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What is personalization and how do we measure the ‘return on experiences?’

Sean Bridge

March 03, 2023

Personalization in marketing is no longer optional. It's become the expectation of any consumer interacting with a brand. As a society, our tolerance for a brand that treats its customers all the same is dwindling by the day, so it's crucial to provide the best possible personalized customer experience.

From a business standpoint, personalization is a catalyst for acquiring more loyal customers. This increases the lifetime value of the relationship, making it easier to achieve a greater ROI on investment.

What is Personalization, and How Effective Can It Be?

Personalization in digital marketing is tailoring a customer's experience based on their personal preferences, behaviors, and continuous profiling. This is achieved through advanced algorithms, machine learning, and data analysis, which allow businesses to understand their customers' behavior and requirements throughout their journey.

Personalization is reminiscent of the adage "right person, right message, right time." Effective personalization is alignment of the right audience, creative, and context. When these three elements are optimized, it leads to higher engagement, better conversions, and a more satisfying customer experience. Your customers are seeing content and messaging that fit the needs they're actively searching to fulfill.

A tailored approach isn't lost on your customers. As McKinsey research shows, 71% of consumers expect companies to deliver personalized interactions. We know that personalization is the future of marketing for many industries, so the RAPP Analytics team has spent the last few years generating insights and business intelligence that measure personalization's impact on the customer journey. An example of how this has come to life in the form of a RAPP service is through our MIQ assessment, which measures a brand's modern marketing capabilities against consumer, context, and content.

We can achieve this with our clients by establishing an analytics workbench that essentially profiles and tracks prospects at the device-level. We then transition into hyper-personalization post conversion when individuals have converted and opted-in with actionable zero-party data. It's what we know about the individual that fuels how and when we connect with them.

Getting the Right Message to the Right Person at the Right Time

First, distinguishing between "personalized" and "generalized" messaging in digital marketing is crucial. You must consciously decide to change the creative and/or context based on prior audience knowledge. To achieve end-to-end personalization, businesses must also consider the click-through site experience, the capture of zero-party data via CRM sign-up, and the hyper-personalization data strategy that can create a 360-degree profile.

You can further break it down by leaning on additional data to optimize experiences and increase revenue for clients, such as:

  • Complete behavioral/engagement data like individual impression, site visitation, and CRM opt-in
  • Considering attitudinal data to better measure "experiences" rather than behavioral data
  • Financial information for business impact and ROE (Return on Experience)

Moreover, measuring ROE as you go keeps projects on track and ultimately makes them far more successful. It properly captures the outcomes of your digital experience investments. Later on, you can use it as a justification for these investments.

But more data does not imply more value. Most brands are currently collecting more data than they can use, especially since many are yet to develop the capabilities needed to leverage that data. It's the quality of these data that fuels personalization, and marketers need to understand this when devising their data strategy for building profiles. What's more, it's important that there is a noted privacy policy and explicit value exchange that consumers can expect when sharing their data.

How Can You Accurately Measure "Return on Experiences?"

Any personalization initiatives should also be paired with marketing KPIs to track how well different personalization options are being received. An effective end-to-end experience requires proper separation of the audience, creative, and context.

Creating a data-driven personalization experience starts with identifying business goals and the data associated with those goals. Return on experience can be correlated to customer satisfaction and interaction. Besides costs, those are important metrics to consider. By identifying and utilizing the right KPIs, you ensure that the intended purpose of your personalization efforts corresponds to the actual return on experience.

Yet marketers often miss key performance insights, focusing on simple KPIs that don't indicate business progress. Businesses rarely consider attitudinal feedback. Rather, they rely solely on behavioral measures. Fact is, personalization maximizes the lifetime value of the customer relationship, so measuring the return needs to go beyond just the cost of acquisition.

Measuring the Impact of Personalized Messaging in Digital Marketing

Personalization in digital marketing is incorporated into the business strategy at various stages of the process. Here are three sure-fire ways to incorporate personalization in your messaging.

  1. Examine things through the audience/creative/context lens.

While the basic structure remains consistent from campaign to campaign, the target audience can change. Specific cohorts can be engaged with targeting strategies and tailored messaging. As a result, each audience's prospects are directed to different landing pages and site experiences.

Even if most of the content remains unchanged, some messages can be tweaked differently to trigger actions. This, in turn, creates a unique experience that fosters bonding between the consumer and the brand.

  1. Implement feedback mechanisms into the system.

Putting yourself in your customer's shoes is critical for improving your website's performance. What makes you more likely to convert when you're navigating a website? What pages they visit and what things they click tell part of the story, but it's their feedback that can paint a detailed picture. Did they find what they were looking for? Was the content relevant?

Implementing a feedback mechanism means analyzing what they do, why they do it, and what would make it better in order to provide insights for the best possible personalization optimization.

  1. Optimize based on key behavioral and attitudinal data, and provide value through ROE.

Undoubtedly, personalization increases revenue. For example, Deloitte reported that Starbucks rolled out a personalization campaign with 400,000 tailored messages, which resulted in a 300% growth in the offer redemption.

You must measure the ROI from personalization on a dashboard that features pre- and post-personalization campaign data, rather than in silos. You need a solid data strategy to enhance the personalization program’s ROI. And returns need to address the lifetime value instead of stopping short at acquisition.

Personalization is key to getting a loyal customer base in today's competitive business environment. That's why you must remember which metrics will help you achieve the right personalization and gain a competitive edge.

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