Personalization enables brands to create tailored experiences for their customers. Everyone involved in any business relationship enjoys the benefits that come with this approach. In fact, thanks to personalization, consumers are more likely to be reached by messages and offers that are related to the products they actually want to buy, while companies are able to achieve better business results. 

The combination of big data and technology is transforming the possibilities for personalization, from simple message segmentation to programmatic ad buying, from updating websites to suit individual users to developing one-to-one marketing actions. However, the growing popularity of this trend is still accompanied by often ineffective practices. To avoid investing time and money in personalization projects that will turn out to be half-hearted if not downright problematic, there is one thing that companies can do: develop a personalization strategy. 

By having a personalization strategy tailored to business goals and requirements companies can solve the four major problems that Widerfunnel points to as the main causes of insufficient personalization:

  1. Ad hoc implementation of standard features that don’t solve critical issues.
  2. Lack of thorough data analysis and timely thinking about the framework that should guide implementation.
  3. Lack of a rigorous process through which to hypothesize, test, and validate ideas of personalization.
  4. Lack of resources to create and deploy the many marketing messages that will need to support multiple, personalized target segments.

Consumers not only prefer to be engaged by personalized communications but now take them for granted (and, increasingly, demand them). And while they are ready to learn how to use the latest features of digital tools in order to enjoy the benefits of personalization, it is equally true that their loyalty to a company depends in a direct way on the smoothness and ease of their experience with that company: on the efficiency, timeliness, and quality of the response the company has provided to meet their needs.

It may seem obvious, but this is probably the key step: a personalization strategy must take the needs of consumers into accountGaining full awareness of these same needs starts with a thorough consideration of the target audience, an audience, to be described as comprehensively as possible, must be broken down into meaningful segments

Before moving on, let’s pause for a moment: is there a difference between personalization and segmentation? And if this difference exists, in 2023, is it still central to the process of building a personalization strategy?


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The basis of a personalization strategy: the difference between personalization and segmentation

Personalization and segmentation are two methodologies that are often used interchangeably. They don’t actually coincide but represent two stages within the same continuum. In fact, they share a common goal: to refine the customer experience, a goal they pursue using the same resource: information gathered about the potential customer.

So far we’ve talked about the similarities. Now, let’s focus on what distinguishes one from the other: 

  1. Segmentation attempts to group potential customers into aggregate categories based on similar characteristics. 
  2. Personalization represents the ultimate goal of a customer experience building process that uses in-depth information and insights to continually redesign it based on individual needs and desires.

Its lower-performing forms, personalization has been around for decades. The advanced version we have today (and which in this sense represents an evolution of segmentation) is made possible by digital technologies and enhanced analytics capabilities. Thanks to these, brands can continue with renewed conviction to pursue the frontier of perfectly individual marketing (but is this frontier really still so far away?). So yes, there is a significant difference between segmentation and personalization, and it will be good to keep this in mind in 2023.


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The risk of advanced personalization: beware of privacy rights

Profiling techniques allow for increasingly granular results and a step-by-step approach to what we might call “understanding the real customer.” The possibility of access to a wealth of knowledge that was almost unattainable in pre-internet days, increases the quality of interactions with customers, but also produces a situation of potential risk to the confidentiality of personal information.

And this is one of the most pressing issues that companies will have to address in the immediate future (or, at best, are already facing) and that concerns what we called the delicate balance between personalization and trust in one of our recent posts. Crucial to any business initiative, this balance can only be achieved through careful and respectful management of customer data. While many of the personalization techniques used today are (still) based on the exploitation of cookies and involve (increasingly) third-party data, concern about privacy has skyrocketed to an all-time high. 

Whatever personalization strategy it decides to develop, in order not to erode the trust credit it has earned, a company will have to activate a trust strategy where procedures and tools are in place to protect customer data (potential or acquired). 

So far, we have presented some of the basic premises that must be internalized before setting up a personalization strategy. Now we can explain some of the most effective steps to implement it.

How to implement a personalization strategy

In its personalization strategy for 2023, a company will have to organize all the actions, communications, and interactions aimed at creating tailored experiences for its “ideal customers” in a structured flow.  This is a broad definition and one that is achieved based on some precise steps.

Identify the most valuable audience segments

The first step an organization must take when deciding to have a personalization strategy is to use the data at its disposal to better understand its target audience, and especially to identify the segment that is most likely to generate the most value over time.

According to Hudson Arnold, Senior Strategy Consultant at Optimizely, “Personalization is not a business practice for companies with no idea of how they want to segment, but for businesses that are ready to capitalize on their segments.”

