Brands fall short of personalization potential
Most brands still have a long way to go to live up to the promise of personalized, 1-to-1 relationships with customers that the Internet was supposed to facilitate, according to Evan Neufeld, VP of intelligence at benchmarking firm L2.
At the third annual New General Market Summit, co-hosted by Drug Store News and Mack Elevation, Neufeld said companies are missing out on opportunities to drive sales and improve customer loyalty by failing to provide the customized experience consumers have come to expect. “It’s the accepted standard now that you need to have a certain degree of personalization to rise above the clutter that’s out there in the market,” he said.
Research from New York-based L2 showed that while many brands leverage digital technologies to achieve some degree of personalized relationship with their customers, most fall far short of their potential to enhance the customer experience with more targeted communications. For example, only 16% of companies surveyed by L2 offered personalized product recommendations online, and only 24% allowed customers to set their preferred store. “That’s a pretty low bar, and pretty disappointing, relative to where we could be,” Neufeld said.
According to research from Social Times, cited by Neufeld, 86% of consumers said personalization plays a role in making a purchase decision, 62% will pay more for a brand that personalizes an experience or service and 48% will purchase more when marketers leverage their interests and behaviors.
At the heart of the drive toward personalization is the increasing availability of customer data, but brands often stumble when handling this valuable resource. Many marketers commit the “cardinal sin” of asking for data and then not using it to filter their communications with customers, Neufeld said, while others make the data-collection process too cumbersome.
Some companies excel at obtaining and leveraging customer data to enhance the customer experience, he said. Ralph Lauren, for example, asks for only two points of data on the first page of its online registration form, then gives customers the option to voluntarily provide seven additional data points on a separate page. “Beauty brands are a great example of customized communication,” Neufeld said, citing Lâncome as an example. “When you go into your Lâncome account, you fill in some data and, based on that, you get a steady stream of personalized, customized recommendations driven by the data you have given them.”
Marketers also need to communicate clearly to their customers why data is being collected and what is being done with it. L2 found that only 14% of 106 companies it evaluated explained why they collect data when customers sign up for an account online.
Personalization is key to the success of mobile apps, said Neufeld, who cited Walgreens and Walmart for creating useful, user-friendly app experiences that solve problems for their customers.
Loyalty programs often are seen as a vehicle for more personalized customer communications, but Neufeld cautioned that many companies have struggled when attempting to launch online loyalty programs from scratch. Companies with a history of customer-centricity and proven success with conventional loyalty programs are more likely to succeed in the world of digital loyalty, he said. “You cannot suddenly become a loyalty brand overnight,” Neufeld said.
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