Few things motivate brand marketers more than speaking to consumers on a one-to-one basis.
Tesco is a case in point. Its in-house data division dunnhumby, which powers the Tesco Clubcard loyalty scheme, acquired online advertising company Sociomantic Labs earlier this month. And that means Tesco can combine data on 700 million web users with dunnhumby’s 400 million-strong customer database to generate more personalised marketing.
But as brands approach the reality of one-to-one communication, they are also taking on great responsibility. After all, the concept implies that a brand has the right to address consumers in ways usually reserved for friends and family, who really do know them. So are marketers up to the task?
Nick Dutch, head of digital at takeaway chain Domino’s, says that how intimate brands can get depends on the role they play in consumers’ lives. “Nike’s wearable tech Fuelband, which tracks physical activity, became a trusted tool to help people manage their fitness,” he says, “but our customers are not willing to give away their life story in order to get a better price on a pizza.”
The brand has focused on more effective use of segmentation rather than personalised marketing on a one-to-one basis. He says that “95 per cent of what we do is about targeting communications and 5 per cent personalisation”, though he adds that Domino’s will send an individually addressed email to a customer who has received a late delivery.
Michael Smith, marketing leader for mobile and social business at IBM, warns it is easy to chase after personalisation strategies “just because you can”. He says: “Customers want engagement with some brands, but not others. Whatever we do, it has to be with the customer in mind.”
It is also possible to over-complicate marketing efforts to an extent that return on investment goes out of the window. Nick Gee, director of consumer marketplace at Auto Trader says that although the brand is launching a new homepage with enhanced personalisation and the ability to log in across different devices, there is always a risk of making features overly complex.
Letting this happen would require “too much processing”, he says, making the back-end technology too costly. “Our customers understand the benefits of logging in to access previous search history, so the risk for us is not so much about becoming intrusive, but overcomplicating our lives,” he explains.
Yet personalisation is a growing trend. “Consumers give up data for free services – that’s the baseline in 2014. But increasingly they want more control,” says Blake Cahill, global head of digital at manufacturer Philips. “As more connected products come onto the market, consumers will be looking for an improved ‘value exchange’.”
Jon Owen, retail director at Shop Direct also believes there is a need to increase personalisation and improve choice and convenience for shoppers. He says that personalisation is being viewed as the foundation of its growth strategy, following an investment of £100m since chief executive Alex Baldock took the helm in 2012.
“Personalisation will be a big driver of success for those who do it well,” he says. “But it’s difficult, and it varies by channel.”
Owen claims that the Shop Direct Group has an advantage because its brands operate only online, without the “distraction” of a store network. He hopes that the investment in personalisation will help to differentiate it from competitors. The group has used more personalised emails to do this.
“Sales emails normally drive demand, but we find that if we populate them with items browsed but not bought, responses go through the roof,” he says.
He admits that the work has been a challenge, although the benefits have been greater than anticipated. “There is such a big benefit in putting the right product in front of the right customer, although there’s a complexity to setting up algorithms.”
He says the biggest challenge was identifying the “clever bits”, for example how types of behaviour indicate someone’s propensity to buy and where profit margins lie.
“You have to think carefully. It’s not just substituting like for like products, according to each individual. It involves a lot of testing,” he explains.
But a number of organisations report huge uplifts in conversions following simple steps to increase personalisation in their digital strategies.
Digital acquisition manager at James Villa Holidays Sally Pemble says that it has doubled click-through rates by serving display ads featuring countries that new visitors to the site have previously investigated using search engines. It worked with search retargeting specialist Captify on the campaign.
“Some tour operators do search retargeting, but not the villa companies as far as I know, so it gave us an advantage,” she says. Pemble explains that the approach was unobtrusive since it was delivering targeted banner ads rather than direct email offers.
“We offer over 50 destinations, so we were able to put the best, most relevant offer in front of people,” she adds.
At Phones 4u, personalisation takes a different form. It tries to replicate the “offline, consultative” experience in its UK stores within an online setting, according to director of marketing Ben Padley. “In store, customers are asked to complete an ‘about you’ form and we’re looking at how we build this into our online platform this year,” he says.
Of course, personalisation strategies vary according to brand or sector, with some having reasons to engage with consumers on a deeper level than others. Sam Diamond, head of brand and communications at Gumtree, says that the online marketplace could offer a “better, more personalised service” if it were to demand registration for users, but it will not be doing so “any time soon”.
The best strategy will vary for each brand. Kelly Kowal, digital marketing director at ecommerce platform Farfetch, says: “You can never know what your customers really want unless you test.” For instance, her team discovered, via testing on customer experience platform Qubit, that new customers who engage with the ‘About Us’ or ‘FAQ’ sections on the site have a higher propensity to buy.
“There was a 17 per cent uplift in this group. Small, simple tests can have big results,” she says.
Jewellery brand Astley Clarke faces similar challenges in that it offers products at a high price-point, meaning purchases are likely to be infrequent and carefully considered. Working with SmartFocus technology, it has sought to move beyond the simple approach of ‘customers who bought this also bought that’. According to customer relationship manager Matt Finn, there is a need to curate products online when creating marketing for a luxury brand.
But he warns of the need to limit complex algorithms to a manageable number. “What we have done in the past six to nine months is strip it back. We were A/B testing all the time and we made the algorithms too complex. We had so many variations and subsets.”
But he points out that it had become unmanageable to curate products manually, and that consumers expect a slick and personalised shopping experience.
