization building blocks by segments, cohorts or moment of the journeys will win." 

Conclusion

Personalization is a vital and expected part of today’s customer experience but it doesn’t come without challenges. That said, by using an omnichannel strategy, eliminating silos, collecting data from both first-party and third-party sources while remaining compliant with regulations, and listening to customers, brands can deliver a personalized experience that will keep customers coming back for more.