Customer Insight · Marketing · Personalization

Compelling, creepy, annoying or just bad? Retail’s personalization opportunity

It’s hard to believe it’s been over 20 years since Martha Rodgers and Don Peppers’ seminal book The One to One FutureAt the time, Dr. Rodgers and Mr. Peppers (not to be confused with Mr. Rodgers and Dr. Pepper!) offered up the radical notion that mass, one-size-fits-all marketing would begin yielding to a brave new one-to-one world. Followed just three years later by Seth Godin’s classic Permission Marketing the more intrepid among us started to make “treat different customers differently” our mantra and advocate for a shift to more targeted and personalized campaigns. Alas, we were a bit ahead of our time.

Despite years of missteps and hype, some two decades later the business case for greater marketing and experiential personalization remains strong. Fortunately, lower cost data storage and more effective technology solutions, along with general advances in know-how and the ability to reach customers through digital channels, now make it possible for most retail brands to realistically differentiate themselves on the basis of deep customer insight, data science and advanced targeting strategies. From where I sit, it won’t be long before advanced personalization skills become table-stakes in the battle for customer share of attention. To remain relevant — to become the signal amidst all the noise — retail marketers will have to get good at one-to-one marketing and in delivering more personalized experiences both in the store and on the web.

Yet, despite the strong business case, advancing capabilities and many years of experimenting, personalization’s potential remains largely untapped. For every success story, it seems as if there are dozens of weak efforts or outright debacles. In fact, a recent study by Accenture estimates that personalization failures cost US firms $756 billion and a total of $2.5 trillion globally. While I have a hard time getting my head around the accuracy and magnitude of those numbers, there is no question poor data management and far from stellar personalization can chase away business as well as leave a lot of money on the table.

As we start to understand how to both avoid problems and seize on opportunities, I find it’s worth asking a few basic questions.

Is it compelling?

The essence of good personalization is two-fold: is it relevant and is it remarkable? Delivering intensely relevant one-to-one (or mass customized) experiences is predicated on deep customer insight and the ability to target the right interaction (or offer) to the right customer at–or as close as possible–to the right moment. Retailers that are getting it right use data science to ascertain customer needs and wants and to better predict the next most effective marketing action. Stitch Fix is a great example of a company that has built predictive analytics and targeted marketing into the fabric (heh, heh) of their enterprise. The other key element is “remarkability.” Even if an offer is relevant, simply serving up the same old tired promotional tricks is unlikely to get a good response and help enhance the brand’s image. According to the Accenture study, 44% of all customers feel that brands fail to deliver relevant personalized experiences. Plenty of untapped opportunities here.

Is it creepy?

In my experience, the vast majority of customers have no idea how easy it is for marketers to purchase potentially useful pieces of data to better inform their targeted marketing strategies. Moreover, many customers fail to grasp how their lack of attention to privacy settings on places like Facebook allows marketers to glean all sorts of insights from the data breadcrumbs left behind by our traffic, likes and so on. Advances in statistical techniques and artificial intelligence allow for powerful inferences to be made by analyzing behaviors, transactions and demographic information. Walking the thin line between delivering surprisingly useful recommendations and something that smacks of Big Brother –or that raises unnecessary privacy concerns–is challenging. In the bloodthirsty quest for incremental revenue, it is all too easy for undisciplined marketers to step over the line. Resist the temptation. Strong brands are based on trust. Tread lightly.

Is it annoying?

I’ve met few marketers that believe less is more. For most, more is more, often to the point of going well beyond diminishing returns. Since email (and certain other digital messages) are often quite cheap at the margin, retail marketers often take the bludgeon approach to their campaign messaging. They dial up frequency until we yell “Uncle.” They chase us all over the internet with retargeting ads. They offer us products we just bought (oh yeah, sure I often buy a second dishwasher or espresso machine the week after I bought my last one). The holiday shopping season is a particularly bad time of the year where frequency goes to 11 and many promotional strategies look like they were created by Jackson Pollock. Just because you can, doesn’t mean you should.

Is it just bad?

In 2011 I started pointing out when bad personalization happens to good people and it’s become a bit of a hobby for me (apparently I have that kind of time). A certain airline (I won’t tell you which one, but their initials are “AA”) regularly sent my teenage daughters offers “specially selected” for them which included deals for mortgage financing. We were nicely generous with their allowances, but not enough for any real estate speculation. Neiman Marcus (where I once, ironically, oversaw our customer insight and personalization efforts) often encouraged me to redeem my InCircle Rewards points. Which would be great if I actually had any. Citibank still pitches me a credit card I already have, while AT&T, um, well where to start?

The first rule of personalization club is to not ask a customer to provide information that you already have (unless it’s to verify identity). The second rule is to demonstrate that you know the customer and understand their relationship with your brand. Any offer that belies that is likely to make a brand look dumb. The third rule is to show the customer that you value them: value their time, their spending, their loyalty, the exchange of information they may have provided you. Don’t waste a customer’s time by misusing their data, failing to protect their privacy, trying to sell them stuff they already own and not making a real effort to treat different customers differently. Don’t mistake simple or cheap for useful or effective.

