Personalization: What options do I have?

Original version published in Emerce Topics (Dutch)

December 8, 2015 - One of the most discussed topics in marketing and e-commerce is personalization. But as with every topic that is hot, the term personalization is used (and misused) by everyone. In this article I will discuss the various methods that are described as personalization. I will not start a theoretical discussion if something should be called personalization or not.

Personalization tools can roughly be divided in the following categories:
1. Use of name in salutation and subject line.
2. Use of name in images and video.
3. Segmentation.
4. Online recommendation engines.
5. Persuasion.

1. Use of name in salutation and subject line

Using the name in in e-mail and on the web site has been the most widely-used method of personalization: ‘Dear Herbert’ in the salutation of an e-mail or ‘Welcome back Herbert’ on the web site.

The first question is the following: Will you use first name, last name or a combination? Do you choose for a ‘Dear Herbert’ or ‘Dear Mr. Weustenenk’ or ‘Dear Herbert Weustenenk’? The preference will be different for each receiver. Companies typically make a choice for first name or last name, based on an estimate of the average customer. Some companies have tested this in an A/B test. But it might be a good idea to ask the customer: What has your preference: Shall we address you with ‘Dear Herbert’ or ‘Dear Mr. Weustenenk’?

You also have to take into account the completeness and accuracy of your data. What do you do when you don’t have the name of the customer? It is annoying for the customer to receive an e-mail with ‘Dear {FirstName}’ or worse ‘Dear null’ in the salutation.
You can keep it neutral with a ‘Dear sir or madam’. A company as Wijnvoordeel has found a nice solution to use in these situations ‘Dear wine lover’.

Salutation

Another method to use the name is in the subject line of an e-mail message. ‘Dear Herbert, we have a great offer for you’. Research about this topic is not clear. Some research shows that using the name in the subject line increases conversion, other research that it decreases the conversion. You have to test this before you implement it. And again: are you using first name, last name or a combination?

The implementation is easy as every professional e-mail marketing provider such as Copernica, MailPlus, Clang, MailChimp, etc. support dynamic content. If you don’t use it yet, start immediately. Do an A/B test if the use is positive, and which salutation generates the best results.

2. Use of name in images and video

A more advanced form of personalization is the use of name in images and video.

A company as One to Smile combines images with text (Short Message in Picture - SMiP). A short personal message - typically the name - is embedded in e-mail, on social media and on landing pages. Although this type of personalization could be used in every campaign, the typical use is in specific campaigns such as events (Christmas, Halloween, birthday, mother’s day), events (World Cup football, concerts, festivals) and in specific marketing campaigns (ski holiday season, product launch).

One to Smile

I personally like the campaign of Deutsche Post after the German team won the World Cup soccer in 2014. Web site visitors could enter their name and the site generated a personalized image that could be posted by the visitor on their Facebook profile or timeline. Too bad Dutch companies cannot copy this campaign for the European Cup soccer in 2016.

Deutsche Post

The same idea (text in image) can also be used in a personalized video. The name of the customer is visible in the video. I really liked the campaign of D-Reizen (‘reserve your seat’) where my name was printed on the towel that was put on the beach chair in the last scene. The campaign of Alphabet Nederland was interesting. Customers were invited with a personal message to visit the office for a coffee. In the trip to the office the name of the customer (both company and person) was shown a few times.

 

The use of personalization in images and video comes from neuro marketing. Seeing your own name triggers your subconscious and makes you more likely to click. Read more in this white paper.

Using personalized images is easy to implement with tools that are specialized. The html code of e-mail or web site refers to an external server (SaaS) in the img src=‘...’. Every e-mail marketing platform will support this. An A/B test will prove if the result is positive.

Using the customer name in a personalized video is very useful for specific campaigns but requires preparation and investment to go from idea to story to execution.

3. Segmentation tools

E-commerce platforms such as Magento Enterprise, shopware, Demandware, Sitecore, etc. but also external tools like Iqnomy, BlueConic, etc. offer the possibility to offer personalized content. The visitor is identified via cookie or log-in and his click behavior is stored to define his preferences.
The marketeers define beforehand for a number of segments (such as interested in product group X, purchase product Y last month, man or woman, city, subscription almost expires) and determine what content they want to show that group on web site and in e-mail. Theoretically you can continue to segment until you reach the ultimate segment of one person. Most companies limit the number of segments, depending on the amount of data you have from your customers and the amount of time you want to spend.

