Fueling Personalisation: Opportunities for Organisations to Advance (Part 1)

Fueling Personalisation: Opportunities for Organisations to Advance (Part 1)

As personalisation becomes the norm, a finer edge is crafted

As the digital age offers up new ways to fight for customer mindshare and dollars, consumer-facing organiSations are responding with new efforts to personaliSe the customer experience—and reaping big rewards in the process

Imagine arriving at your favorite neighborhood restaurant. For 20 years, you’ve been ordering the lasagna. This evening, your server has put your order in early— and now he’s bringing you spaghetti. You are puzzled. 

Replicate this experience at scale with millions of customers, and you get to the heart of the customer challenge for consumer-facing organisations today. Companies that fail to show customers they know them and their buying preferences risk losing business to competitors who are more attuned to what their customers want. And the ranks of those competitors are growing. In a new survey of more than 600 business executives by Harvard Business Review Analytic Services, 47% say their organisations are already executing tailored customer communications successfully across all channels. 

“People today expect personaliSation,” says Isabelle Birem, senior vice president of loyalty for France’s ACCOR S.A., a multinational owner, manager, and franchisor of hotels, resorts, and vacation properties. “It’s just something you have to do.” 

Indeed, nine in 10 survey respondents say their customers now expect them to know their interests and anticipate their needs. 

“When they make purchases, they expect to receive personalised recommendations that are helpful and relevant,” says Farrell Hudzik, senior vice president and enterprise customer engagement officer for U.S.-based consumer financial services firm Synchrony Financial. “When they reach out to us, they expect us to know who they are. When they reach a chatbot or live agent, they expect us to know what they’ve been inquiring about on a digital property.” All that is reason enough for companies that aren’t personalising the customer experience to start. Or for those that have only dipped their toes into the water to jump in feet first. But the rationale extends beyond meeting customer expectations. Personalisation also has become critical to improving business performance. Simply put, personalisation drives better financial results. Eight in 10 survey respondents say personalisation is now important to their organisation’s strategy, and more than half say it is an important driver of their revenue and their profits.

Product Offerings and Recommendations Are Top Personalisation Focus Today

90% of survey respondents say customers expect organisations to know their interests and anticipate their needs.

8 in 10 survey respondents say personalisation is important to their organisation’s strategy

More than 50% say personalisation is already an important driver of their organisation’s profits

54% say their organisations are placing a high priority on investing in personalisation tactics

Almost half of respondents say their organisations are tailoring communications to customers across all channels.

The most common area where organisations are using personalisation is in product offerings and recommendations

Some personalisation strategies are seen not just as table stakes but as drivers of competitive advantage—and can extend beyond marketing. Among the higher-order activities:

Even more—81%—say it will be an important driver of financial performance in 2020. Not surprisingly, 54% of survey respondents also say investing in personalisation is a high priority for their organisations. Why? To achieve primary goals of improving customer relationships (cited by 63% of respondents), driving customer retention (54%), and driving revenue (38%).

Moving Beyond Table Stakes: Using Personalisation to Gain Competitive Advantage

Given the early wins it’s delivered, it’s no surprise that personalisation is quickly becoming the norm in many areas of marketing. Nearly half of survey respondents now see personalisation as table stakes, for example, in email marketing, print marketing, and search advertising— whether they’ve personalised their own activities in that area or not. “If we don’t do it we will lose customers,” says Harsimrat Kaur, CRM insight manager for Costa Coffee, a U.K.-based multinational coffeehouse. 

In a very real sense, those table stakes arenas are starting points for organisations that have thus far lagged behind in the personalisation revolution—capabilities they must nail down quickly so they can move on to more innovative and higher return personalisation techniques that survey respondents say can deliver real competitive advantages. Among those higher-order activities: personalised product offerings and recommendations; personalised online experiences, including greeting customers with personalised home pages; personalised pricing strategies; and personalised mobile applications that can do things like push notifications to customers based on their location.