Personalization is not easy. But the revolution sweeping retail demands that brands get more relevant, more differentiated and more remarkable. And fast. For many, delivering more personalized experiences and marketing may be the difference between success and being roadkill in the age of Amazon and digital disruption.

The changes that many brands need to make are not insignificant. They typically require new technology, new people, new processes, new metrics, material incremental investment and a willingness to aggressively experiment. But to paraphrase Eric Shinseki, “If you don’t like change, you’re going to like irrelevance even less.”

A version of this story appeared at Forbes, where I am a retail contributor. You can check out more of my posts and follow me here.  For information on keynote speaking and workshops please go here.

Being Remarkable · Leadership

The hardest to learn is the least complicated

Gentle reader, congratulations on your wise choice. It is indeed your good fortune to have chosen to read my blog today for I am about to reveal a short-list of virtually guaranteed ways for you to be successful in both your professional career and your personal life.

Intrigued? I bet.

Ready? Let’s do this.

Steve’s virtually sure-fire ways to be successful in business:

  1. Focus relentlessly on the customer.
  2. Never engage in a price war you can’t win.
  3. Defy the sea of sameness and find your purple cow.
  4. Treat different customers differently.
  5. Reject the cult of busy.
  6. Don’t be afraid to fail. Fail better.

Steve’s virtually sure-fire ways to be successful in your personal life:

  1. Accept the things you cannot change.
  2. Live in the now; be present and mindful in all you do.
  3. Be kind whenever possible. It is always possible.
  4. Don’t take things personally.
  5. Remember the things for which you are grateful.
  6. Live open-heartedly and with compassion.
  7. Embrace vulnerability.

As a reader of this blog you have already revealed yourself to be a person of great intelligence and discernment, so you have likely already concluded that these ideas– collectively and individually–are both true and useful. More importantly, you probably noticed that they are all conceptually rather simple to comprehend.

So why do we struggle to put them into practice?

The first reason is our habits. If you are anything like me, you’ve been been conditioned to strive for perfection, to associate your self-worth with your job, your busyness and your possessions. Perhaps you’ve also been taught that vulnerability is weakness or that you’re not okay unless the people around you are okay or that it is your job to figure things out without the help of others. These are all rather obvious and destructive lies, yet our negative practice has created deep grooves in our psyche. The only antidote is to develop different habits and practice them until new grooves are formed.

The understanding is not the hard part. It’s the un-doing.

The second reason is our choices. I’ve watched myself (and more than a few friends, colleagues and loved ones) decide to stay stuck in the past, fight things I couldn’t change, drink the poison of resentment, bask in the misguided attention of victimhood and generally engage in far too much ego grasping and not enough letting go.

Again the understanding is not the hard part. It’s the acceptance that every day we start clean slated and I (and you my dear friend) get the chance to make a new set of choices. Our task is to choose wisely and to rinse and repeat.

The wolf we feed is the one that wins.

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h/t to the Indigo Girls for the title inspiration.

CRM · Customer Growth Strategy · Customer Insight · Personalization · Share of attention · Uncategorized

This time it’s personal

A book that I read more than 20 years ago fundamentally changed my perspective on business overall and marketing in particular.

Peppers and Rodgers “The One to One Future” embedded in my psyche the notion that knowing more about your customer than your competition was a critical component of competitive advantage. And before long “treat different customers differently” became my mantra.

As brilliant as Don and Martha’s book is, it was, for the most part, way ahead of its time. To be sure, many brands and marketers benefitted from its wisdom. But overall, few brands saw personalization as a burning platform and many of the espoused concepts simply could not be operationalized in any practical and cost effective way.

For most, a strategy of uniquely identifying customers, differentiating them by their needs and value, interacting with them to understand their desires and then customizing the experience in a relevant and remarkable way, lingered somewhere between a dream and a nice-to-do.

Yet today personalization is not only increasingly possible at scale, it is rapidly and inexorably becoming a business imperative.

It’s an imperative not because it’s cool or sexy or sounds good at a conference.

It’s an imperative because the battle has shifted from market share to share of attention–and it’s increasingly difficult to be the signal amidst all the noise.

It’s an imperative because one size fits all marketing strategies are well past the point of diminishing returns.

It’s an imperative because we are drowning in a sea of sameness and delivering average products for average people gets you average results, if you are lucky, and gets you fired, if you aren’t.

It’s an imperative because the power has shifted irretrievably to the consumer and the only way to stand a fighting chance is to compete on deep customer insight, intense relevance, remarkability and trust.

That means small is the new big and intimate is the new interesting. And that, at last, the one to one future is here.

 

I will be moderating two very different expert panels on personalization during the next month. Stop by and say “hello” if you can.

On April 20th I’ll be with the Dallas-Fort Worth Retail Executives Association. Pre-register here: http://bit.ly/1Moj5ag  

Then it’s ShopTalk in Las Vegas on May 17th. More information is available at http://bit.ly/1qYKvul  Readers of this blog can use my promo code “sageb250” to save $250 on their conference registration.

