Well executed personalisation drives incremental sales and reinforces brand value while poorly delivered personalisation, on the other hand, can have a seriously detrimental effect resulting in reduced sales, brand damage through negative social commentary and, most importantly, eroding trust, according to research conducted by Teradata and Celebrus Technologies.
It is clear from the research that personalisation works. But today's consumers are fickle, making customer relationships fragile and the difference between a good and bad customer experience has never been more critical. At the heart of that experience is control, consumer control. Consumers are data savvy - but they want control over what data they share, who else it's shared with and how it's used, as well as control over the channels through which they receive communications as a result.
Essentially, consumers may increasingly like, even expect, a personalised experience - but not at any price. It is of critical importance that marketers achieve a fine balance between gathering the information required to create an excellent personalised experience, delivering that experience, and ensuring that the consumer remains in control of their data in order to build customer trust, according to Ruth Gordon, Director of Digital Marketing for Teradata, and Katharine Hulls, VP Marketing for Celebrus Technologies.
Personalisation versus Privacy
Organisations are in a headlong rush to capture customer information in order to deliver that much vaunted personalised experience. And for good reason: personalisation clearly works. When done well personalisation drives up sales and reinforces brand engagement but - and this is a big 'but' - how many organisations really recognise the fragility of this customer relationship?
One of the clearest findings of the research is that consumers are becoming increasingly savvy and sophisticated about brand relationships - and they want to retain control over every aspect of the interaction, from channel, to the way in which data is shared, what data and when. Channel is a key area of control, with most consumers still favouring the receipt of promotional information via email. Consumers also want to retain control over their time - they expect brands to know and recognise them rather than demand the same information again and again; and control over their data, both in terms of what is gathered, how it is used and, critically, by whom.
Any brand failing to recognise and support this consumer desire for control will rapidly pay the price: if and when brands get any aspect of this relationship wrong, consumers are quick to react. This is not just a case of unsubscribing from emails - although that is prevalent. Consumers are increasingly willing to share bad experiences with friends and family via social media and that means any poorly targeted attempts at personalisation, misuse of data or simply persisting with the wrong channel - even if the message is good - can cause real damage to a business very quickly.
Trust is at the heart of this new consumer/brand interaction and many brands might be surprised to know just how low that level of trust is at the moment. According to the research, the brands most trusted to treat personal information confidentially and securely are retail banks - trusted by 32% of consumers; followed by telecommunications companies (25%). At the bottom of the list are retailers, trusted by only 21% of consumers. Given this lack of trust it should be no surprise that consumers are protective of their personal data - both what they will share and how they can control the way that data is used.
While most will happily share email addresses, for example, very few will provide a phone number and there is a significant resistance to sharing geolocation with brands that would allow the tracking of location. However, while less than a third will share household income data, over half will share personal information such as personal preferences - dress size or favourite holiday location - with brands; and almost two thirds of UK consumers are happy to share data about how they interact with a brand's website. At the same time, these consumers are very aware of data privacy issues and how they can control that data - they are unwilling to have their data shared with third parties, have strong concerns regarding spam, and many now say that they routinely clear cookies.
This increasingly data mindful and sophisticated consumer base demands a different approach from brands - this relationship has massive value to a business, but it is easily broken. Therefore while consumers actively welcome personalised offers, organisations need not only to get those offers right, but also be completely transparent about what data is being gathered and how it is being used. Just as it is essential to understand each individual customer in detail to get the right messaging, it is also crucial to determine each customer's level of data sharing comfort. Trust can only be built by using that data to provide relevant and personal messages through the right channel at an individual level. Only then will the customer feel both valued and in control. And trusting!
The fragility of this vital customer relationship reinforces the need for a well-managed, well controlled personalisation strategy underpinned by individual customer data and technologies that enable the true level of individualisation that consumers increasingly expect. Brands need to build a strategy for what they are trying to achieve; understand what data is required; and develop a framework for securely and effectively managing, analysing and acting upon that data. Without this strategic approach, there is a huge risk of failing to reflect an individual consumer's channel and data preferences and disengaging that valuable customer in the process.
Whilst opting for a stand-alone personalisation tool and just getting stuck in might work for some less sophisticated organisations, is a pretty high risk approach for larger brands as consumers know they should be able to expect one-to-one personalisation nowadays.
For example, to truly understand each individual consumer, a brand needs the ability to track the entire customer journey not just at each online visit but across multiple visits, channels and devices. This is particularly essential in markets such as financial services where the product/service sale will evolve through several visits. The ability to understand the customer journey across a number of sessions is key to recognising intent and responding in a way to drive a better, more relevant interaction.
Combining offline with online data is also important to build a far deeper understanding. For example, that individual browsing ISAs might also be a current account holder - without a single customer view that encompasses online and offline activity, a brand risks significant mis-messaging to a valuable, existing customer. Hardly a successful, personal approach, especially given the growing focus on customer retention and cross-selling.
Essentially, if a brand does not have a strategic and controlled way of developing and delivering personalisation, there is no way of meeting these growing consumer demands for control.
Reaping the Rewards
Done well, personalisation is one of the most effective and compelling tools that any business can deploy. But in this era of data awareness and, to be frank, consumer mistrust, brands must tread a fine line. Get it right and reap the rewards; Get it wrong, and watch brand value and customer trust disappear.
The truth is that very few companies are doing personalisation well and giving customers a good experience. Instead, many are doing the opposite - rashly misusing the information they have collected from customers and eroding trust further. And the implications are felt not only by that brand: each bad experience has the potential to erode a customer's confidence in that sector, if not the broader marketplace.
Consumer confidence and control are the key to retaining this fragile balance. If brands can build trust, consumers will share the information required in order to receive a good experience that gives them value. But that information must be respected and used in line with the customer's evolving preferences. To do that, brands need to understand their customers as individuals otherwise they simply don't have the full picture.