Targeted mass marketing was developed by direct mail businesses in the 1960s and 1970s to enable customers to be segmented by age, geography, or income. Today, thanks to the internet, social media, and our always-connected society, more information is generated about who we are and what we do than ever before. And all of this incredibly rich data can be used by organizations to offer us products, services, and marketing that is uniquely tailored to meet our needs in increasingly individual ways. This is the era of mass personalization.
How personalization has evolved
Online, data-driven mass personalization started out with determining a user’s geographical location from their IP address and directing them to a landing page serving their particular region. As the variety and volume of the data collected increases, so does the granularity with which customers can be segmented by age, interests, occupation or many other factors. This means that the picture of each customer becomes increasingly personal.
The desire for personalization in marketing has become more important as we consumers have become resilient towards, and even resentful of, poorly-targeted mass communications from people trying to sell us things we don’t want or need.
At the same time, the demand for highly personalized products is increasing. We’re used to being able to customize big-ticket purchases like cars, with manufacturers offering a range of extras to tempt us to increase our spending. But thanks to related technology trends like AI, automation, robotic manufacturing, and 3D printing, almost any kind of mass-market product can be individually customized to help the buyer feel they have spent their money on something uniquely special to them.
And when it comes to services, internet giants like Google, Facebook, Netflix, Amazon, and Spotify have pioneered the personalization trend by serving up personal recommendations to each individual customer. So when you scroll through the movies available on Netflix, you’re being offered a sample of what is available based on what Netflix thinks you will want. Spotify’s personalized weekly playlist is another great example. And, of course, Amazon is the king of personalized recommendations.
Avoiding the pitfalls of mass personalization
Clearly, mass personalization can deliver a range of business advantages, including increased sales and greater customer engagement. As an example, when Coca-Cola launched its “Share a Coke” campaign, with the logo on bottles being replaced with popular first names, the company gained roughly 25 million new Facebook followers.
That said, there are various downsides and challenges to consider. Here are five of the most common mass personalization mistakes and how to avoid them.
1. Creeping out your customers with overly personal marketing messages
Just as poorly targeted marketing is a turn-off for customers, so too are overly personal or familiar communications that can appear creepy in the way they are personalized. It’s one thing to say to your customers, “Hey, we notice you like X and Y, so we thought you might enjoy Z." But it's quite another to reveal you know a customer is pregnant based on their shopping habits before they've even told their family – as Target famously did with a teen customer several years ago. In other words, you want your customers to know that you value and notice them and that you can meet their needs as an individual, but not in a “Big Brother is watching you” kind of way. It’s not always easy to strike this balance, so if you’re ever unsure whether something is overstepping the mark, ask yourself how you'd feel if you received such a communication.
2. Not taking data privacy seriously
This is closely related to the first point since not creeping out your customers involves demonstrating to them that you can be trusted with their data and won’t abuse what you know about them. Balancing consumers' desire for personalized marketing, products, and services with ongoing public distrust surrounding wide-scale data gathering is certainly a challenge, but I believe public confidence will increase now that regulators are beginning to take data privacy seriously. (Indeed, hefty fines are now a reality in many jurisdictions for companies that misuse data, gather it without consent, or fail to adequately protect it.)
For organizations, taking data privacy seriously involves:
· Explaining to customers what data is being collected and how that data will be used
· Offering opportunities for privacy-conscious individuals to opt out of data capture and use your products/services anonymously
· Regularly reviewing the methods of data capture that are used and how details about it are communicated to customers.
3. Using the same marketing personalization tools as everyone else
There are plenty of ready-made tools designed to help businesses better understand customers and their behaviors. Facebook and Google’s targeted marketing programs, for example, leverage the vast troves of data those organizations already own. The downside, of course, is that these tools are available to everyone. If you need to stand out from the crowd, or if mass personalization is critical to your business’s strategic goals, you might be better off with a more bespoke offering that caters to your business niche. Alternatively, you can create your own data gathering and analytics framework, although this can be a costly process.
4. Creating personalized products/services that your target audience won’t pay for
While someone might be delighted to buy a $2 bottle of Coca-Cola with their first name on it, they might be less charmed with the idea of paying $5 to get a bottle printed with their first name and surname. The risk with personalization is that it can restrict or eliminate huge sections of the market. So when you’re particularly thinking about personalizing products or services, you want to strike a balance between customizing your offering and not becoming so restrictive you cut out huge segments of your market.
5. Overlooking the impact on other business processes
Moving towards personalization will often also require a root-and-branch review of logistics and supply chain processes. For example, manufacturing goods to individual customer specifications means taking a completely different approach to warehousing and inventory management because design decisions may need to be made immediately prior to the product or service being delivered. When managed well, this can have a positive impact across the organization, from cutting down on the expense of storing inventory for long periods of time to reducing waste.