TABLE STAKES ARENAS ARE STARTING POINTS FOR ORGANISATIONS THAT HAVE THUS FAR LAGGED BEHIND IN THE PERSONALISATION REVOLUTION— CAPABILITIES THEY MUST NAIL DOWN QUICKLY

WHICH PERSONALIZATION TACTICS DELIVER A COMPETITIVE ADVANTAGE?

Of all areas where personalisation is possible, the only one where a majority of organisations are using it today is in product offerings and recommendations via multichannel communications

Of all areas where personalisation is possible, the only one where a majority of organisations are using it today is in product offerings and recommendations via multichannel communications, with 52% of survey respondents saying it is part of their toolkit. The next most common applications center on email marketing (cited by 49% of respondents) and the in-person customer experience (48%). Accor, for example, is devoting much of its personalisation efforts to enhancing the guest experience in its hotels, which Birem says is by far the most important place a lodging company interacts with its customers. 

Not every region of the world is equally advanced in its use of personalisation strategies. Overall, survey respondents in North America are more likely to be using personalisation techniques than their counterparts in Europe, while organisations in both regions tend to use personalisation more than organisations in the Asia-Pacific region. Fifty-six percent of North American organisations engage in personalised email marketing, for example, versus 47% of European organisations and 42% of Asia-Pacific organisations.

Fewer dramatic differences exist in the use of personalisation strategies within the four key industries polled in the survey—financial services, health care, manufacturing, and technology— with the notable exception of the manufacturing industry. Generally operating in a business-to-business environment, manufacturers tend to make less extensive use of personalisation strategies such as the online customer experience.

PRODUCT OFFERINGS AND RECOMMENDATIONS ARE TOP PERSONALIZATION FOCUS TODAY

north american organisations most aggressive in using personalisation strategies

NORTH AMERICAN ORGANIZATIONS MOST AGGRESSIVE IN USING PERSONALIZATION STRATEGIES

personalisation use fairly consistent across key industries, except manufacturing

PERSONALIZATION USE FAIRLY CONSISTENT ACROSS KEY INDUSTRIES, EXCEPT MANUFACTURING

In contrast to where organisations are using personalisation today, organisations’ plans for investing in personalisation over the next two years align more closely with those areas where they see it delivering a competitive advantage. The top places in which survey respondents plan to invest in personalisation by 2020 are in product offerings and recommendations (cited by 52% of respondents) and the online customer experience (51%). Right now, only about a third of organisations are using personalisation for the online customer experience, or for mobile apps or call center applications—valuable windows of opportunity just waiting to be exploited. 

The same is true of personalised pricing. A majority of survey respondents—54%—see opportunities to gain a competitive advantage with personalized pricing strategies, yet only 26% are using it today. More encouragingly, 29% plan to invest in that area by 2020.

Failing to Take Personalisation Beyond Marketing May Prove Costly

The fact that 47% of organisations are using personalised communications across all channels is encouraging, but also illustrative of the opportunities that still exist for many and the profits they may be leaving on the table. In addition to personalised pricing, many of those opportunities exist in areas beyond marketing, including personalising human and automated call center interactions, and in-person and online customer experiences. 

Synchrony is among those pushing the envelope. To be sure, the company devotes much of its personalisation work right now to marketing initiatives. High among them: using data analytics to optimise its outreach strategies— to reach, in other words, the right customers at the right time with the right offer. “There is significant value in optimizing this outreach by customer segment to drive loyalty and revenue, and also to right-size promotions to avoid giving away too much to those who might purchase anyway,” says Hudzik. “And we are seeing good results from it.”

However, Synchrony also is devoting energy to creating a frictionless—but secure—customer-authentication process by using customer recognition technology. The company measures success in this area by looking at both qualitative measures (e.g., the results of customer surveys) and quantitative metrics (e.g., the percentage of credit applications customers complete once they start those applications). “This is one of the areas outside of marketing where we’re really focused on creating personalized experiences,” says Hudzik.

staying on top of data privacy

Using data and data analytics to personalise customer interactions is a proven means of driving business revenue and profits. And the volume and variety of data available today allows companies to better understand their customers. But companies still need to be mindful of how they use that data, not only to avoid backlash from customers who may feel their privacy is being invaded but also to ensure compliance with data privacy laws. “Customer loyalty is based on trust,” says Isabelle Birem, senior vice president of loyalty for multinational hotelier Accor S.A. of France. 

