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Personalized marketing, or one-to-one marketing, is a marketing strategy by which companies leverage data analysis and digital technology to deliver individualized messages and product offerings to current or prospective customers. Advancements in data collection methods, analytics, digital electronics, and digital economics, have enabled marketers to deploy more effective real-time and prolonged customer experience personalization tactics.

Technology

Personalized marketing is dependent on many different types of technology for data collection, data classification, data analysis, data transfer, and data scalability. Technology enables marketing professionals to collect first-party data such as gender, age group, location, and income and connect them with third-party data like click-through rates of online banner ads and social media participation.

Data Management Platforms: A data management platform (DMP) is a centralized computing system for collecting, integrating and managing large sets of structured and unstructured data from disparate sources. Personalized marketing enabled by DMPs, is integral to consumers receiving relevant, timely, engaging, and personalized messaging and advertisements that resonate with their unique needs and wants.

Customer Relationship Management Platforms: Customer relationship management (CRM) is used by companies to manage and analyze customer interactions and data throughout the customer lifecycle to improve business relationships with customers, assist in customer retention and drive sales growth. CRM systems are designed to compile information on customers across different channels (points of contact between the customer and the company) which could include the company's website, LiveChat, direct mail, marketing materials and social media. CRM systems can also give customer-facing staff detailed information on customers' personal information, purchase history, buying preferences and concerns.

Beacon Technology: Beacon technology works on Bluetooth low energy (BLE) which is used by a low frequency chip that is found in devices like mobile phones. These chips communicate with multiple Beacon devices to form a network and are used by marketers to better personalize the messaging and mobile ads based on the customer’s proximity to their retail outlet.

Benefits

Personalized marketing is being widely adopted in one form or another by many different companies because of the benefits it brings for both the businesses and their customers.

Businesses: Before the Internet, it was difficult for businesses to measure the success of their marketing campaign. A campaign would be launched, and even if there was a change in revenue, it was nearly impossible to determine what impact the campaign had had on the change. Personalized marketing allows businesses to learn more about customers based on demographic, contextual and behavioral data. This behavioral data, as well as being able to track consumers’ habits, allows firms to better determine what advertising campaigns and marketing efforts are bringing customers in, and what demographics they are having the most effect on. This allows firms to drop efforts that are ineffective, as well as put more money into the techniques that are bringing in customers.

Once the necessary systems and technology have been put in place, some personalized marketing can also be automated, increasing the efficiency of a business’s marketing strategy. For example, an automated email could be sent to a user shortly after an order is placed, giving suggestions for similar items or accessories that may help the customer better use the product he or she ordered, or a mobile app could send a notification about relevant deals to a customer when he or she is close to a store.

All of these benefits eventually lead to the most crucial benefit: an increase in revenue. Businesses implementing personalized marketing have seen an average increase of 19% in total sales.

Customers:In today’s technology-driven marketplace, consumers face an overwhelming variety of different products and services available to purchase. A single retail website can offer thousands of different products, and few have the time or are willing to make the effort to browse through everything retailers have to offer. At the same time, customers expect ease and convenience in their shopping experiences. In a recent survey, 74% of consumers said they get frustrated when websites have content, offers, ads, and promotions that have nothing to do with them. Many even expressed that they would leave a site if the marketing on the site was the opposite of their tastes, such as prompts to donate to a political party they dislike, or ads for a dating service when the visitor to the site is married. In addition, the top two reasons customers unsubscribe from marketing emailing lists are 1) they receive too many emails and 2) the content of the emails is not relevant to them.

Personalized marketing helps to bridge the gap between the vastness of what is available and the need of customers for streamlined, relevant shopping experiences. By providing a uniquely customized experience for customers, frustration is avoided and satisfaction is higher as the customer is more able to quickly find what they are looking for, as well as avoid wasting time sifting through irrelevant information. Consumers have come to expect this sort of experience that is catered to their interests, and companies that have created ultra-customized experiences, such as Amazon and Netflix, have quickly become customer favorites in their markets.

Future of Personalized Marketing

Personalized marketing is gaining headway and has become a point of popular interest with the emergence of relevant and supportive technologies, like DMP and various forms of social media. Now, many people believe it is the inevitable baseline for the future of marketing strategy, and the baseline for future business success in competitive markets.

Adapt to technology: For personalized marketing to work the way advocates say it will, companies are going to have to adapt to relevant technologies.They’ll have to get in touch with the new and popular forms of social media and data-gathering platforms - technologies with which not all current employees and businesses may currently be familiar.

Restructuring current business models: Adopting a brand new marketing system tailored to the most relevant technologies will take time and resources to implement successfully, so organized planning, communication and restructuring within businesses will be necessary as well as externally between businesses and consumers. Companies will have to accept that their current business and marketing models are going to change radically, and probably often. Aside from new forms of training of current and future employees, companies will have to reconsider the ways through which data and information circulate within the company and possibly beyond. Company databases will be flooded with expansive personal information on individuals – current clients’ whereabouts, potential buyers’ past purchases, etc. – and there will be complications regarding how that information is gathered, circulated internally and externally, and used to increase profits.

