Nov 15, 2021.
In marketing parlance, a message sent to a prospect using his or her data such as time, age, country, gender, etc., is termed as a personalized message even though it may not contain the name of the receiver. Such personalized communication created for the sake of providing them with more valuable offers and news at the right time is part of personalized marketing. In this digital era, both small and large firms are adopting personalized marketing, a step beyond mass marketing.
Marketers would generally send blanket alerts of a particular benefit, like a discount for a service or product to all the subscribers. This was found to be not cost-effective as made out by the famous quote dated back to the 1800s and attributed to Philadelphia retailer John Wanamaker, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” This has however changed, with the emergence of newer technologies, tools and analytical power coupled with the wide penetration of mobile phones. The convergence of these technologies has now enabled marketers to target users based on their personal choices to make them trust the brand and feel valued. This has led to personalized marketing (PM).
PM can happen in many ways such as personal selling, personal mails, personal emails, personal messages on mobiles, customization of products etc. A major strategic question that stares at the marketing managers is the degree to which the firm needs to personalize its offerings. Thinking of mass customization, personalization is a more comprehensive concept as it involves customizing nearly all aspects of marketing tools for each customer (Goldsmith & Freiden, 2004).
In digital marketing, personalization means personalized email marketing and personalized mobile marketing. In this write-up, we will confine to personalized promotions (communications) not the entire gamut of marketing. Personalization involves tracking key user details and using this information to create personalized notifications. Personalization can be based upon anything from the user’s age to location, interests, or in-app behaviours. For example, a news app might track a user’s individual content preferences and then send out important updates based on their favourite categories or a travel app used by frequent flyers can alert them to a sale based upon their previous purchases. One of the reasons for its success is simple; customers are more willing to open emails, read the content, or engage with the brand if every aspect of the customer experience has been personalized. However, this requires a robust and strategic approach to remain relevant and competitive in a crowded and cluttered market.
According to a survey, 53% of consumers agreed that personalized communications are more relevant to them and a higher number (69%) agreed in the age group of 18-25 (Lindsey, 2019). The same study also found that there is an inverse correlation between PM and age. Maybe the older people are more circumspect and perceive PM as a clever marketing tactic to push them to buy the products. Maybe they are right; after all, it is not an altruistic activity. However, personalized marketing has come to stay. Among many, Amazon and Netflix are the most enthusiastic practitioners of this art to boost conversion rates. Netflix, for example, has only 90 seconds to recommend something – movie or music before the viewer switches to other programmes. This has made Netflix a strong adherent of personalized marketing by recommending the appropriate product to the viewer. In fact, Netflix’s personalized recommendation algorithms produce $1 billion a year in value from customer retention (Springboard India, 2019). Certainly, these are encouraging signs of PM for marketers. But, it too has its own share of challenges.
Marketers should be alert to the fact that people are wary of their information being used for marketing purposes. They should ensure that they don’t suffer from ‘promotion myopia’ i.e. while focusing on improving the effectiveness of communication, they should not lose sight of the customers and overdo it. Marketers should be aware that some customers feel irritable if they feel that the ads seem to follow them around the internet. This is more so with more companies starting to practice unbridled PM. Some firms go overboard with PM and integrate it with all forms of communications to resemble a blanket promotion. In fact, the GetApp survey reveals that nearly 50% of customers are personally promoted the products that they did not show any interest in online but may have looked at them offline. The same survey also shows that 95% of people surveyed believe that they are being tracked online.
The reason for customers being shown the products that they never searched for on the internet or overdoing PM may be innocuous. The possibility may be the usage of predictive analytics. As the name implies, the job of predictive analytics is to predict how a customer will behave or what and when a customer is likely to buy. To be accurate with the prediction, the only way is to collect plenty of information about a prospect. Companies like Amazon and Netflix are moving close to this limit by exhibiting highly effective recommendation engines. For example, if Amazon notices that one orders a new book at the end of alternative months, it can offer some book recommendations at the right time when the customer might be thinking of a purchase.
One major problem in such a scenario is the feeling of loss of privacy by the customer. He or she might consider these aspects as intrusive in their personal life and might feel disturbed. Though the concept of PM is relatively new, it is now annoying to see the email inbox is filled with marketing text messages.
Is it good or bad?
On the whole, is PM good or bad? Good or bad to whom? There are two prespectives;The people/prospects/customers and the firm. Let us consider the latter first. At the outset, it is cost-effective for the firm to practice PM. They can expect a greater return on their promotional investments. They might even take solace from the fact that they are not disturbing the people who are not interested in the given product or service. Though the above might be true to some extent, much of the success depends on the prediction. The predictive analysis comes to the fore. The accuracy of the prediction however is correlated to the quantity of information collected about an individual. More the information, accurate is the prediction. This implies that the marketers need to collect as much information about the individual as possible – the information becomes the prime player. The firms in their enthusiasm to collect more information may overstep their confines. Further, their algorithm should be such that it picks the most prospective individual to send the personalized message not everyone who has shown a cursory interest.
Next, let us consider the individual. Despite people valuing their privacy, they are mostly transactional in real-life situations. For example, most of us, sometimes or the other, give our email and phone number to the firms in exchange for information/article or a free product etc. Many times we give away our names, age etc., for a better shopping experience. After all the firms can not be fully blamed for our inboxes being filled with promotional emails. Also, it is not the case that all of us all the time dislike personalized messages or marketing. The digital age has increased our expectations for relevant, contextual and convenient experiences; we regard when firms make us feel important and valued. We, today’s customers, have become accustomed to having our way and getting what we want and when we want. We patronize those brands that acknowledge and recognize us.
Marketing being meeting the customer expectations, it naturally leads the businesses to leverage all the marketing tools including ‘Personalization’ to keep the customers engaged and draw them back for more. Personalization appears to have improved customer satisfaction and improved sales and profits as well. PM is good after all, to both the customers and the businesses.
- Goldsmith, R. E., & Freiden, J. B. (2004). Have it your way: consumer attitudes toward personalized marketing. Marketing Intelligence & Planning, 22(2), 228-239. doi:10.1108/02634500410525887
- Lindsey, N. (2019, November 4). Personalized Marketing Faces New Consumer Privacy Concerns. Retrieved from CPO Magazine: https://www.cpomagazine.com/news/personalized-marketing-faces-new-consumer-privacy-concerns/
- Springboard India. (2019, November 5). How Netflix’s Recommendation Engine Works? Retrieved from Springboard India: https://medium.com/@springboard_ind/how-netflixs-recommendation-engine-works-bd1ee381bf81