Personalized marketing is all the rage for modern businesses.
Successful brands like Netflix, Spotify, and Amazon, among others, have aced the art (and science) of personalization, becoming synonymous with the term in the process.
We’ll dissect everything you need to know about personalized marketing from the benefits to the practical strategies you can embrace to take your personalization game to the next level.
What is personalized marketing?
Personalized marketing is a form of one-to-one marketing that uses real-time user data and analytics to deliver branding messages and target specific prospects.
It’s different from traditional marketing, which engages all kinds of customers at one go in a blanket approach. Personalized marketing targets a customized segment of audience based on specific interests and needs.
It’s a method of marketing that emphasizes the relevance and quality of messages over the quantity, and behaves as a systematic, data-driven approach to delivering prospects the right message at the right time.
From a statistical perspective, here's how personalized marketing stacks up:
An overwhelming 72% of customers will only engage with personalized marketing messages. With an expected 320 billion emails being sent each day, you can hardly blame them for being selective.
91% of consumers are more likely to shop with brands that provide relevant offers and recommendations.
Personalized marketing is becoming the gold standard for reaching out to new prospects, building a long-lasting relationship with existing customers, and empowering brands to stand apart in a sea of sameness.
5 benefits of personalized marketing
Now that you have a solid understanding of what personalized marketing entails, let's run through its benefits.
1. Allows for consistent messaging across channels
Personalized marketing enables brands to provide consistency in the marketing messages across a variety of platforms and channels from the in-app experience to the in-store experience, every piece of content forms part of a coherent whole. As a result, customers can pick up the conversation from where they left off regardless of the channel they were on.
2. Helps deliver improved customer experience and customer engagement
The ultimate goal of personalized marketing is to engage customers by communicating with every user as an individual. This is done by extracting customer insights into buying behavior, past purchases, and tailoring the communication based on the data gathered. At the end of the day, the more relevant and specific the interaction, the higher the chance of quality customer engagement.
3. Leads to increased brand awareness and loyalty
Around 90% of consumers are willing to share their behavioral data if additional benefits are provided that make shopping cheaper or easier. This is exactly what personalized marketing aims to do by treating customers as individuals with unique preferences. This ultimately allows brands to gain a competitive advantage through increased brand loyalty and enhanced customer satisfaction.
4. Helps achieve better ROI from your marketing spends
Considering that personalization involves identifying the right channels to use for each customer, marketers can enjoy greater bang for their buck and optimize their marketing spend to the fullest extent.
In fact, data indicates that tailored marketing emails can increase the campaign revenue coming from millennial customers by nearly 300%. Additionally, personalization could lead to a decrease in customer acquisition costs by as much as 50%.
5. Results in a shorter sales cycle
Since your customers have a heightened sense of trust and confidence in the brand and its offerings, the sales cycle gets shorter and shorter. In other words, brands will not need to spend much time convincing customers to get on onboard; they can instead focus on enhancing the customer experience at every stage of the customer lifecycle.
Challenges of personalized marketing
If you think that personalized marketing comes easy, think again. It can pose numerous challenges if not approached strategically.
The inability to find the right technology fit
The technological landscape is fast-changing. If you're not constantly upping your tech game and using intelligent algorithms, your personalized marketing efforts might seem outdated or, worse, irrelevant. Instead, invest in the right cocktail of automation tools that are tailor-made for collecting data and driving intuitive automation using a smart recommendation engine.
A cumbersome data collection process
Given that marketers end up leveraging data from numerous touchpoints, the trick lies in piecing the customer data together into a singular unified customer profile – one that can offer the 'big picture' while seamlessly deep-diving into the intricate details that make every customer unique. Without the right team and tools in place, making sense of the data can become a Herculean task.
Improper time and resource allocation
Your personalized marketing strategy can only be successful if you combine the power of intelligent automation with your human assets. Most companies fail to set up a dedicated team and allocate the right resources for driving personalized marketing at scale – a fatal mistake.