CRM · Customer Growth Strategy · Marketing · Me-tail

I see dead marketers

I see dead marketers. Walking around like regular people. They only see what they want to see. They don’t know they’re dead.

Marketers who behave as if customers care about channels.

Marketers who continue to push average products for average people.

Marketers who value efficiency over effectiveness.

Marketers who think they can price cut their way to prosperity.

Marketers who don’t get that today’s battle is for share of attention.

Marketers who believe that the same irrelevant and unremarkable promotions will work if they just shout them louder and more often.

Marketers who relentlessly flog one-size-fits-all programs instead of embracing a treat different customers differently strategy.

Marketers who believe they are ultimately in control.

Mass marketing is dying, as are its stubborn adherents.

It’s the end of mass and the beginning of us.

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Amplify · Customer Growth Strategy · Customer-centric · Frictionless commerce · Omni-channel · Retail

An end to omni-channel?

I have a little confession to make.

Despite my including “omni-channel” liberally in speeches I give, in the hashtags of my tweets and in my often shameless self-promotion of my alleged retail strategy and marketing expertise, I kind of hate the term. Here’s why.

First, it’s hardly a new concept or a revelatory insight. I was leading the “anytime, anywhere, anyway” initiative at Sears in 2001 (not a typo). Companies like Nordstrom, Williams-Sonoma, REI and Neiman Marcus, among others, have been working in earnest on the essence of cross-channel integration and customer-centricity for more than a decade. If a brand has started throwing out the term in their annual priority statements and investor presentations more recently–or injecting it into the titles of staff members–it only means that company was late to the realization that it mattered, not that they are some kind of innovator or industry savant.

Second, it’s vague. As it’s applied relentlessly in retail do we ever actually mean “all”? Home shopping? Cruise ships? Military bases? University book stores? Of course not. Good strategy is rooted in choice, not trying to do it all. It’s not enough to say we’ve embraced all things omni-channel. In fact that’s quite sloppy and unhelpful. We need to lay out the customer relationships that are essential to our brand, the channels that matter for them and what we are doing specifically to eliminate the friction–and amplify the intensely relevant and remarkable–in their experience.

Third, it’s over-used. At conferences, in white papers and among industry observers it’s a virtual hype-fest. It often seems as if certain brands think that if they say “omni-channel” enough their needed (or hoped for) capabilities will magically appear. In my experience if a company is throwing around jargon a lot there is a pretty good chance it’s to obfuscate their lack of strategic clarity and/or executional progress.

Lastly, and most importantly, by itself becoming “omni-channel” is simply not good enough. Regardless of exactly what a brand means when they extol their omni-channel strategy, capabilities like cross-channel inventory availability, order-online-pick-up-in-store, and a host of other functionality that add up to the much vaunted “seamlessly integrated” experience, are rapidly becoming table-stakes, not differentiators.

Certainly retailers must root out the friction in their customer-facing processes and strive for a one brand, many channels experience. But they also need to accept that the power has shifted to the consumer and it’s become much harder to get a brand’s signal to command attention amidst all the noise. The reality is that in a slow growth world, more and more, sales increases must come from stealing share from the competition and mass, one-size-fits-all strategies are rapidly dying. Without making customer insight a core capability–and adopting a treat different customers differently commitment–market share losses and shrinking margins are almost certain.

Ultimately, I don’t care if you use the term “omni-channel” so long as you are clear about exactly what you are doing, how it benefits your efforts to retain, grow and acquire your core customers and why, when successful, it will be truly remarkable. But I’d also like to hear an acknowledgement that those efforts are simply necessary, not sufficient, to win in an ever noisier, customer empowered, slow growth world.

Customer Growth Strategy · Customer Insight · Customer-centric

Most growable customers

I didn’t come up with the term “Most Growable Customers”–Don Peppers and Martha Rogers did–but I’ve used it as a cornerstone of crafting customer growth strategies for nearly 15 years.

In concept, any good customer growth strategy has three basic components:

  • Plans to retain your Most Valuable Customers (“MVC’s”)
  • Actions to attract and engage your Most Valuable Prospects (“MVP’s”)
  • Strategies to increase share of wallet with your Most Growable Customers (“MGC’s).

Most often, struggling brands fail to clearly define and track these segments, understand their unique needs and put into place differentiated, workable programs to move the dial with each.

But even if companies don’t use this exact framework they typically are pretty good at focusing on the big spenders, while simultaneously obsessing over winning new customers.

Unfortunately this often means they aren’t spending enough time on their MGC’s. And that’s usually a big miss.

Typically MGC’s represent great leverage. You already have a relationship with them, so your acquisition costs are behind you. With any luck you have a way to cost effectively reach them. Minimally you should have some basic data about their behavior–products they buy, channel of engagement, full-price or markdown customer–which provides clues as to possible tactics to try next.

Sure you must work hard to keep your Most Valuable Customers–so long as you don’t confuse sales volume with value–and clearly few businesses can thrive over the long-term without adding meaningful numbers of new customers.

But I’d be willing to bet that if you invested more resources against understanding low share of wallet customers and made it a priority to identify and implement opportunities to drive more frequency, cross-shop and/or up-sell, you’ll be happy you did.