Rethink Personalization as Customer Understanding to Delight Customers

Personalization is among the most hotly debated topics among marketers. To some, it's the holy grail their organizations need to seize to delight existing customers, acquire new ones, and prove return on marketing spend. To others, it's a false flag for invasive data collection and inaccurate promotions that alienate shoppers.

One way to reframe the debate over personalization and ensure marketers are pursuing something practical and helpful when developing personalization strategies is to anchor marketing on customer understanding rather than personalization. As a shopper, I don’t necessarily want Sam’s Club to target me down to the person. But I do want it to understand some basic things about me that will make my experience more convenient.

In practice, marketers can build strategies on customer understanding by making the customer feel understood, not known; developing trust through high-quality customization; and focusing on the long-term value customers want, not the data that appears likely to generate a one-time purchase.

Make the Customer Feel Understood, Not Tracked

The promise of personalization, down to the nomenclature, which makes it sound like marketers should try to understand each of their customers as individuals, has led to digital marketing’s association with creepiness. Marketers don't need to know that Dana Smith browsed a sweater on a third-party platform or dates women to offer her targeted value. And if they exploit that sort of tracking in their communications with Dana, they're likely to creep her out.

Rather than endeavoring to establish a 360-degree view of customers that will make them feel like marketers know everything about them — something customers don't want or need — marketers should try to understand shopper needs and desires within the context of their commercial relationship. Customization down to the person isn't necessary to meet that goal. Dynamic segmentation and contextual targeting suffice.

For example, let’s say a 40-something-year-old man is browsing an online craft store in early June. The retailer might assume based on basic demographic information and the time of year that end-of-school-year crafts might be appropriate and suggest them to that shopper. The marketer can bet that a decent percentage of the shoppers it targets with those promotions will find them helpful, especially if it targets them to known shoppers with first-party relationships with the retailer who have purchased crafts in June before.

This is an example of targeting, whether based on context and demographics or deterministic data, that's helpful, noninvasive, and premised on the value the shopper is seeking from the business. The shopper is likely to feel the retailer understands their needs, and there's little risk of a perception of excessive data collection.

Develop Trust Through High-Quality Experiences

Another pitfall of personalization is that the imperative to understand each individual customer has led to the pursuit of a large quantity of data over quality. Marketers have resorted to data brokers and covert tracking to vacuum up all possible data attributes about a customer available on the web. The result isn't just that customers often don't understand why they're receiving a promotion; the promotion is also based on incorrect information sourced from a probabilistic, aggregated dataset.

Sending customers incorrectly targeted promotions based on low-quality data is a perfect example of a pursuit of personalization in tension with customer understanding. Ostensibly, marketing has been personalized. However, because a high degree of personalization was prioritized over common sense understanding, the marketer burdened the customer with invasive and inaccurate information.

This isn't uncommon. Studies have found third-party data on gender, for example, is wrong more than half the time, meaning guessing would produce more accurate results.

It's better to have one fewer piece of information about a customer than to get one specific piece of information wrong. Instead of pursuing highly granular customer data at scale, marketers should rely on segmented assumptions and contextual experiences that provide the customer value without raising privacy concerns.

Solve the Customer’s Problems Instead of Focusing on a Transaction

Another flaw of personalization as a concept is that it encourages short-term thinking. Personalize your offer to drive a sale. Show the customer the item they browsed a week ago to drive a conversion today.

Customer understanding is about driving lifetime value, not just a one-time purchase. To operationalize that long-term value, focus on solving the shopper’s core problems associated with your business.

Consider Amazon.com. The retailer certainly provides recommendations based on past purchases, or personalized promotions. But what has really made Amazon a behemoth is that it solves a core customer problem: People don’t have the time to browse products or the bandwidth to track deliveries. They want to know they can find an item fast, order smoothly, and be assured of receiving it in two days. In other words, Amazon’s advantage rests on trust that it will solve the problems of busy customers.

Delighting customers isn't about targeting them down to the individual; it's about providing intuitive value, preserving trust through accurate communications, and solving long-term problems. Marketers who do that will have achieved all the goals personalization was devised to meet.