Personalization is a term in the loyalty marketing world that is commonly used and can be a major customer engagement tool when executed properly.
Loyalty360 caught up with Brad Rukstales, president and CEO of Cogensia, to find out more about effective personalization and its potential impact on customer loyalty.
How can personalization impact customer engagement when, on a daily basis, consumers are bombarded by a plethora of emails from a variety of companies?
Rukstales: Personalization is, first and foremost, the way to break through the clutter. We don’t need another twenty percent-off coupon from a department store, or a restaurant. If you want to break through, it’s knowing how to use an email to drive deeper engagement.
For example, “as our VIP, please come to our special VIP-only event! Hurry, space limitet.” However, it can also be engagement outside of email. The time a customer engages with an email before determining whether to read or delete is about 0.3 seconds, and his or her decision is typically made based on a text subject line in the middle of a bunch of other text subject lines. In some cases, other channels may be better – in-app messaging, Facebook in-stream messaging, and direct mail all have longer retention. The key is to match all the components – copy, offer, and channel – to drive the most impact. This can only be accomplished through analytics and marketing working together.
What can you personalize?
Rukstales: There are several levels of personalization to consider, and many are very explicit. Birthday and anniversary offers and e-club registration offers are low-hanging fruit. Then there are behavioral triggers, which provide an obvious signal in the relationship. This could include, say, six months without a visit to a store when they used to shop regularly. This could be a “We Miss You” campaign. A frequent customer could receive a special VIP night notification. Notice that these are acknowledging a specific relationship with a customer, which should resonate with the customer (it’s the “relationship” part!).
Then there are inferred behaviors based on demographics that can be used for personalization. For example, we know that single millennial men will often frequent a local bar and grill, and have appetizers for dinner. A family, however, will go during regular dinner and have a mix of kids’ meals and, perhaps, some healthy food for the adults. Older couples can enjoy lunch and a glass of wine. If we know these demographics, we can attach inferences around their behaviors, and offer “new appetizers you just must try,” “healthy for you, great for the kids,” and “our new lunch portions with a glass of our finest.” These will resonate.
The final area of personalization is based on statistical modeling and machine learning. This is the big stuff. A recommendation-engine-type approach can be used based on prior purchases. We’ve worked with a grocery store to implement this, and it works very successfully when the algorithms behind it are based on strong empirical data. This allows for personalizing product choices to an individual.
How can automation positively impact the theme of personalization and, ultimately, increase customer engagement?
Rukstales: Automation is critical for all of this to work. There will be many more creative versions, subject lines, dynamic content, and customized offers. And the key here is that much of this is based on the customer’s time, not your promotional calendar. You don’t have a win-back campaign two times per year – you are missing the impact for some customers. Automation allows triggers, versions, and personalization to happen at all times to all customers. This requires a database that is up-to-date. Our customer management platform is updated daily to prompt next-day offers and communications (if necessary). The brains, which we call the knowledge engine, ensures that all models and decision rules are coded and that the optimized contact for a customer is managed and deployed.
Relevancy is such a key word for loyalty marketers. When it comes to personalization and automation in marketing, how can brands ensure they are sending personal, relevant messages?
Rukstales: We do a ton of testing here. We have seen as much as a seventy percent increase in engagement with some simple things, like mentioning the preferred menu item at the top of an email. We’ve replaced generic marketing with segment-based creative and seen a thirty percent plus increase in traffic within that universe.
The role of the marketer is even more important. What do you want to say to your best customers? Your lapsed customers? The families you see in your store? What are the important brand attributes, products, and specific messages you want to highlight? Brand marketers and agencies spend a lot of time looking for a unifying brand message. This is the opposite – it’s finding out what makes individuals different.
We have always had a strong analytic capability in house. Companies need the data scientists to align with the marketer to ensure that the segmentation, modeling, and analysis focuses on meaningful differences in customers, so the marketer can define the relevant messaging.
In the world of personalization and automation in marketing, what is being done well and where do the challenges lie?
Rukstales: My inbox is filled with a ton of emails from companies who do little personalization. Same offers to everyone (I presume since my offer doesn’t scream unique to me). Of course, we all see birthday offers, and a large coupon or discount if we’ve made a larger purchase. So, yes, there is generally some level of differentiated communications. Whether this is automated or not, it’s hard to say. Most scream of a time-based event or campaign promotion, very little at a customer level. That’s not bad, but it’s not personalized automation.
Getting to a world of sophisticated automation that delivers a personalized, relevant, relationship-driven communication experience is not easy. It requires a lot of data, analytics, and visionary tactical marketers to pull it off. However, we’ve seen it work, inside and outside of our platform, very effectively. The biggest challenge is getting started. We have clients with an e-club and that’s it, and they ask us to bring automated personalization to life. Well, we integrate, standardize, analyze, and begin marketing in a new way. Technology is allowing the bridging of analytics and marketing in exciting new capabilities, and we are proud to be at the forefront of this evolution.