Personalization has taken on new momentum and meaning in the digital economy. Even a couple of years ago, one-to-one marketing was largely transaction based. Increasingly, it is being delivered at scale, on a mass level, at every touchpoint. Thanks to technologies such as agile, analytics, automation, dynamic pricing and even custom content generation, the possibilities are proliferating, and the pace of change is accelerating as artificial intelligence capabilities mature.
For marketing leaders, this can be a challenge and an opportunity. Personalization offers many benefits — including reducing costs, increasing revenues and boosting the efficiency of marketing efforts. Consumers are growing more comfortable with it, and have even come to expect it. But at times personalization can entail a level of unsolicited public intimacy that can feel unwelcome or even offensive. As companies journey toward the new frontiers enabled by personalization, a thorough understanding of when personalization is welcome and when it becomes creepy can help keep them on the safe side of that boundary.
As statistics show, marketers are bullish on personalization. They almost unanimously agree (98%) that it helps advance customer relationships; more than two-thirds (70%) claim that it has a “strong” or “extremely strong” impact. Eighty-five percent believe that their customers and prospects expect a personalized experience. Meanwhile, companies are continuing to invest in technology. A 2018 survey of marketing professionals by Evergage and Researchscape International found that respondents expected their personalization budgets to remain constant (60%) or increase (37%).
There are strong reasons for enthusiasm. When applied properly, personalization works because it delivers the right product or service at the right time, which is highly valuable to the target consumer. It makes life easier, better, fuller or more convenient. It does this by offering something – a product, service or experience – that meets the customer’s individual needs, at the right moment, rather than the generalized needs of a market segment.
Netflix’s algorithms save you time and offer you content that pleases you, not just your demographic; compare that to the obsolete process of browsing the aisles at Blockbuster. Amazon’s product recommendations and Spotify’s customized playlists work for similar reasons. It’s not only tech and service companies that are deploying personalization to deliver a superior experience. Cadbury’s launched an acclaimed marketing initiative that used the information on people’s Facebook pages to reveal which of their Dairy Milk chocolate products they would prefer. None of these examples provide a guaranteed bullseye every time, but consumers appreciate when they are on or close to the target.
The key insight here is that consumers are weighed down by the plethora of stuff that our advanced economy offers. We think the choice is good, that it imparts freedom, personal responsibility, self-determination, and autonomy. But this is a misconception. The author and psychologist Barry Schwartz famously addressed this in his book The Paradox of Choice: “If we’re rational [social scientists] tell us, added options can only make us better off as a society,” Schwartz wrote. “This view is logically compelling, but empirically it isn’t true.”
When people are presented with numerous options, each involves trade-offs that create conflict. This causes each choice to look unappealing, making people less likely to decide. As anyone who has visited the cereal aisle of a supermarket can attest, an excess of choice overwhelms us, inflicting decision anxiety prior to a transaction. Afterward, it can lead to buyer’s remorse: maybe life would have been more fulfilling with a German car rather than a Japanese one?
In 1997, this critical insight – that too much choice is harmful – helped Steve Jobs save Apple Computer. He dramatically simplified the company’s product line, boiling it down to two segments (consumer and pro) and two products (desktop and laptop). These days, with personalization, companies can take the idea to a new realm by delivering a targeted experience — unburdened by choice – to every customer.
But how can a company ensure that one of its products or services is exactly what a consumer is looking for? Of course, that’s where data comes in – a lot of data, from numerous internal and external sources. Data forms the foundation of each consumer’s profile. This extensive database of a person’s likes, dislikes, behavior, and purchases underlie what is called an identity graph, which can either be built or borrowed. As companies track consumers across the digital landscape, they can get an in-depth sense of who their customers are. Therein lies the risk: unsolicited intimacy – commonly known as creepiness if it crosses a line – a quality that has a strong adverse impact on customer buying patterns. Such privacy intrusions are also the focus of a growing body of regulatory restrictions, such as Europe’s General Data Protection Regulation (GDPR) and more recently the California Consumer Privacy Act (CCPA).
But is there really a reluctance to provide detailed personal information to an algorithm? In fact, studies have consistently shown that consumers want personalization and are willing to share personal data, as long as they see an immediate or compelling benefit. Such benefits span a wide range. A Gartner study found that a personalized message must accomplish at least one of the following to be perceived as beneficial: reward or reassure a consumer; make a process easier; teach something useful; or direct consumers to a product or service that solves a problem they are experiencing.
A classic example: people reveal their travel plans to Waze or Google Maps to get the best route. No one feels that their privacy has been compromised because they receive an immediate benefit. Likewise, in the Cadbury’s example cited above, in return for access to Facebook content, consumers are rewarded with benefits: a personalized chocolate recommendation, as well as a cool, personalized video that they could share with their friends. To ensure that participants welcomed the initiative, Cadbury’s took the additional step of soliciting explicit permission. With consent and the personalized video, the initiative avoided veering toward creepiness.
The reason we hear so much about privacy violations is that data is collected for the benefit of the collecting entity with limited or no immediate benefit returned to the consumer. The bottom line: data collection and personalization programs need to be designed so that the goal is not only for the company to understand, market and sell to the individual, but also to deliver meaningful benefit to the consumer. Otherwise, they risk being rejected, damaging rather than strengthening the relationship.
For the larger enterprise, a third-party strategic partner can help design a personalization program that delivers the most benefit to a target audience with minimal creepiness. Get more details here: firstname.lastname@example.org
About the author(s)
Jim Wheless is the Global Head of Customer Experience (CX) Transformation within our Consulting and Services Integration practice at TCS. Jim is a senior executive with 20+ years' experience delivering business outcomes in Customer Experience (CX) Strategy and Digital Transformation to premier clients across multiple industries.
Jim was a partner at another firm where he helped build their Digital Practice and where he led the offering development of a full suite of capabilities across Customer Experience, Advanced Analytics and AI, Digital Marketing, and mobility/IoT based solutions. Under his leadership, the Digital & CX business grew 25%+ annually and received award-winning innovation recognition. He broadened previous client relationships and broke into new accounts, advising and partnering with CXO's and their organizations.