Thursday, March 6, 2008

Personalization--Part 1 - The Front End

The CMO Council has just released a study of personalization, covered in Marketing Charts yesterday. The Council surveyed over 700 senior marketing and executive officers in companies around the world to learn how they gauged the impact of personalization and the extent to which they were using it.

Personalization is hardly a new topic to marketers. Direct marketers have been using it for years, especially in mail marketing. Some has been good and effective, some has been silly or downright awful. You’ve seen it all. Even reasonably well done, personalization does work. The carry-over to email marketing is obvious. According to the CMO Council:

• Spending on direct-mail advertising (an integral part of personalized communication applications)shows no sign of abating; investments by marketers totaled $58.4 billion in 2007, and that figure isexpected to increase to more than $70 billion by 2011 (source: Winterberry Group).
• More than $3 billion was spent in the U.S. alone on e-mail marketing (source: EmailInsider).
• Yet, an overwhelming 56 percent of marketers believe personal communications out-performs traditional mass market delivery; digital, database-driven channels (email, web, contact centers)reportedly offer the most upside potential for engaging in customized communications (source:The Power of Personalization)

What exactly does personalization accomplish? According to the report it improves customer retention and loyalty by increasing conversion, close and action rates and increasing website traffic. I’d add another outcome; used creatively personalization can increase the chance of a communication going viral. Here’s a global example, a Dutch politician to be precise. This is apparently the politician, Jan, standing under a sign with the recipient’s name, Eelke. The political email included the usual “send it to a friend” with a twist. When you forwarded it to the friend, the name of the recipient showed up in the sign, according to the Dutch marketer who sent me the example. That is a creative—effective—front-end use of personalization!

I define "front end" as all the activities that lead up to a sale--all the things we do to attract the attention of customers and put them in a frame of mind to take action. The action can be a visit to a website, a request for information, sale of a product or service, or in this case support of a political candidate.
In spite of its effectiveness, marketers are not making extensive use of personalization according to the survey (download the report from the CMO Council). Not because it doesn’t work, but because their organizations and their back-end systems are not with the program.

So tomorrow, the back end of personalized marketing.
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