Marketers chasing the idea of one-to-one personalized marketing could create false goals, work toward a “false finish line” and will likely burn out, according to Jennifer Polk, VP and analyst for Gartner.
“It is a false construct, if you think about it the wrong way,” Polk said in an interview with CMSWire. “If you think about one-to-one marketing in terms of 'I need to deliver an experience that is entirely different for Jennifer than the experience that I deliver for Dom,' you’re thinking about this the wrong way. You’re going to burn yourself out before you even see the finish line, let alone get there. What you really need is to deliver an experience that's the most relevant for Jennifer and then deliver an experience that's most relevant for Dom.”
Polk shared those thoughts with CMSWire after Gartner released a report that found 80% of marketers who have invested in personalization will abandon their efforts by 2025 because of a lack of ROI, the perils of customer data or both.
The End of Personalization? Not Exactly
Gartner isn't saying marketers will stop trying to create relevant and tailored content and campaigns for prospects and customers. However, the Gartner report finds leveraging personal data on each customer journey stage backfired and has “failed to meet marketers’ ambitions,” leading to consumers rejecting brand outreach.
Further, Polk added, marketers are spending an extraordinary amount of time and energy and budget collecting and integrating customer data. Not to mention data analysis, testing and experimentation, figuring out what to personalize and then creating content.
At the same time, marketers are contending with the potential for data ethics violations, privacy breaches, consumer willingness to share their data and possible PR and reputational damage in the face of such violations.
“Every time you acquire a new piece of someone's data, you bring with it the risk of now being responsible for protecting it,” Polk said. "Am I getting ROI out of this? We're spending a lot of money on this, and there are the intangible costs. The reputational risk. The data privacy risks are sort of mounting. At what point do you say enough, period, or we can't continue to do this?”
Related Article: Why Personalization Efforts Fail
Personalization Budget, But No Personalization Strategy
Personalization accounts for 14% of marketing budgets, but Gartner found only 5% have a personalization strategy and roadmap they actually feel good about, according to Polk. “That's kind of scary,” she said. Further, Gartner has reported an economic downturn is likely on its way. If that is happening, and only 5% of marketers feel good about their personalization efforts, there may be a marketing personalization ship sailing without marketers soon — hence the 2025 prediction.
More concentration on spending and possible financial constraints in the face of an economic downturn is leading to scrutiny on all of marketing spending, Polk said.
Not all are seeing a lack of ROI from personalization efforts, however. According to research by the Relevancy Group, what they call “advanced personalization” can generate $20 in ROI for every $1 invested.
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Personalization Efforts Struggle With Immediate Returns
Polk categorized personalization efforts into marketing, customer experience and digital commerce. She finds marketers are not seeing immediate financial gains from marketing campaign or content efforts, nor are they realizing immediate profit from customer experience personalization.
“Marketing is all about campaign planning and segmentation and getting the right message to the right place,” Polk said. “It may or may not be tied to a measurable transaction or lift conversion, or a financial outcome. It could be about improving campaign performance. And we have data that shows for the marketing use case that campaign performance is one of the top three success measures.”
Customer experience, she added, has ROI metrics attached to it, but it also tends to be a “long game." Improving customer experience is a "team sport," and it takes a while to do it because you have to get everybody on board. "You've got to fix policies, you've got to fix stuff that is broken," Polk said. "It is like a total remodel of the house. So while they're measuring it against a financial goal, it’s probably not something that's going to deliver an immediate return. And it's not going to deliver as quickly as you might need to deliver in the face of budgetary scrutiny.”
Related Article: 1-to-1 Marketing Personalization: Myth or Reality?
Jumping on the Digital Commerce Personalization Train
Enter digital commerce. Gartner has seen a spike in organizations that purchase personalization engine technologies for digital commerce programs. This may lead to a more immediate ROI opportunity for marketers using things like average order value and conversion lift. “It’s near-term revenue that’s a lot harder to get to with marketing, if that's even your goal," Polk said. "If your goal is campaign measurement and campaign performance with your marketing, you weren't even trying to get there (financially). It’s a lot harder, and it’s going to take a lot longer to get there.”
