Personalization--Part 2 - The Back End

Read Part 1 here
Personalization of customer communications is can be a powerful marketing technique. It is best exemplified by carefully-chosen content that is relevant to the customer’s activities and interests, not simply by addressing customers by name. On the front end it can be used to attract attention and encourage action. On the back end it places great demands on data and systems. Relevant behavioral data must be captured and maintained in a form that makes it accessible to personalized marketing communications programs. Systems must be in place to ensure data quality and security, maintain it in actionable form, and deliver it when required. Marketing and IT are the two major players in these activities, but they require the informed cooperation of personnel throughout the organization. That requires the backing of top management. Put together, as they are in this graphic from Marketing Charts it’s a very tall order.
The CMO personalization survey confirms observation and anecdote that indicates few firms are handling the data and systems issues well. Their findings include:

•Nearly 50 percent of marketers report having fair to poor or little knowledge of customers, and almost 47 percent rate their company’s data integration capabilities as being deficient or needing improvement.
•[Only about] 10 percent of respondents rate the accuracy and reliability of their customer data as extremely good.
•Many marketers currently spend less than 10 percent of their budgets on personalized
communications; looking ahead, 55 percent say they will spend more than 10 percent.
•Purchasing history/activity – as well as size, profitability and location of customer – are key data points for designing personalized communications campaigns.
•Multi-channel integration is still lagging in personalized communications as almost 50 percent of marketers report a low degree of integration.
•Marketers appear fearful and intimidated by the investments required for personalized communications as there has been limited testing across all areas.

The effectiveness of personalized communications has been long established, as I suggested yesterday. Likewise the challenges of shared organizational ownership of data that leads to poor data capture and management are not new to those who have practiced database marketing since the 70s. These problems do not seem to be getting better. In fact the sheer volume of data available on the Internet seems to have exacerbated them. The CMO report includes expert commentary on the results. Bernard Gracy,VP, Strategy and Business Development forPitney Bowes Document Messaging Technologies hit the nail squarely on the head. He lists the top three challenges as being:

• Inadequate systems, data, resources and budgets. Personalization requires an effective investment to improve our available solutions – something many marketers are hesitant to make.
• The disconnect and lack of communication between chief marketing executives, who serve as the primary directors of personalized marketing initiatives and sales and customer relationship management groups, which most frequently maintain control of data used in these campaigns.
• An ineffective tracking system for a customer’s purchase history and activity, as well as size,profitability and location of customer. These are, by far, the most important key data points for designing personalized communications.

He adds that, “Tapping into “The Power of Personalization” requires marketing, IT, and operations divisions to work in concert – to link disparate databases across the enterprise to create a single view of the customer,create insight from that view, and have that insight.”

At best, that’s a hard job. Without top management understanding (this is not all going to happen overnight) and support (it’s going to take some front-end investment; ROI will come later), the job will not get done. The CMO study provides useful guidelines. It also suggests that CMOs will have to champion the personalization initiative within the organization. That takes marketing strategy skills, some rudimentary knowledge of what the technology can and cannot do, and the ability to bring disparate groups within the organization together around a common theme.

Let’s hope we have lots of CMOs with the combination of marketing and organizational skills necessary to pull it together on the back end. With the back end in place, the front end will be able to field compelling personalized communications.

Without it, companies will languish in the back waters of untargeted mass communications. That cancels out major capabilities of channels like email and websites themselves. That’s unfortunate, and in the end, it’s a waste of resources. Better to invest in the data that will enable meaningful use of the technology.
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