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Successful personalization at scale requires four elements working together. Here is how marketing leaders build the operating model to make it happen.
The role of marketing has evolved to deliver experiences that are both world-class to the consumer and deliver value to the business. Personalisation at scale has become a crucial weapon in the marketer’s arsenal to achieve that aim. This is how businesses can deliver tailored recommendations, content, and experiences across the entire consumer journey. According to the Mckinsey Global Institute, the value of personalisation of scale is in the “trillions of dollars”, where most of which is expected to be realised first in the retail, travel, financial services, and telecom sectors.
In the last century, marketing efforts by companies were focused on selling standardised products to the typical, generalised consumer. Today, the customer base of companies have become increasingly more fragmented, where the same product is used by a myriad of diverse customers with varying preferences, because of differing tastes and perhaps, in some cases, technical standards. This would impact many operational decisions such as how consumers want to receive information, what they buy, where they want to shop, and what experiences they want. This requires putting a different lens at how companies look at the consumer decision journey, not as a single funnel, but as a network of various journeys for customers of differing preferences.
For this reason, “more than 90 percent of retailers say personalisation is a top priority." But only “15 percent of these companies believe they are actually doing a good job at it.” If you have been stalked by irrelevant ads or bombarded with outdated offers, you’d probably agree too.
While many companies have had some modest success with their personalization experiments and initiatives, few know how to do so at scale and consistently across all channels. Most companies focus exclusively on data, analytics, and agility, while investing very little in the necessary transformation of how employees work. Personalization is still treated like a nice add-on to a company's existing marketing function.
However, we believe that substantial and sustainable growth through personalization is only possible if it is embedded in the marketing operating model. To achieve this, companies need to move beyond the initial excitement of "one-to-one marketing" and into the unexciting but extremely important area of organizational change.
An operating model driven by personalization requires four elements to work together effectively:
The real value of this operating model lies in the interaction between each element and the others. The insights from the data allow the company to design offers in response to the signals from the customers. The more this operating model works, the more it improves, feeding more and more data into the model and refining its activities. Each of these individual elements has already been covered in detail, but none is particularly effective on its own. Only by developing and deploying an integrated personalization operating model that enables faster and more effective operations can organisations hope to realise their full growth potential.
Building a personalization operating model requires business leaders to invest in six fundamental elements: process, tools and technology, governance, KPIs, talent, and leadership. Implementing and embedding these elements is complex and requires dedicated effort, focus and problem solving.
Not long ago, the management of a retail company decided to take a big step toward personalization. Although they had selected a strong group of five employees and were working in an agile manner, after six weeks they had little to show for it. The problem was that the selected employees did not work in the same place and returned to their normal duties after the daily stand-ups.
Since an agile work team is at the core of a personalization program, it's important to get it right. At the most basic level, this means assigning a small group of carefully selected individuals - including a campaign manager and creative, digital media, analytics, operations and IT staff - as full-time members of any agile team. Personalization will fail if it's just a side job. The team that shares a common goal also needs authority and stature to succeed. Process improvements should include:
The retail company brought its personalization team members to work together in a single location and relieved them of many of their other duties. In addition, the team gained immediate access to creative design resources from the marketing department (through new SLAs), speeding up the creation and testing of new marketing campaigns. As a result, the number of pilot projects launched in a given month more than tripled.
Without clear boundaries, decision rights, and responsibilities, the creation of personalization teams can lead to unexpected conflicts with other parts of the business. For instance, a local telecommunications operator recently placed a personalization team in an agile "war room" only to find that business-as-usual (BAU) channel functions, such as e-commerce, were launching conflicting tests.
Under such circumstances, a governance layer needs to be inserted and this team is normally led by a manager and a small staff of people who are responsible for tracking, anticipating, and resolving issues, as well as maintaining a centralized testing pipeline with a common prioritization logic. In practice, this means making agreements with legacy groups on testing and release protocols, meeting regularly with affected functions to maintain good relationships, and creating transparency through regular communication to build trust.
This is an extension of a previous point on assigning a budget to the personalisation team.