Lack of data-driven smart segmentation
Most marketers do not move past the basic segmentation strategies (e.g. demographics) and simplistic clustering models. This one-dimensional approach will not cut it. Customers need to be wowed with hyper-relevant offers and recommendations so they feel understood and appreciated.
How to create a personalized marketing strategy
The need for personalization in marketing has never been more important than it is today. Here's a breakdown of the process of creating a personalized marketing strategy into four key pillars.
1. Identify and analyze the right data touchpoints
Customer data has emerged as a powerful currency in the marketing world. By extension, the first step towards creating a successful personalization strategy lies in ongoing data collection to understand your users' needs at all times.
Today, brands need to invest in smart algorithms that can analyze mountains worth of structured and unstructured data relating to your customer's behavioral patterns, likes, and dislikes, etc. Here are the different types of data you should be typically collecting:
Quantitative data: Website activity, users’ social network activity, transactional information, customer services-related data
Qualitative data: Users’ attitudes, motivations, and opinions via surveys and polls
Descriptive data: Empowers you to drive marketing decisions (i.e. lifestyle information and customer habits)
You can also collect first-party data (data extracted from your app/website, CRM data, social data, subscription data), second-party data (social media, user surveys, website activity), and third-party data (data collected from outside sources) to bring greater accuracy to your personalization strategies.
The end goal of this stage is to collect diversified data to learn about your customers on a deeper, more intimate level so that you can customize your content to their unique needs and challenges.
2. Differentiate through the segmentation stage
Once you have the relevant data at hand, you'll need to store and organize it using a robust CRM tool. This will also allow you to differentiate the good fit data from the bad fit data. Then, you can work toward segmenting your target audience by answering questions like:
Which audience segments are most useful for your brand?
What does your ideal buyer look like?
Who do you want to engage or re-engage with?
Here's how you should be segmenting your customers:
Segment your users into groups based on the data collected and in alignment with your business and marketing goals.
Analyze your customer segments and make iterations as needed.
The filtered data can then be used to create a useful, in-depth, and accurate customer persona that accurately and reliably represents who your ideal customer is, as well as their pain points and likes, wants, and motivations among other things.
In this stage, the primary goal is to segment your customers into relevant clusters so that you can build targeted campaigns that truly resonate.
3. Interact with and reach out to customers using segmented data
In this phase, your main focus should be to find the right channels to connect with your customers and prospects based on their preferences.
Step 1: Research to understand customer behavior on different channels from email and social media to websites and apps. The idea is to determine which channels/platforms are most influential for the customer.
Step 2: Try to A/B test and experiment with new channels/platforms. This will enable you to measure the effectiveness of the channel in question.
Step 3: Evaluate your channel options and go for a channel mix that sits well with your users.
Step 4: Identify which channels are best suited for your communication objectives while factoring in your users’ preferences.
“Be where your customers are" is the mantra to follow at this stage in the personalization process. If you are not targeting customers on the right platforms, all that personalization effort will be in vain.
4. Customize to use personalization in your marketing strategy
This is where the magic happens. You've done your homework. Collected the data. Analyzed the right channel mix. Now, it's time to put all that invaluable information to use in your marketing strategy.
Here are some best practices to follow when creating a non-invasive and value-driven personalized marketing experience:
Create compelling content based on data to target your customers. Spotify's wrapped up campaign is a great example
Map your content strategy to the specific interests and needs of each persona and target group. Think about what stage you want to target customers. At the top of the funnel (getting people to your website)? At the middle of the funnel (nurturing existing prospects)? The bottom of the funnel (getting customers to choose your brand).
Create a cohesive, omnichannel, personalized campaign that makes use of different channels and platforms that are most relevant to your specific user group.
Opt for a variety of content formats, from eBooks and social media posts to emails and webinars – the world is your oyster.
Focus on personalizing the whole customer experience instead of opting for an isolated personalized marketing campaign.
