Why aren’t more marketers using personalisation?

A large number of marketers have no strategy for personalising their communications even though it delivers clear returns, and those that do are mostly just using email, but there are a multiplicity of ways to extend its effectiveness.

Few marketers would argue that personalisation doesn’t have a positive impact on sales, so why do 38% of them not implement such a strategy on any channel?

This figure, outlined in Econsultancy’s Conversion Rate Optimization Report 2014, will not come as a complete surprise. The report, published with technology business RedEye, says many marketers bemoan a lack of resources (57%) and budget (32%) as barriers to improving conversion rates generally and applying effective personalisation.

Other obstacles are conflicts of interest between different departments (28%), a lack of strategy (27%), poor integration between IT systems and working in a siloed organisation.

Of those brands that do have clear personalisation tactics, email is by far the most popular channel to use – 88% are using email messages created via a CRM database – however other channels such as websites, social media, SMS, offline and search engine marketing are taking a back seat. In fact, only 25% of marketers are using website personalisation and customising recommendations or content, and almost all of them (93%) have seen an improvement in conversion rates.

So the time seems right for others to join them, especially as many consumers now expect some level of customisation.

One company keen to improve its website personalisation is Odeon Cinemas. It has delivered personalised emails for some time but customising the website has been a challenge, says commercial director Andy Edge.

“You can spend a lot of money personalising your website but sending targeted emails remains a low cost option that works,” he says, “although we want to get to the stage where, when someone visits our website, we know what films they like and what information they want. We are also looking at personalising our Facebook marketing by UK regions.”

The Odeon Première Club loyalty scheme has more than 2 million members and does enable offers to be personalised to some degree, but Edge says personalisation as a technique can also be restrictive. He argues that applying a marketing filter based on past purchase history is not always the right thing to do commercially because it can fail to adapt to someone’s evolving life cycle.

“As parents you might find that for years you only watch family movies at the cinema but your children will reach an age when they can be left and you can go to the cinema again as a couple. You have to be careful not to miss these opportunities to get consumers to do something outside what appears to be the norm for them.”

“We want to get to the stage where, when someone visits our website, we know what films they like and what information they want.”

Andy Edge, Odeon Cinemas

Another fan of personalisation – from a professional and personal perspective – is Aviva direct insurance marketing director Heather Smith. As a consumer, she wants the brands she interacts with to help her make choices, as long as she can opt out and she does not feel that a brand is stalking her.

“Ultimately good personalisation is about ensuring the interactions you have with a customer are helpful, useful and relevant. If the messaging is too commercially driven, however it is personalised, it can miss the helpful box,” she says. “I like Booking.com and Amazon. Booking.com knows we are a family of three and where we like to go, and Amazon helps me choose books I would like.”

Smith says another challenge is integrating offline and online data to match names held on their various databases. In response Aviva is recruiting more data analytics experts.

“Consumers’ concern about privacy is perhaps holding marketers back because the insights we hold to be helpful and relevant are already there,” she says. “Consumers need to feel more confident about brands producing personalised offers and content.”

For many brands it is sufficient for the moment at least to have a segmentation of the market to target rather than tailoring offers and content for individual customers. Health food shop chain Holland & Barrett uses attitudinal segmentation to identify its core customers based on how often they visit and how much they spend. Email targeting remains its most often used activity but store staff have now been trained to identify different customer types.

These include the beauty buyers who follow a healthy lifestyle; sports customers who know exactly what they want to buy; vitamins customers, who are mainly older women buying for others to prevent the family getting ill; and the food customer, often vegetarians and vegans.

The retailer has invested millions in new Oracle technology so suppliers can issue discounts and vouchers at the point of sale based on a customer’s purchasing history. The Oracle platform also provides the chain’s ATG engine to boost its sales from e-commerce.

Lysa Hardy, chief marketing officer at NBTY Europe, which owns Holland & Barrett, says the company was not doing any personalisation when she joined from the RAC in 2012.

“We had to invest in technology but it had to be the right technology because tech on its own won’t allow you to execute segmentation,” says Hardy. “Our approach to personalisation now is quite sophisticated, but my approach has always been measure and monitor what you are doing.”

Business customers want information when they need it so it is vital to target the right person, says Canon’s Adam Poole

She says the conversion rate on a personalised email campaign can be 8% compared with just 1% on a less targeted campaign.

“The results have to speak for themselves to justify the investment. Personalisation must feel like it is a service you are offering to customers,” she says. “People like personalised offers but they do get annoyed when you get it wrong. We once ended up promoting a female sexual health product to men.”

Within 12 months Hardy hopes its recently launched loyalty app will welcome customers with real-time targeted messages on their mobile when they enter the shop.