In the pursuit to minimise costs to implement changes, management of companies sometimes turn to develop in-house tools instead of purchasing available off-the-shelf technology. This results in counter productive efforts by the agile team to implement and test new initiatives. For example. consumer goods company began its shift to personalization the right way. Management had agreed on a strategy, defined the consumer priorities it wanted to implement, and engaged the right people and leaders to drive the change. The initial pilots got off to a fast start, but soon after, the expansion of the successful pilots stalled. The IT department had promised a new set of tools that would enable a perfect 360-degree view of the consumer, the creation of campaigns across channels in a few clicks, and fully automated decision making to reduce manual list querying and targeting friction. When this did not happen in a timely manner, the agile team was forced to manually measure campaign performance, which often did not yield results until 7 to 12 days after a campaign was completed.
Automating list retrieval, enabling versioning with dynamic templates, and building easily searchable libraries of creative assets can reduce daily friction, while real-time measurement capabilities accelerate testing and learning. At the heart of personalization technology is a centralized decision engine or "brain" that is able to interact with any external system to make consistent, real-time decisions based on consumer signals. This technology is able to coordinate content offers for different audiences and channels in real time and help teams adjust them based on feedback.
In addition, companies are investing in customer data platforms to unlock the data trapped in various silos. These investments have the added benefit of freeing up teams from low-value activities, allowing them to focus more on developing great customer experiences.
A retailer's personalization team quickly developed a series of personalized triggers that targeted customers at key moments when there was a strong intent to purchase. The campaign was successful and increased sales. However, subsequent campaigns were of limited value because the team either could not agree on a focus or aimed too broadly, resulting in multiple conflicting initiatives.
The best teams identify short-term drivers that help them achieve this goal and use employee rewards as incentives for user behavior (the amount of rewards varies widely by industry and program objective). These incentives can include capturing a customer's email address, downloading the brand app, signing up for the website or mobile app, or registering for the loyalty program. For example, one retailer that sells multiple brands and categories used advanced machine learning techniques to identify all of the value drivers, and then allocated a dollar amount to each of them that counted toward the team's goal and each member's personal reward.
For nearly a year, high-performing employees driving a company's personalization agenda had been part of a dynamic and agile start-up environment. But in the team's mostly hierarchy-free structure, there were few opportunities for advancement, and no one wanted to simply return to their old jobs. The result was that motivation declined rapidly over time, which in some cases led to them working for other companies. The question of what to do with valuable employees is a challenge that few companies take enough time to address.
Personalization teams should become the means of promotion for highly skilled employees or a way for high potential employees to build meaningful skills. In this way, War Rooms act as mini-business schools that enable the acquisition of new skills, mastery of an agile way of working, and an understanding of how to be customer-centric. When it's time to take on new challenges, team members should be promoted to another team with a larger mandate or promoted to a leadership position within marketing or another department, such as strategy or merchandising. Effective career management should become the HR leader's priority, with a focus on creating competitive compensation programs.
Creating attractive career paths and leadership opportunities also helps recruit the multi-disciplinary generalists needed to staff agile personalization teams. Traditionally in marketing, for example, there is one person who builds logic into the email system for campaigns, another who builds recipient lists, and another who does quality assurance. In an agile personalization team, this is all the domain of one person.
After a few months of being energized and excited about transforming the personalization process, a business leader retired from day-to-day operations to focus on the next big thing. He was still involved, but mainly kept himself informed of the War Room's progress toward throughput and impact goals. Without active and ongoing leadership, a personalization program is likely to stall and die a slow death.
To ensure success, leaders must make personalization not only a corporate priority, but a personal priority as well. They must demonstrate their support and enthusiasm for the program on a daily basis, over the many months it will take to truly complete the transition:
To ensure that management remains engaged beyond a few months, companies can include goals (e.g., test throughput rates, sales increases, customer retention) in a manager's performance evaluation.
Personalization is ready for its big moment. Technology and customer expectations are converging to speed up personalization - the use of data to customize the timing, content and design of every experience in real time - from a promise to a reality.