Personalization can play a key role in refining your messaging and go-to-market strategy, and the right time to focus on the personalization was yesterday.
3 examples of personalized marketing campaigns
Here are three real-life examples of personalized marketing to help up your personalization skills.
ClickUp is an excellent example of a company that uses personalization in its marketing and messaging. As a result, they produce more content featuring their product than not, and it's working quite well for them because ClickUp gets most of its users through word-of-mouth and referrals.
Unlike any other brand in their niche, they used the natural product-market fit framework to fuel their growth where personalization played a significant role in educating their users about the new updates, new use cases, and much more.
They have spent a good amount of resources building content that teaches potential users and paying customers to use their product. This can be seen in their onboarding guide, blog posts, videos, webinars, and more.
When you visit their website and ask a question about their tool as a freelance user, you’ll get results with supporting content specific to your needs, i.e. per the needs of a freelancer.
If you give it another try this time, you’ll get different supporting content. It showcases how a digital agency can use its tool. A different situation, but again with a personalized solution.
The same thing can also be seen on their “on-demand webinars” where they break down the product application according to user-specific use cases:
Considering the above example, you can understand that they have crafted supporting content personalized to their user needs. Irrespective of your brand size and Industry, you should take inspiration from their personalized marketing strategy and craft one specific to your brand needs.
At the heart of Amazon's personalization efforts lies the use of a killer product recommender system that does all the (personalized) heavy-lifting. Here are some of the ways the brand is using personalized marketing to create a competitive advantage:
The recommender system recommends relevant products to customers via the “Customers who bought this item” widget:
The brand uses artificial intelligence to understand which products customers are likely to buy next. To do this, the algorithm factors in products the customer has viewed, bought, or reviewed. Once a customer lands on the brand's website, they’re greeted with a personalized homepage that showcases recommendations based on the customer’s real-time behavior on the platform:
Personalized marketing can boost your bottom line. Nearly 35% of Amazon sales come from personalized recommendations. You can use personalized marketing to upsell or cross-sell to customers as Amazon does through its "frequently bought together" section:
This can encourage repeat purchases. In fact, 56% of online shoppers are more likely to return to a website that recommends products. Brands need to invest in a cocktail of technology (as relevant to them), from predictive analytics to machine learning, to master personalization at every stage of the buyer's journey.
Netflix also uses smart AI algorithms to predict customers’ preferences and deliver a personalized viewing experience unlike any other. The brand runs A/B tests on the landing cards to understand the psychology of their customers, analyze which are the most clicked, and use that data to personalize the browsing experience:
Netflix also uses a recommendation engine that factors in critical data touch points such as browsing data, search history, rating, and device used, among other things, to offer relevant suggestions to customers via a hyper-personalized homepage that differs for each and every customer.
In order to understand what's working and what's not, it’s critical to do A/B testing. In fact, Netflix runs about 250 A/B tests per year – one of the reasons why its personalized recommendations are always spot on.
Personalization not only improves the overall customer experience but can also significantly reduce churn rates and drive unshakable brand loyalty, too. It also allows brands to deliver the right message, at the right time, which can turn out to be a game-changer in terms of boosting customer engagement.
The bottom line
When it comes to personalized marketing, there's no one-size-fits-all strategy. Every brand's personalization journey will be different depending on their user type, product type, business objectives, and other variables.
What's important to remember is that your personalized marketing campaign should be customer-obsessed and should always keep your users at the front-and-center of every email, social media post, strategy, or decision you drive.
This time, it's personal.
Create valuable, memorable, personalized experiences with the right personalization software tool.
Savan Kharod is a Digital Marketing professional at Acquire. He loves to share his knowledge and experience in digital marketing, social media marketing, customer service and growth marketing. In his free time, Savan likes to backpack and explore new places.
This time, it's personal.
Create valuable, memorable, personalized experiences with the right personalization software tool.