This means that before we can implement true personalization tactics, we must focus our energies on interpreting the data to identify the most important users (from whom we expect the best results over time) among all those who have come into contact with the brand. To achieve this goal, we can proceed gradually, through successive steps: 

  • A first selection considers broader cohorts, focusing on the visitor’s geographic location (where is the user located?), device use (is he browsing using a tablet or desktop PC?), his online behaviors (how long has he been viewing that product page?) the touchpoint with which he interacted (did he arrive at the site from a Facebook ad?)
  • Subsequent selections use different types of metrics as the definition process breaks down into more precisely qualified segments. 
    • Transactional metrics that isolate and translate the perception accrued by the customer along the purchase path into a quantitative figure. The most widely used KPIs here are probably the CSAT (Customer SATisfaction) and CES (Customer Effort Score), which qualify and quantify a specific interaction and return the customers’ appreciation at a given moment (but tell us nothing about the overall interaction or the complete succession of interactions).
    • Relationship metrics, which measure the state of the relationship between customers and the brand from the very beginning of the business relationship, making it possible to observe how the interaction evolves, including in its emotional range (i.e., they help to define customer sentiment about a brand) from a historical perspective. The NPS (Net Promoter Score) is the archetypal relationship KPI: it expresses the likelihood that a brand’s customers would recommend it to someone else on a scale of 1 to 10. That is, it measures a customer’s propensity to recommend a product, service, or brand to friends and family following an interaction. Customer retention (customer retention rate) is also a relationship indicator: It indicates the amount of customers who return to shop from a brand after purchasing one of its products or services, records the perceived quality of customer service and product performance, and measures the degree of loyalty. 

Marketing teams can also segment potential customers during the onboarding process, integrating the information obtained from their responses directly into the personalization strategy. This type of analysis, which is qualitative, contributes greatly to increasing customer understanding.

After gathering customer information and selecting the most valuable audience segments, it is necessary to identify which insights are valuable to the target audience.

Extract the really useful insights

One of the recurring questions that fuels a personalization strategy is this, “How can I get useful insights to create personalized messages that really work?” The effectiveness of the entire strategy depends on the answer to this question because the quality of customer insights directly affects the quality of personalization results. 

It is possible to obtain the insights needed to build better personalized initiatives through three ways (to be used individually or in combination):

  • Insights obtained by deductive means.

Deductive personalization is based on general theories, psychological or user-experience-related principles, best practices, and then develops through moments of verification and validation.

  • Insights gained by the inductive route.

Inductive personalization proceeds in reverse to deductive personalization: rather than starting from an ideal level and then applying the model to the data, it looks for generalizable patterns in the data or test results that have already been acquired. 

  • Insights obtained directly from clients 

In this case, the floor passes directly to the users who are specifically asked to talk about themselves. Therefore, they self-identify and self-segregate. Insights of this type are the easiest way to conceptualize and implement.

All of the insights obtained will be used to further characterize audience segments andcreate personalized messages.

At this point, we have segmented our audience in the most timely way possible and have extracted those insights that can inform our personalization strategy. All that remains is for us to choose the marketing tactics we can use based on what we have discovered about our audience.

Choose the best formats to convey your personalized content

A personalization strategy must always be thought of in the broader context of marketing optimization, within which different communication channels and content formats have their place. The ones we point out below are just two of the possible tactics that can be employed within a personalization strategy, but we see them as the ones with the greatest potential.

  • Responsive sites. Micro-sites that combine the flexibility and interactivity of a web page with the engagement capabilities of personalized content are able to support the multichannel customer journey and they provide customers with rich, selected information based on their tastes and needs. All interactions, even purely transactional ones such as bills and statements, become digital experiences that can be enjoyed through the web. Interactive features such as calls to action, forms, and chatbot integration transform a channel that is historically relegated to transactions or reporting into a two-way communication tool. 
  • Personalized and interactive videos. Videos that offer a complete set of features for personalization. They make it possible to create individual interactive content that can be customized in every component according to the recipient’s data. Dynamically edited scenes to compose a story in which the user is the star, where custom text elements or audio sequences can be inserted that integrate seamlessly with the narrative. Conveying complex information while offering an engaging experience: personalized, interactive videos help achieve both goals and create unique experiences for each customer.

The year 2023 is shaping up to be one where the stakes will be very high when it comes to losing or enhancing trust in the company. A personalization strategy must then be designed especially with this goal in mind: to nurture and enhance the loyalty process. Doxee’s interactive experience offers not only technologies that live up to this mission but also the right cultural perspective, where the consumer gains a position of absolute centrality and where companies build valuable relationships.