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Reaping the Benefits of a Personalization Strategy

By Mauricio Valdez Mendia - Microsoft for Walmart LATAM
Chief Transformation and Digital Officer


By Mauricio Valdez Mendia | Chief Transformation and Digital Officer - Thu, 02/09/2023 - 15:00

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When researching personalization, one can find two major aims for  implementing a corporate personalization strategy. The first is delivering information that is relevant to specific individuals or groups of specific individuals in the format and layout specified at appointed times. The second is increased  revenue and reduced costs of intermediate marketing by applying a one-to-one marketing understanding of the needs, habits, lifestyle, preferences, likes, and dislikes of the company’s customers. In the end, the combination of both aims is addressed or at least given the illusion of satisfying the customers' individual needs and preferences. In my opinion, both are tightly intertwined with each other, for the second can’t occur without the first and vice versa.

Even though the aims of implementing a personalization strategy are so clearly defined by scientific studies, some organizations still struggle to reap the benefits.  My previous articles address the importance of data quality and data gathering and the creation of a real 360-degree view of the customer, which is tightly directed to fulfilling the first aim: delivering relevant content, which, in my opinion, is a foundational pillar.  In this article, I will explore the main reasons for not achieving a positive and acceptable ROI from a personalization strategy.

Let’s start by accepting the fact that putting in place a personalization strategy is expensive, because it requires various platforms to achieve it:

First, the technology required (this is not an exhaustive list, but will give you a general idea): 

  1. Data quality and master data management (MDM) platforms

  2. Customer Relationship Management (CRM) system

  3. Customer insights

  4. Marketing cloud and direct marketing 

  5. Customer data platform 

  6. Asset management for design teams

Second, the human resources you need to manage and operate your strategy and with specific knowledge of the platforms mentioned above. Operating a personalization strategy requires alignment across your organization, so you can expect or have experienced incremental headcount.

At this point, if you disagree with my statement that it is expensive t, we can at least agree that it is not cheap! So, here is my list of foundational elements that need to be present to help you maximize your investments.  

  1. Reach critical mass: This is a very straightforward KPI. How many of your current transactions can you link to an identifiable and contactable customer?  The number you are trying to reach is above 50%. If you can only personalize your e-commerce or digital customers and they represent less than 25% of your total transactions, you are not likely to reach a positive ROI. You should have daily visibility of how this number is improving. 

  2. Transform experiments into organizational programs: Now, your organization has the capability of running hundreds of controlled experiments and has the ability to quantify short- and long-term results.  It is only when you have failed and succeeded in trying to incentivize customer behaviors that you can start picking those experiments that were successful and transform them into scalable recurring programs that will start delivering the profitability you are expecting.

  3. Integrated view of your marketing spend: Your organization now has a complete and detailed view of all your marketing efforts and each marketing area across the organization has its budget and goals directly related to its purpose (Branding, upsell, etc.)

  4. Defined and own attribution model: You are now able to understand which specific campaign brought you the best result, and you have a data-driven attribution model that has minimized conflicting information and overlap regarding external results brought to you by your favorite social media partners. Only you have the ability to  view a complete omnichannel attribution model that has integrated physical and digital touchpoints, and it would be in your very best interest to keep it private for it is now a key piece of your business model.

  5. New approach to your marketing spend: Now that you have reached critical mass and can deliver personalized content to your customers, it is time to revise your marketing spend and strategy. You have now invested a lot into having a great customer base to which you can deliver personalized experiences and have invested a lot into creating insights from it. At this point, your dependency on external partners should start to decrease. Your direct channels will start to become increasingly  effective, and scale will reduce their unitary costs, so it is only natural that your budget allocation starts to shift.

Personalization strategies are always accompanied by big result statements, and CEOs and boards are anxious to reap its benefits. While they understand that the first stage of data gathering and platform integration will be time exhaustive, after12 to 18 months they will start to measure its economic terms.  

The bottom line is that a personalization strategy must increase customer loyalty and that should reflect directly into the organization’s increase in profitability.

Photo by:   Mauricio Valdez Mendia

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