Tuesday, March 01, 2005

How Personal Do you Need to Be?

1:1 Marketing is an idea that is intuitive to direct marketers. If you address people by name and tailor messages to what you know about them or to interests they have expressed, they are more likely to respond and purchase. DUH!

Implementing 1:1 is a lot easier said than done. Principally because there is no widespread data or consensus on how much personalization is sufficient or how it pays out. The web, according to a wide array of geeks, seers and pundits, is capable of relatively inexpensive personalization, using database driven, dynamically generated custom-tailored content, which yields the potential for marketers to create, manage and sustain customer relationships. So far, no one I know has confessed to me any relationship with any website.

Anecdotally, Patricia Seybold told the NCDM that, for American Airlines, “Website personalization steadily increased regular logins and bookings . . . showing that personalization increases both loyalty and revenue.” But she didn’t tell us how they get from “Dear Danny” to loyalty and revenues. Marrying each individual to the stuff they most want to know is the promise. This desired intersection of interests and information creates a psychological validation, a feeling that the company speaks to just me, a sensation which we’re all looking for in our lives.

Sounds too good to be true. For me, as for most of us plebs, getting a company to speak just to me about my account, my bill or my concerns is a nightmare. Unless, of course, I owe them money.

1:1 Marketing has become an empty cliché. Why? Because the incremental cost versus the incremental lift in response, sales or customer satisfaction doesn’t automatically pay out. The big question is . . . At what point does customizing messages or content yield added sales and loyalty and at what point does it just yield diminishing returns? If the prospect has already shown interest by calling, mailing or clicking, will the added impact of personalization expedite the sale or just add expense?

To start with, no one is sure if personalization means calling a customer by name or simply providing content as specified by a consumer, explicitly, by filling out a questionnaire or profiler, or implicitly by dynamically serving content based on past site visits or page view sequences. I haven’t seen any data to suggest if either tactic yields greater customer satisfaction or conversion. I do know there are growing numbers of cybernauts who consider the latter technique snooping.

As if these choices weren’t confounding enough, they are further complicated because context and tone affect the perception of personalization. Netflicks talks to me by name. But since I expect only listings, and spend barely a few seconds reading the e-mails, the impact of seeing my name is negligible.

In contrast, sites I rely on for daily stock prices, horoscopes, box scores, and news, never use my name. But because they deliver exactly the stuff I’ve specified, I don’t miss, nor do I expect, a personal greeting. I’ll take the information. Forget my name.

We are all closet egomaniacs. The first thing we look at in any communication is our name. Spell my name wrong and you immediately alert me that you are a stranger, an outlander, an interloper or someone who can’t be trusted with key facts about me.

Super sales coach Jack Carroll starts his e-zine by calling me “Danny.” I almost hear his voice when I click on the e-mail and I hear the text, as if it’s being delivered orally, as a pep talk. Yet when the Passport Wine Club with “Bonjour Daniel,” it provokes an acid flashback to elementary school French class where Mary Ann Pessignelli tortured me for weeks. Peppers and Rodgers call me by name, but their ceaseless self-promotion and self-congratulatory tone (“This week we helped a voracious multi-national ravage the planet . . .”) embarrasses me.

There is some evidence that personalization without live contact falls flat. An NFO Interactive survey found that customers would spend more money if they could talk in real time to a customer service rep while they browsed a website. One in six shoppers, who said they had never actually purchased, claimed they’d become buyers if they had real-time contact.

This sounds right. But it’s far from the low cost solution. In fact, it’s the opposite because you incur the cost of web tech plus the costs of live operators and web-telephony interface. Given the fact that most marketers are directing prospects to the web to promote do-it-yourself buying and to reduce the cost of sale, this survey turns that assumption on its head.

And so we’re left with a series of Talmudic questions …
How much personalization is necessary or enough?
How little is necessary to begin or continue dialog?
How many dollars are worth risking for personalization?

2 Comments:

Blogger Neil Lichtman said...

What's the real purpose for personalization? Isn't it to increase loyalty and LTV?

If so, as your blog suggests, it's not about using my personal information to show how sophisticated your data base management is - it IS about your relevance to me. The more that you provide information that is important to me, in a format I want it, with the frequency I prefer, the more I will read and react to your message and tell my friends about the experience.

Sorry Danny, no tested proof - just 35 years of test after test with clients proving what every Excellent sales person knows. "Give me what I want and I am your friend."

12:53 AM  
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2:34 PM  

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