New Forbes Report: Personalization Leaders Prosper, Learners Suffer
Recent years have not been kind to retail, media, and many other sectors. But new survey results from Forbes and Treasure Data show that some businesses are aggressively fighting back. The report, “The Clear Path to Personalization,” reveals how businesses use AI-driven technology to personalize the customer experience, even at a scale of millions of individual customers. Those blazing a trail with this new strategy say they’re already reaping the rewards, while the fortunes of those who lag behind are declining, according to the survey of marketing executives from 200 global firms.
Why the Drive to Personalize?
The push to personalize is driven in part by the rise of digital technologies, which have changed the relationship between customers and businesses, says Ming Zeng, chief of staff and strategy advisor to Alibaba Group and author of Smart Business: What Alibaba’s Success Reveals About the Future of Strategy.
“The internet makes it possible to interact with massive groups of customers directly, in real time,” he says. This approach, which emphasizes hyper-personalization, is already practiced by the leading internet companies, which “are serving billions of customers daily,” Zeng adds. “These innovative practices are spreading throughout the whole economy.”
The Rise of Mass Hyper-Personalization
With so many high expectations riding on this one strategy, we wanted to uncover the truth about personalization. The Forbes survey looked at how enterprise businesses in retail, consumer packaged goods, consumer electronics, and media really prioritize, budget, implement and measure their personalization efforts. In this survey, personalization is defined as an “organization’s ability to make customer experiences as relevant to the individual as possible, regardless of channel.”
How to Develop Millions of Individual, Unique Customer Relationships—Profitably
Two in five executives, 40 percent, report their customer personalization efforts have directly impacted sales, basket size, and profits in direct-to-consumer channels such as e-commerce. For those Forbes identified as “leaders,” the returns are even more substantial. Fifty-four percent report they exceeded their revenue targets over the past year, compared to only 15 percent of “learners.” Leaders account for 21 percent of those surveyed. They consider their organizations to be competitive or highly successful in their personalization efforts and more than 10 percent of their total marketing budgets is committed to personalization. Learners are defined as the rest of the survey respondents who are not as actively committed to personalization.
Retail & Media Fight Back, Go High Tech
Tellingly, more than a third of leaders come from the retail industry, closely followed by those in media.
It’s probably no coincidence that these two sectors are more likely to have leaders at the helm who are willing to bank on new technology. Traditional brick-and-mortar retailers have long been on the receiving end of wildly successful e-retail personalization strategies. And media executives who perceive publishing and entertainment as threatened by tech issues such as free browsing and digital rights issues, are finally using personalization tech to take back some of the ground they’ve lost.
Those in the consumer packaged goods and consumer electronics sectors lag behind. Why aren’t the learners keeping pace? Budget is one factor that impacts personalization adoption. A majority of respondents, 74 percent, told Forbes that less than 10 percent of their current marketing budgets go toward personalization efforts, while only 4 percent exceed 20 percent.
Successful Personalization Tech Ventures Spur More Investment?
Unsurprisingly, leaders want to devote far more investment to personalization. Most, 85%, say they want to commit at least 20 percent of their marketing budget to personalization, compared to just 4 percent of the learners who say the same.
Personalization as a Way to Disrupt the Disruptors
Many forms of marketing technology have long used simple forms of personalization, such as lightly tailored mass email software. So what’s driving investment and interest in personalization now?
What’s vastly different now is that advanced AI and machine learning personalization technology allows marketers to piece together data from diverse sources, such as social media, weather satellites, loyalty programs, in-store purchases, mobile app usage, and geolocation. Using these data streams, sophisticated algorithms, such as those used in Customer Data Platforms (CDPs), use all this information to build a unique profile for each person. This helps marketers deliver promotions and communications at the right time and with the right personalized message and offers, for a unique “customer journey.”
It’s an approach that is working for traditional retailers, big consumer brands, games makers, and online retailers. The 2019 Forbes survey, which confirms and advances many of the trends found in its previous “Data vs. Goliath” report, makes it clear that savvy marketers understand the promise of personalization: A chance to fight back against the mega players buffeting their businesses, and a path to the win. Clearly, many marketers are on this path, or hope to be sometime soon.