The Future Is Emotional
Gartner’s findings on the future of personalization was met with some skepticism and confirmation.
Tyler Lessard, VP of marketing at Vidyard, said personalization at scale has been wrought with challenges, and he doesn’t disagree with Gartner’s take.
“In the years ahead,” he added, “I think marketers will focus more on high-value education and stimulating emotional responses, while sales teams will take on the role of hyper-personalizing client outreach using data coming from AI to inform their message, and new mediums like chat and video to deliver their messages."
Related Article: The Great Personalization Con
Users Overwhelmingly Want Personalized Experiences
Josh Wetzel, chief revenue officer at OneSignal, found the Gartner prediction that 80% of marketers will abandon personalization efforts by 2025 a “hollow one.” “If you want to be a mediocre marketer who struggles to build strong, loyal relationships with its customers,” Wetzel added, “then maybe this is true. But the actions of users overwhelmingly favor personalization.”
Providing content selections relevant to each user drives better business performance, he said, adding his team analyzed 118 billion messages sent to consumers over a four-week period in the fourth quarter of 2019 and found personalization drove 50% greater engagement. “Think about emails you receive: are you more likely to engage with one addressed to you, with an item relevant to you than an email that looks like a one-size-fits-all spam message?”
Marketers Can Do Better
Meyar Sheik, president and chief commerce officer of Kibo, said he agrees with Gartner’s assertion that marketers are challenged in determining personalization ROI and in leveraging higher-fidelity customer data. He believes the research firm wants to motivate marketers to do better.
“The report does make one thing clear: marketers have work to do,” Sheik said. “It’s true that privacy laws will require more strict data management practices. We also agree with Gartner that marketing teams would benefit from behavioral scientists and more structured cross-channel efforts overall.”
Very few businesses, he added, view personalization as a corporate strategy centered around their customers. He finds a lack of C-Suite level commitment to a more holistic and longer-term personalization framework with the customer experience at its core.
“Small steps forward with data management, personalization and cross-channel marketing can have a big effect,” Sheik said. “But those steps must be orchestrated within a broader personalization framework embraced by all business functions and not just marketing. There are countless examples and case studies demonstrating the power and benefits of personalization from a customer experience and loyalty perspective.”
A Balance Between Personalization and Privacy
Christian St. Louis, solutions team lead at StackAdapt, said the reason why this is becoming an issue is that, in general, personalization hasn't yielded ROI. Privacy issues, he added, are removing identifiers, which is making it harder to effectively target.
“No matter how many elements are removed, like cookies and devices, first-party data and identity consortiums (new identifiers) will always exist, evolve and support personalization efforts,” St. Louis said. “Personalization is fluid and will continue to evolve. We just need to strike the right balance between privacy and personalization.”
To do this, technologies like data management platforms or customer data platforms should be deployed, but marketers are also left hanging because they simply don’t have enough tech expertise in-house such as data engineers and data scientists to make sure their data is of high quality. “That expertise is critical to help marketers solve their data and personalization challenges and because of the in-house knowledge deficit these teams are leaning on tech providers,” St. Louis said. “They’re paying huge fees but don’t understand what’s going on behind the scenes.”
Related Article: One Reason Personalization Fails? Customer Journey Mismanagement
Stop Chasing One-to-One
Circling back to where marketers may be fruitlessly chasing personalization, Polk said the idea of chasing one-to-one personalization is actually part of the problem. Most marketers are at a segment level for personalization, and a small percentage have achieved one-to-one personalization. Figuring out what is salient for each customer and prospect and what is motivating their behavior is most important.
You can get there by using machine intelligence and predictive analytics. And you can do that through a test-and-learn approach to build product recommendations using personalization engines or product recommendations engines. “It’s not one-to-one, but it is more relevant to you than the standard experience,” Polk said. “And I'm going to test, and I'm going to learn, and I'm going to iterate from there. And along the way, I'm going to ask you for more data but I'm going to clearly communicate the benefits of sharing it. And I'm still only going to collect the things I intend to use.”