It's now understood that in order to drive exceptional customer experiences brands need to extend personalization beyond just recognizing customer names. Since customer data is part of a value exchange system that consumers are increasingly conscious of, it's becoming even more important to zero in on the contextual insights that allow you to create hyper-personalized experiences.
With Internet of Things (IOT) predicted to account for nearly half of all internet connected devices by 2020 (12.2 billion in total) are we ready to make sense of the growing volume of data being collected by these billions of sensors and beacons?
In a recent BCG study, Profiting from Personalization, results of a 2016 survey of fifty companies in ten industries outlined a number of barriers to maximising the potential of personalization. Top among the barriers were lack of personnel, lack of talent and knowledge and even a lack of a clear roadmap. According to BCG’s research, companies that are creating personalized experiences with advanced technologies and proprietary customer data see a 6-10% increase in revenue, which is two to three times faster than their peers.
So what is going on here? On one hand companies are collecting an unprecedented amount of data on their clients, but on the other hand the majority of companies surveyed said that they had too few resources to act on the very data that could unlock supernormal revenue growth.
Marketers are all too familiar with the concept of personalization: using individuals’ purchasing behaviour or even web-browsing behaviour to target ads, with the intention that the ads will be more likely to catch their attention while they’re skimming the CNN headlines. However, marketers are now faced with an unprecedented amount of data on their customers and the ethical considerations on how best to use it.
Whether it be sensors that track your fitness, food intake or blood sugar or a trash can sensing when it is full, businesses need to answer the question of how they will use this information to create customer experiences that are targeted, relevant and superior to those that don’t take into consideration a person’s circumstances.
Personalization is not the sole domain of marketing though. In order to truly unlock the value of personalization, cross functional teams consisting of relevant lines of business such as IT, operations and general management need to collaborate to create online and offline experiences at every touch point that are both compelling and personal.
“Personalized marketing is a good starting point, but ultimately personalization is more than a marketing challenge. For incumbents to defend—and expand—share, they need to reimagine their business with an individualized value proposition at the core, merging physical and digital experiences to deepen their customer connections.” Profiting from Personalization, BCG, May 2017
One of the reasons I love working with hospitality and travel clients is that service-based industries inherently understand the ROI of personalization. The travel industry in particular is famous for its loyalty programs that pride themselves on recognition, points and status. Progressive hotel brands understand that the goal posts for loyalty have now shifted.
While points alone may have been sufficient in the past, those that aim to differentiate via service are successfully leveraging the data they hold on their guests to create personal experiences. Whether it be to detect a guest has entered a room and set the lighting and heating to the guest’s preferences or creating mobile experiences that inform guests about their local environment when travelling; IOT devices can be a powerful ally to anticipate guests’ needs and personalize their surroundings in real-time.
In order for customers to continue to be willing to share their personal data with businesses there needs to be a fair value exchange. Customers give clues about their behaviours, wants and needs but then expect in return that businesses use this data to continue to serve them better.
The risk to the IOT industry is that huge amounts of data continues to be collected on consumers but the industry’s capacity to leverage that data for the benefit of the consumer does not keep pace with the devices and data coming online. At that point, consumers will rightly start to question why their fridge is sending grocery data back to the manufacturer. A recent Altimeter Report suggested that the highest state of organizational capability for personalization strategies were those organizations that use artificial intelligence to sift through the customer data they collect to identify new ways to personalize for relevance.