Everyone collects something, and I collect information. Earlier this week, I was digging through my research archive and I noticed, across sources, 2015 predictions emphasize the need for content personalization.
Content personalization is the modification of the digital content (e.g. website, ad) displayed based on a customer’s social networks and past content affinities. Hubspot wrote a nice piece about this in a 2013 article. I believe this heavy emphasis on content personalization is misguided, and that in turn has two major consequences.
First, if you do not have your digital strategy and data really together, content personalization becomes expensive and time consuming with a poor return. It looks like a remix of “spray and pray” marketing with an audience twist. More on this below and what you can do instead.
Second, while your company is distracted creating more content (instead of deeply getting to know your customers through your own vast data stores) it opens up a fantastic opportunity for competitors who do have their data strategy together to nab all your valuable customers. These data-driven competitors will have a sharper focus on customers before content, and convenience above all.
Here are the three things your company needs to do to defend those customers and boost your competitive advantage now:
Make 100% use of your existing customer knowledge.
There is pressure to show results in marketing and, it is true, content personalization can lift your marketing returns by a few percentage points. Third-party sources which feed personalization rules vary widely in accuracy, but your own in-house data is often overlooked gold. If you want to be competitive, you need to use everything you know about the customer. That means breaking down silos of customer data stored in different business units.
Remarketing is an easy example of short-term lift and simultaneous long-term customer failure. Case in point, I have been a loyal customer of the CRM product Insightly for more than a year. But what ads do I see urging me to sign up all over the internet? Yep, Insightly. Their sales data is not talking to their marketing data.
Court the right customers with CLV.
In addition to knowing whether someone is already a customer or not, you must know the value of their relationship to you (their Customer Lifetime Value). This competitive advantage is usually lost in broad sweeping personalization efforts. Yes, I’m talking about the unholy blend of marketing and math, specifically statistics in the form of propensity: the likelihood a customer will take a valuable action. With a little math, you can sort out four tiers of customers:
Tier 1) Customers who love you and don’t want to be badgered or further upsold by you (political campaigns take note!).
Tier 2) Customers who like you and might like you more.
Tier 3) Customers who like some aspect of you but not all of you.
Tier 4) Customers who want something from you, but are expensive to maintain.
Gently monitor the first group. Do not eliminate the 4th group, but move to control costs. Focus on tiers 2 and 3, who have the highest likelihood of becoming more valuable. These are the customers you really want. They are actually able to become your long-term jewels. Dig deep and really understand what do they value from you? Attach content personalization to that.
Focus on convenience.
Once you have tapped your internal goldmines of customer data, and sorted the customers into the right relationship groups, it’s time to think about convenience. This is where innovation takes off and the competitive advantage locks in your customers for a lifetime. If you doubt the value of convenience over content or personalization, then ask yourself: when was the last time you switched banks?
Modern customer convenience is why Amazon now delivers diapers to your door, and why business travelers love the ease of Uber. This is the domain of long-term lasting customer value. What kind of time-saving conveniences do your 2nd and 3rd customer tiers value?
Content personalization, which misidentifies the business value of the customer creates thin short-term gains at best. Your competition will not delay. Gather the insights you need to deeply know your customers, drive competitive innovation and lock-in lasting customer value.