Many other retailers have seen conversion rates rise from using personalisation. Luxury store LK Bennett wanted to boost sales among consumers who were engaged with the brand but had never made a purchase. It worked with customer experience technology business Qubit to reduce abandonment levels by offering users free delivery as they were about to exit the site. This fuelled an 11% increase in conversions among this segment.

And when outdoor travel brand Kathmandu wanted to increase brand awareness among 18- to 44-year-old active adventurers who check the weather before setting out, its media agency OMD decided to team up with The Weather Channel.

Its weather-intelligent marketing platform WeatherFX was used to trigger display advertisements on colder days across mobile and tablet platforms. The Kathmandu creative was delivered via the channel’s Branded Backgrounds and the campaign peaked at 40,000 impressions compared to the campaign average of 8,000.

“We have been in the UK for more than 10 years but brand awareness is low,” says general manager Paul Stern. “The Weather Channel Branded Backgrounds have been an effective component of our online activity, driving engagement with average click-through rates of 0.72%”

“Consumers’ concern about privacy is perhaps holding marketers back because the insights we hold to be helpful and relevant are already there,”

Heather Smith, Aviva

Elsewhere, haircare brand Frizz Ease picked a particular consumer segment rather than individual women to change the perception that the product was only for women with frizzy hair who wanted straight hair. It asked consultancy BzzAgent, owned by Dunnhumby, to use its data to target women who spend at least £8 a month on haircare products at Tesco and have the correct hair types.

The 4,000-strong targeted group were sent a BzzAgents kit tailored to their hair type, with consumers asked to post ‘before’ and ‘after’ photos and videos on Facebook and Twitter, and to write reviews. The brand had 1.2 million conversations on social media resulting in a 30 per cent increase in positive opinion of the brand and an 88-point increase in net promoter score, which measures customers’ likelihood to recommend it. The impact was a £2.29 sales-to-cost ratio on products featured in the product kit.

With consumers becoming more demanding when it comes to personalisation, it is often as important to invest in creativity and service as it is the right technology. Take free software community Mozilla, best known for producing the Firefox web browser. It is using personalisation to increase engagement and long-term loyalty.

Firefox OS has a feature called ‘adaptive app search’ which speeds up search time because the phone adapts to a user’s needs, whether they want to use an app once or they choose to download it. If someone searches for a music act, for instance, the search results will return Soundcloud tracks, MetroLyrics, a link to the artist’s home page and Twitter feed, their YouTube channel, tour dates and information on how to buy tickets and music.

“We’ll customise via geography too,” says John Bernard, global marketing director at Firefox OS. “If someone logs into our website from India they’ll see phones available to buy locally with web copy written in Hindi. This level of creative customisation ensures the end user has the right experience and it creates stickiness to our web site.”

In the business-to-business (B2B) arena, personalisation is more difficult because brands must be aware of where their customers are in their particular buying cycle. Adam Poole, marketing business strategy director at Canon Europe, says it can be difficult to ensure the messaging is targeted at the decision maker within an organisation.

“Five or 10 years ago personalisation in B2B was just about sending printed or electronic mail to a person and all we had as marketers was their name, role in the business, number of employees and the industry,” he says. “Now business customers want to find information when they need it so you have to engage with the right person in the organisation with relevant content.”

The number of marketing directors giving a green light to a personalisation strategy is sure to rise as resources and budgets are increased and customer data collected from various sources is integrated. However, there needs to be cohesion between different internal departments and marketers must be braver, more creative and think beyond email.

Case study

Casual clothing brand Crew Clothing Co wanted to reward loyal customers with personalised offers and re-engage with lapsed buyers to boost its competitiveness in a crowded retail market.

It has more than 80 UK stores and it wanted to replace its mass email marketing with customised messaging to increase conversions and build long-term loyalty.

It used the Oracle Marketing Cloud to segment its customers based on purchase history and it introduced testing to see what content appealed to which group. Crew Clothing Co’s online marketing manager Sebastiano Elia says this approach meant every pre-selected campaign key performance indicator was beaten.

The number of active customers increased by 20% and open rates were up by 75%. The number of lapsed users fell by 25%.

“The key to re-engagement was to encourage further interaction with Crew Clothing Co, such as an incentivised purchase, download or click-through,” he says. “Many factors influence open rates, including relevance, profile, and preference. However, once we had encouraged a lapsed customer to open the email, we needed to ensure that the content they found motivated them to take action.”

The technology enabled the brand to devise a methodical way to test what users were interested in, what constituted an ‘incentive’ for them and whether they preferred an educational or sales tone in the messaging.

“Crew Clothing Co has a customer base that is comprised of occasional shoppers and really loyal brand fans. Lots of people like to receive our items for special occasions too, like birthdays or Christmas, so this makes a view of the customer base more complex,” says Elia.

“A properly segmented customer base has given us the clear view we needed to make informed decisions. Email marketing is our critical tool for re-engaging customers. We want to establish one-to-one relationships.”

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