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Which Stage of Personalization Are You In?

January 3, 2020

Which Stage of Personalization Are You In?

It's a no brainer that customers will purchase your product or service if you give them a deal that appeals to their desire for a bargain, or meets their unique needs or purchasing patterns. In fact, 80% of consumers are more likely to buy from a brand that offers them a personalized experience.

The vast majority of brands are now investing in personalization, since they see it as the key to building customer loyalty and growing their business. But depending on who you ask, you may get different perspectives on what "personalization" is and how to do it.

In our recent white paper, "Why Personalization Isn't Always Personal," we examine why many brands are over-promising and under delivering on their personalization goals.

The key to this is understanding the three stages of personalization, knowing which one you’re in, and how to get to the next. Each of these stages use different strategies and tactics, evolving to help you reach the ultimate end game: true 1:1 marketing.

The 3 Stages of Personalization

Stage 1: Macrosegmentation

This is often the first step of the personalization journey, in which you send emails, using the recipient's first name in the greeting. Or you may segment your customers into general groups based on some basic demographics, such as age, gender or where they live.

This kind of segmentation relies on identifying some similarities among the customer base, and creating five to 10 different groups. But segmentation falls short because the individuals in these groups are often still so diverse that it limits what marketers know about them.

Stage 2: Microsegmentation

In this stage, data analytics are introduced to create "microsegments" based on additional attributes like lifestyle, interests and purchase and/or search behaviors, among other factors. By digging deeper, marketers can design promotions that are more relevant to these smaller, more targeted groups.

Microsegmentation also falls short because, in addition to the increased number of diverse groups, the manual processes related to building and sending promotions to this number of groups are time and resource-intensive. This tends to limit the number of segments that can effectively be managed to between 10 and 30.

Stage 3: 1:1 Personalization

Stage 3 is where brands are able to achieve 1:1 personalization nirvana. When companies are able to leverage artificial intelligence (AI) and machine learning (ML) technology, to access and process large amounts of disparate data and fine-tune promotions, they have the opportunity to understand each customer more fully than ever before. But, as noted in stage 2, this cannot be done manually.

Advanced marketing platforms eliminate the manual processes and make offer creation and execution fast and seamless. Plus, you’re able to deliver relevant offers your customers - which can lead to proven revenue growth of up to 10 percent, an amount that is two to three times higher than those that rely on segmentation alone.

If you're interested in evolving to the next stage and reaching the pinnacle of personalization, download our white paper, "Why Personalization Isn't Always Personal" now.

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