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Made-to-Order Marketing

By Sep 01, 2011

“One-to-one marketing” is no longer a buzz phrase. It's been part of the marketing discussion for so long that it's become an accepted philosophy. Finding ways to identify your likeliest prospects and then tailoring your marketing message to their needs and interests will ultimately produce higher conversions, improved relevance and better loyalty.

The problem is putting that philosophy into action. Marketing personalization is a broad strategy that can involve many channels and many different tactical tools, from customized direct mail and triggered email to ad retargeting and specialized web content. The choice of tactics for personalization depends on sellers' business models.

And as always these days, considerations of budget and the cost-efficient use of resources enter in too. Some customized marketing can be done relatively inexpensively, such as integrating personalized URLs into direct mail or email. Other elements take a major commitment of funds and people power. You might agree that showing ecommerce shoppers product recommendations based on their past purchases would create incremental sales; but would that sales boost be enough to justify the cost of bolting that feature onto your website?

Chief Marketer decided it was high time to get an overall picture of how many marketers are doing something to make their messaging stand out from the pack through personalization. Just as important was examining the barriers that are keeping others from diving in and taking part in this one-to-one exchange.

Email leads in personalization

By their own report, most marketers are indeed doing something to move their messaging away from mass-blasts and toward more personalized communication. Eighty-one percent, or more than four in five, said they now customize their marketing to some extent, against 16% who don't. Those basic proportions hold true for both B-to-C and B-to-B respondents to the survey. Large companies that earned more than $100 million in revenue last year indexed much higher than the average on personalized marketing (86%), while small companies with $10 million or under came in below the average at 76% — still a hefty commitment to custom messaging, it should be noted.

As to the channels used for that targeted messaging, by far the most common choice was email, where 89% of respondents who customize their marketing said they were applying personalization. Direct mail was the next most likely channel for a custom approach (58%), followed by the web (36%), social media (31%) and mobile (12%).

As above, large companies were more likely to target their messaging in these channels than small ones — with the notable exception of social media. There, 39% of responding companies with $10 million or less in revenue said they offer some kind of personalized content, while only 15% of companies with sales of more than $100 million made the same claim.

Purchases, clicks, views

Targeting messaging starts with amassing data about customers: their interests, tastes, life stages and position in the buying funnel. The two data sources most often cited by respondents now using personalized marketing are consumers' purchase histories (58%) and site registration information voluntarily submitted (51%). About two marketers in five said they also use interactive tracking (clicks and page views) to hone their marketing for some customer segments. Only 30% use data from offline encounters in stores or via call centers.

Among those respondents using personalized messaging of any type, the leading tactic used (58%) is deploying email triggered by specific online behavior. Although the survey did not drill down to the specifics, it's a safe bet many, perhaps most, of these email messages are prompted by shopping cart abandonment or as follow-up to some interaction such as a white paper download.

Other tactics have a much narrower following — none above 50%. PURLs are used by 38% of the response group, and slightly fewer customize the web content they show to some visitors based on expressed interests (35%) or tailor product recommendations to past purchases (34%). About 29% of those polled customize landing pages specific to some of their search keywords — a kind of custom content that uses search terms to segment out visitor interest.

Only about 19% said they employ retargeting, which collects data about products, services and topics of interest to some site visitors and then shows them reminder ads for those items when they're on other websites or social networks.

ROI still elusive

Among respondents already sending out some kind of customized marketing message, a full two-thirds said their companies will increase use of the strategy in the coming year, and 23% said they will maintain their current level of personalization. Asked to explain their answers, a large number of these respondents pointed to at least an expectation that more targeted messaging will produce more conversions and a better marketing ROI.

The emphasis on “expect” is intentional, particularly in regard to returns. Asked directly about the ROI benefits, a full 46% of those currently doing it said that personalization “produces a better response rate than mass media, but true ROI is difficult to measure.” That compares to 26% who said the response, and thus the ROI, was “measurably better than mass media.” About 6% of this group said the response rate and ROI were pretty much the same as for untargeted marketing, and a large 19% were not sure how the two compared.

What about the 16% who said they were not doing anything to personalize their messaging to prospects and customers? What's stopping them? Lack of in-house expertise (47%) and lack of funds (43%), for the most part, although 38% also cited a shortage of the kind of data needed to make marketing customization work. Thirty-one percent of B-to-B respondents also pointed to the difficulty of personalizing marketing in their field, where buying decisions are often run past multiple stakeholders.

But even among this group of non-personalizers, only one-quarter of respondents said they don't expect to begin deploying customized marketing in the coming year. Thirty-three percent said they probably will start tailoring their messaging in the next 12 months, and a majority — 43% — were simply not sure.

Methodology:

The Chief Marketer Personalization Survey was conducted online between June 26 and July 20, 2011, and polled 675 active marketing professionals distributed across business-to-consumer and business-to-business models, from brands and agencies in the manufacturing, retail, financial, healthcare, travel, entertainment, advertising, publishing, database and nonprofit sectors.