Legal liabilities: To address people's concerns with sensitive information being gathered and utilized without obvious consumer consent, liabilities and legalities would have to be set and enforced before companies could easily obtain and use any amount/form of personal data on individuals to increase corporate sales and efficiencies. Privacy is always an issue, in some countries more than others, so companies would have to manage any legal hurdles before personalized marketing can make its expected major takeoff.   

Controversies

Many people are concerned that companies are using too much personal information to create the personalized marketing used today by businesses.

Use of algorithms: One of the perceived problems with personalized marketing is that data is being generated by algorithms, and the algorithms associate preferences with the user’s browsing history or personal profiles. This means, rather than discovering new facts or perspectives when one searches for news, information, or products, one will be presented with similar or adjoining concepts. Some consider this exploitation of existing ideas rather than discovery of new ones. Presenting someone with only personalized content may may also exclude other, unrelated news or information that might in fact be useful to the user.

Algorithms may also be manipulated. In February 2015, Coca-Cola ran into trouble over an automated, algorithm-generated bot created for advertising purposes. Gawker’s editorial labs director, Adam Pash, created a Twitter bot @MeinCoke and set it up to tweet lines from Mein Kampf and then link to them with Coca Cola’s campaign #MakeItHappy. The result was that for two hours, Coca-Cola’s Twitter feed was broadcasting big chunks of Adolf Hitler’s text. In November 2014, the New England Patriots were forced to apologize after an automatic, algorithm-generated bot was tricked into tweeting a racial slur from the official team account.     

Internet marketing

Personalized marketing had been most practical in interactive media such as the internet. A web site can track a customer's interests and make suggestions for the future. Many sites help customers make choices by organizing information and prioritizing it based on the individual's liking. In some cases, the product itself can be customized using a configuration system.

The business movement during Web 1.0 leveraged database technology for targeting products, ads, and services to specific users with particular profile attributes. The concept was supported by technologies such as BroadVision, ATG, and BEA. Amazon is a classic example of a company that performs "One to One Marketing" by offering users targeted offers and related products.

Personalization is the term that later followed as a way of describing this evolution in Internet marketing.

Other marketing

More recently, personalized marketing, also known as Individual marketing, has become practical for bricks and mortar retailers. The market size, an order of magnitude greater than that of the Internet, demanded a different technological approach now available and in use. Many retailers attract customers to the physical store by offering discounted items which are automatically selected to appeal to the individual recipient. The interactivity occurs through the offer redemptions recorded by the point of sale systems, which can then update each model of the individual shopper. Personalization can be more accurate when based solely upon individual purchasing records because of the simplified and repetitive nature of some bricks and mortar retail purchasing, for example grocery superstores.

Don Peppers and Martha Rogers, in their book on the subject, The One to One Future, speak of managing customers rather than products, differentiating customers not just products, measuring share of customer not share of market, and developing economies of scope rather than economies of scale. They also describe personalized marketing as a four phase process: identifying potential customers; determining their needs and their lifetime value to the company; interacting with customers so as to learn about them; and customizing products, services, and communications to individual customers.

Some commentators (including Peppers and Rogers) use the term "one-to-one marketing" which has been misunderstood by some. Seldom is there just one individual on either side of the transaction. Buyer decision processes often involve several people, as do the marketer's efforts. However, the excellent metaphor refers to the objective of a single message source (store) "to" the single recipient (household), a technological analogy to a "mom and pop" store on a first-name basis with 10 million customers.

Strategies

One-to-one marketing refers to marketing strategies applied directly to a specific consumer. Having a knowledge of the consumer's preferences enables suggesting specific products and promotions to each consumer. One-to-one marketing is based in four main steps in order to fulfill its goals: identify, differentiate, interact and customize.

Identify: In this stage the major concern is to get to know the customers of a company, to collect reliable data about their preferences and how their needs can best be satisfied.

Differentiate: To get to distinguish the customers in terms of their lifetime value to the company, to know them by their priorities in terms of their needs and segment them into more restricted groups.

Interact: In this phase it is needed to know by which communication channel and by what means contact with the client is best made. It is necessary to get the customer's attention by engaging with him in ways that are known as being the ones that he enjoys the most.

Customize: It is needed to personalize the product or service to the customer individually. The knowledge that a company has about a customer needs to be put into practice and the information held has to be taken into account in order to be able to give the client exactly what he wants.

See also

• Mass customization
• Recommender system
• Management information system
• Intelligent document
• Relationship marketing
• Configurator
• Management
• Marketing
• Internet marketing
• Variable pricing
• Variable data printing
• Real-time Marketing

References

Category:E-commerce Category:Marketing Category:Information technology management