The tool places the visitor automatically and real-time in the defined segment, and shows them the content you have determined for that segment.

The use of tools like this creates a more personalized user experience, and helps the visitor with his selection by showing relevant products, banners and other information. With this, the ‘every visitor gets his own web site’ comes within reach. It is also possible to add personalized offers to e-mail marketing. The standard tools typically include an API to e-commerce platforms and e-mail service providers.

4. Online recommendation engines

Online recommendation engines such as Pleisty, Prudsys, Rich Relevance, Nosto, etc. take the ‘every visitor gets his own web site’ a step further.

The tools recognize the visitor automatically and real-time, and calculate which content would be most relevant for the visitor using automated algorithms. The click and purchase behavior of the visitor and from all visitors together is combined with predefined merchandising rules. The number of segments is virtually unlimited through the use of automatic algorithms, and results in the ultimate segment of one person. As with the previous group (segmentation tools), it is possible to include personalized content on web site and in e-mail marketing.

Wijnvoordeel

The first and most known online recommendation engine is used on the site of Amazon. Nowadays the larger sites such as Wehkamp, Bol.com, Coolblue, etc. use their own data scientists that use home-made self-learning algorithms. From the group below that some companies such as Wijnvoordeel, Conrad, etc. are using commercial recommendation engines. But you see an increasing number of standard plugins in the app stores of e-commerce platforms such as SEOshop and the e-mail marketing platforms that allow smaller web shops to use online recommendations.

The implementation of a segmentation tool and an online recommendation engine requires a few hours to a few days, depending on the existing situation and the selected tools. The implementation is not very complex but you have to decide upfront which method and tool you want to use. In theory you could do an MVT test with a baseline, segmentation, and online recommendation. But this is pretty labor-intensive and most web shops will study the alternatives, choose a tool and implement it.

Segmentation tools are very suitable for a smaller product portfolio while the online recommendation engines are more suitable for a larger portfolio. Segmentation provides more control of the shown content while online recommendation engines are fully automated and self-learning. Segmentation tools are typically a little cheaper but require more time for maintenance and optimization.

Marketing agencies often prefer segmentation tools because it provides more control over the content shown and they can use their expertise. And they can spend more hours working for the customer.

5. Persuasion

The last group that I want to discuss are the persuasion tools such as Webpower. Based on the six key principles of influence of Robert Cialdini (Reciprocity, Commitment and Consistency, Social Proof, Authority, Liking, Scarcity), visitors can be influenced to convert.

Some people can be influenced by scarcity (only two rooms left), others for social proof (if other people like this, it must be good).
Of course the claim needs to be true. Recently a company was caught as they suggested scarcity that wasn’t there.

Persuasion techniques cannot be used in all situations. It is especially suitable when the customer already made the choice for the right product, and only needs a nudge to finalize the purchase. If a customer does not like that product, persuasion won’t have much effect.
For example: A few years ago I was on a market in the Middle East and a vendor offered me a carton of cigarettes. ‘Only 25 dollars’. ‘No thank you. I don’t smoke’. ‘OK, 20 dollars’.

Choosing the right personalization method and tools

All these methods are seen as ‘personalization’, although that could be confusing. Only the methods (1) and (2) are personal: The name is used. In the other methods the visitor can be anonymous. We don’t know his name but know everything about his preferences.

The methods are not mutually exclusive. Only the choice for a segmentation tool or recommendation engine needs to be made in advance. The others can be switched on or off.

Now your question is: Which method is suitable for me? And/or which tools should I use? My answer is, like every consultant: ‘that depends’. And most consultants will then add: ‘But I can help you with your selection process.’

Conclusion

A web shop should step by step aim for a more personalized approach of its customers and visitors. Not only because the tools are becoming available for every store but also because customers are going to expect that the web shop owner knows what is relevant for them.

And although the use of the name in salutation or subject line suggests a personal relationship with the customer, it is important to keep the content more personalized too. Some time ago I received an e-mail with ‘Dear Herbert’ in the salutation and a promotion of the latest hair styling products. In other words: You know my name but you do not know anything about my hair style.

A one-size-fits-all approach on web site and in e-mail marketing will eventually lead to clients switching to your competitors.

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