In the new Harvard Business Review Analytic Services survey of more than 600 senior business executives, 92% strongly agree that customer trust in their brand and products is their greatest asset, and 60% say changing consumer perceptions around data privacy have impacted their personalisation strategies more than actual regulatory changes, such as the European Union’s General Data Protection Regulation (GDPR), which gives EU citizens more control over their personal data. 

About a third of survey respondents say their organisations have invested in data management, consent tools, or legal or data experts in response to GDPR. But only 4% have moved away from personalisation, and many of the executives interviewed for this paper say the new regulation has had little impact thus far on their data privacy policies or the way they use data to interact with customers. 

“France has always had very strong privacy protection regulations, and we have always valued the protection of the data of our loyalty program members,” says Accor’s Birem. “So for us, it was not a shock to go through GDPR. We did make some adjustments, but for the most part we were already compliant.” 

“We have our own version of GDPR here in South Africa,” adds John Bradshaw, head of marketing for supermarket chain Pick N Pay. “I think customer expectations are ever increasing, and I think we’ve always made it a point to be very explicit about what data we collect and how we use it, and good about how we store it. We’ve also worked hard to show customers the benefit to them of having us use their data. We also are careful in terms of reflecting that data back to them in the form of vouchers. We realize that not everyone wants to be confronted with their shopping history, and that they may be more sensitive about that in some product categories than others.”

personalisation drives revenue gains

PERSONALIZATION DRIVES REVENUE GAINS

Meanwhile, at Accor, the primary focus today is, as noted earlier, on the guest experience—not online, but rather in person when customers visit its hotels. “You can be very personalised and perfect before or after the stay, but if the stay itself does not go well, or is just average, it will not distinguish you from your competitors,” says Birem. “So we work hard to share with our hotel staff the preferences guests have shared with us—such as whether they prefer to be on a high or low floor, or close or far from the elevator, or whether they like the air conditioning on or off, and what type of bed they prefer. And we try to use this information to make the guest experience personal—to create ‘sparkle’ moments for our guests.” 

Still, Birem notes, “Our intention is to increase personalisation at all customer touch points.”

Personalisation Initiatives Are Delivering Positive Results

As noted earlier, more than half of survey respondents say personalisation initiatives have become important to driving revenue and profits, and a similar number say it’s also become important to driving gains in market share and customer base. Overall, 64% say their personalisation strategies have already had an impact on performance, including 19% who say it’s had a big impact. Just 2% are unable to recognize any impact.

Looking specifically at the impact of personalisation initiatives on revenue, 44% of respondents say their organisation’s top line has increased over the past two years specifically due to their company’s ability to create personalized customer experiences, including 6% who claim gains in excess of 25%. Looking ahead, they’re convinced they can do even better. Seventy-four percent expect personalisation initiatives to boost revenue between now and 2020, including 10% who expect revenue gains in excess of 25%. 

Also striking is the number of survey respondents who see no gains from personalisation: While 32% fall into that camp today, only 6% believe revenues won’t increase as a result of personalisation by 2020. 

The fact that 24% of survey respondents don’t know whether their organisation’s personalisation initiatives have impacted revenue over the past two years—and 19% don’t expect to know by 2020—underlines the point that organisations need to become better at using data analytics to measure the results of their personalisation initiatives. While it looks like organisations are moving in the right direction, 19% need to get going faster—or risk falling behind.

44% SAY THEIR ORGANISATION’S TOP LINE HAS INCREASED OVER THE PAST TWO YEARS SPECIFICALLY DUE TO THEIR COMPANY’S ABILITY TO CREATE PERSONALISED CUSTOMER EXPERIENCES

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