The era of personalization begins now
The majority of companies implement personalization from a business perspective as campaigns or stand-alone features. From a technology point of view, personalization is often implemented as a separate stand-alone application.
Winning companies, however, understand and enforce personalization as an integral part of their business. For them, personalization is a seamless part of the company’s technology architecture. The best companies adopting the digital-first approach like Airbnb, Uber, and Netflix, consider personalization as a vital part of the overall customer experience. They firmly believe that the ability of their company to successfully perform this transformation will define their success or failure in the future.
For years, there has been a steady influx of content, tips, and applications about advertising and website personalization. Yet from the consumer’s perspective, the experience is surprisingly seldom personalized nor positive enough. But when it is, it truly stands out. Companies like Uber, Netflix, and Airbnb are the best examples.
At Frosmo, we’ve witnessed the same pattern while talking to companies and partners. Few companies have been able to implement a personalization strategy that stands out.
Let’s begin with the current situation in the market. When it comes to the maturity of personalization and how it has been adopted, we believe that the market can be split into three groups of companies.
The first group is a significant majority of companies that have just managed to get started with personalization. These are the companies that are still trying to cope with the digitalization of their businesses. For them, personalization is still about testing with campaigns and simple separate one-to-few feature applications. It’s all about implementing something fast at a low cost.
Unfortunately, with this approach, because personalization is mainly about tactical conversion optimization, it can be quite challenging to stand out in the market, and it’s nearly impossible to create a positive effect on the customers.
The third group is the digital-first companies, mainly platform companies like Uber, Netflix, Airbnb, and Amazon. For these companies, personalization is an integral part of their technology stack – it’s not a separate one-to-few feature application. Personalization is natural to all of their touchpoints with customers. Only a handful of companies in the world are at this level. They employ people who think and breathe digital business and those technically-skilled enough who can develop personalization directly in their platforms.
Between the first and third groups is the second group, which are companies that have realized that personalization is the key to success in digital business. There are not too many companies in this group – or at least not yet. These are mainly more prominent companies that have started to realize the need to serve customers so well that they don’t even consider switching to other providers.
At its best, personalization is not about freaking the customer out, but to help make everything easier and the customer journey smoother. Alex Gash from Gartner explains the logic behind this in his post about the parallels and critical differences between B2B and B2C personalization.
The shift of the first group to the second group is why we believe that the era of personalization is just about to begin. In the second group, companies start to plan personalization so that it becomes a part of the business processes. They also realize that personalization technology must be included in their technology stack.
The graph below aims to visualize the maturity of personalization in the market. The horizontal line is about the business processes: is personalization seen as a one-off campaign or a continuous part of all of the touchpoints? The vertical line is about the technology maturity – is personalization a stand-alone application or is it an integral part of the technology stack?
Now, what can companies do to ensure a smooth and good transition from the first group to the second?
Three business process requirements for the next level personalization:
- A company must be able to define what personalization means and integrate it as part of their brand, value proposition, and customer experience.
As it is getting more and more difficult to create a competitive advantage in the modern world, customer experience in digital channels is the solution. Personalization is a crucial part of the customer experience. Thus a company must learn, understand, and define its approach to personalization at every level of the organization.
- A company must be able to create and plan comprehensive, personalized customer journeys in every vital touchpoint and for the critical customer segments.
As companies define what kind of key customer segments are most important for their businesses, they must be able to define how their personalized customer journeys should look like. There should be a practical and easy-to-grasp guide that allows implementing personalization quickly to different customer touchpoints. This guide should also draw which systems are responsible for what, and who is responsible for which process, ensuring an efficient and effective process with minimal confusion.
- A company must be able to continuously develop, analyze, improve, and automate these personalized customer journeys with a data-driven approach.
Once the personalized journeys for key customer segments have been created, they also have to be implemented. This is why the technology has a significant role not just for implementation, but also for continuous iteration. The nature of personalization and perfecting it is iterative and based on data.Personalization requires lots of trial and error, hence automation is critical. Machine learning algorithms and AI models can help, but at the same time, it’s also important to ensure that there are standardized, easy-to-use, and fast-testing environments, and a centralized data collection for analysis.
Three technology requirements for the next level personalization:
- Personalization technology must be part of the company’s user interface technology.
- Personalization technology must fetch content from the company’s centralized CMS or ecommerce platform.
If personalization technology is implemented as a stand-alone application, marketing typically begins to use this application and unintentionally duplicate content. This means that the company starts to have two places for content in the company technology stack. In the personalization application, you have separate images for the products or different text for offers or A/B tests. This creates confusion and leads to inefficiency. For example, the people who are responsible for content don’t understand why there’s a visible banner in the user interface that shouldn’t exist at all. It also compromises the further development of the stack. When properly done, personalization technology is connected to the Content Management System and/or ecommerce platform. The content becomes available in the personalization system. The content still remains in the correct place and the personalization system tells the user interface which content to fetch and to which customer to deliver. This doesn’t concern the content that’s only in the user interfaces, but also all channels for marketing. For this reason, Frosmo has developed an easy-to-implement connector. You can take a look at this example with Contentful.
- Personalization technology must be integrated with the company’s technology architecture over APIs.
As companies add new channels and there are more and more data about the customers in different systems (or in Customer Data Platform), the development of the company technology stack must be flexible, transparent, and easy to connect with different systems.
What the future holds for personalization
A significant majority of companies are at group one, where personalization is done with single-feature applications performing basic conversion optimization. The third most advanced group consists of the digital-first platform companies that have implemented personalization into all of their business processes and technology stack.
Now the biggest opportunity for both the companies and their customers lies in group two: a delightful customer experience based on personalization and part of every touchpoint.
To shift from group one to group two, companies need to be able to define how personalization creates a competitive advantage for them, and how it can be implemented on all of their business processes. They also need to be able to implement personalization as a seamless part of their technology stack connected to their user interface technologies, content management system, ecommerce platform, customer data platform, and marketing technologies – all this over APIs that they can build upon.
And this will be the future of personalization – finally a promise of the best possible customer experience to all of us in every touchpoint with our favorite brands and companies.
Start by assessing where you are in personalization with the Personalization Maturity Assessment Tool – and find out how you stack up against the industry benchmark. This is a specially-designed tool carefully put together from more than a decade of knowledge and experience with implementing personalization for businesses.
About the writer:
Mikael Gummerus is the founder and CEO of Frosmo. He’s a visionary and a firm believer in the adoption of microservices architecture, headless ecommerce, and CMS. With more than a decade of experience as a web entrepreneur, he’s passionate about growing consumer expectations of superior digital experiences.