Sometimes, rather than personalising a brand’s service in an attempt to be perceived as a trusted partner to the consumer, marketers can take a step back and let customers themselves provide the personal touch. By assembling communities of like-minded people to support one another, the brand can act as a helpful intermediary.
Gracia Amico, former global ecommerce director at Hobbs, will this month become chief executive of Petspyjamas – an online retailer specialising in all things pet-related. It offers a location-based dog-walking service, whereby the brand facilitates the connection with the nearest dog-walker. “It’s about being there when people need you,” she explains.
Jeremy Corenbloom, marketing director at Match.com, is excited about the dating site’s new service that brings together members through ‘socials’ – activities built around shared interests.
For example, it discovered that 24 per cent of its members are dog owners and therefore launched a series of events for that group.
It is one way in which brands can add the personal touch without delving into areas of consumers’ lives where they do not want brands and anonymous marketers to go. And brands do not have to sell their services in order to boost trust and engagement, when consumers only want value, convenience and a rewarding experience. Data may make it possible to personalise every interaction, but whether that is welcome will always depend on the relationship you and your customers already have.
Case study: O2
Kristian Lorenzon, head of social media at O2, notes that customers who interact on social channels such as Facebook, Twitter and LinkedIn tend to display a higher satisfaction score. “People are using more devices and online channels, and they are looking for brands to be there, too,” he says.
The mobile network operator has a sizeable social media community management and response team, which Lorenzon describes as a significant investment, but one that he says can be directly linked to cost savings as well as increased satisfaction.
Lorenzon believes that companies can and should aim to use social media in order to be perceived as a trusted advisor. O2 rolled out Tweetserve a few months ago, whereby customers can sign up on the social platform to receive a range of services such as data usage updates.
“This was launched in response to increased demand for online support. It’s driven by convenience. People want information in seconds,” he says. “A lot of the younger generation are more willing to share data and are reaping rewards already,” he adds.
Econsultancy Best Practice
Content and community producer
Today’s consumer, especially within younger demographics, is not shy in giving away data. Not even the worldwide scandal around data collection by intelligence agencies has stopped it.
Every time a consumer likes a Facebook page, authorises an app to use location data, registers an email address, signs up for a loyalty card in store, or logs into Google and does a search, they give away data.
So the question for brands is how best to use that data, and how to provide continuing value to consumers. Customer relationship management technology and marketing automation software have never flown off the shelves as quickly as they are now. Brands realise uniting multichannel data with messaging is a necessity.
But let’s be clear, opting out can and should be relatively easy. One can unsubscribe from email within Gmail’s interface, and this channel probably still represents the consumer’s main understanding of personalised marketing.
The context for brands using data to get closer to customers is muddying slightly. Using third-party data, or even contacting or using ’cookies’ with your own customers has become a more sensitive process in Europe, with the Directive on Privacy and Electronic Communications demanding that users opt in first. Once the consumer does opt in, there are a number of issues for brands to consider.
– How personalised should you be? Will marketing messages targeted using sensitive customer information unnerve the customer?
– Is the customer empowered by a brand’s use of data? Companies can start by presenting customer data to the customer in a useful way. The Energy Saving Club is doing what the energy companies are not – ensuring customers are best positioned to decide on the best tariff according to their energy consumption data.
– What other data can be collected? Connected devices will collect data over the lifespan of a product. So in the future there is the potential for brands to let us know when we are not using a product as efficiently as we could, or when the product needs replacing or repairing.
The point is that the playing field is open. Brands have to continue to innovate around data and consumers will readily accept them. So the question is not ‘how many brands can we accommodate in our lives?’ but ‘which brands are smart enough to interact with consumers in an appropriate, useful and surprising way?’
The power is with the consumer, as it always has been on the internet.
Tom Waterfall, director of optimisation solutions
There are not many brands doing great one-to-one marketing. On a grand scale it is quite tough.
That said, some are managing to position themselves as trusted advisors. KLM, one of the most innovative airlines in the sector, is using location-based services to deliver great customer experiences. Net-a-Porter and Mr Porter also offer related product recommendations, a stream showing what other people are buying and a display of what you have previously viewed – it feels almost one-to-one.
Netflix does a great job across multiple channels, too. It helps that you have to log in, but if you start streaming a film on one device, you can pick up on another device at the same point.
The world has changed and people are becoming better informed. When cameras first hit the consumer market in the late 19th century, privacy fears escalated and they were banned in a variety of public places. People feared the same when the first mobile phone cameras came out.
Likewise, I have seen Google Glass banned in some cafes and restaurants. People think it’s constantly recording. There’s a lot that they don’t know about the technology but, as they become more informed, we could see increased adoption. Former Dell marketer Andy Lark said the iPad wouldn’t take off, and Microsoft’s Steve Ballmer said the same for iPhone.
As for feedback, we can use A/B and multi-variate testing to see how much data website visitors are willing to provide. Loyal customers will provide more details and enter non-mandatory information on forms without a second thought.
This will vary, of course, based on the generation of the visitor and other demographic and behavioural traits. For some audiences, you may need to scale down the number of fields in the form in order to get them to fill it in, for others you don’t have to.
Through segmentation and post-segmentation analysis, pages can be honed specifically to attain that optimal balance between higher conversion rates and valuable data collection.
Some brands are doing a good job of adding a ‘gamification’ element to personalisation, for example the emails from British Airways’ Executive Club, which shows passengers the flight paths they have taken, all the cities they have visited with the airline, and the miles they have travelled. The BA communication cements the relationship they have with them. Visitors really respond to this ‘quantified self’ concept.
Millennials tend to be more educated about the advantages of data-led services than older generations, but in future people will share information based on what they get in return.