Personalization Drives Retention
The number of e-mail users continues to grow each year, far outpacing the number of Web users. According to industry analyst firms such as Jupiter Communications, New York, the average number of commercial e-mails a consumer will receive is expected to increase to 1,600 in 2005, from 40 in 1999.
This trend will make consumers more selective about which companies they develop online relationships with. Already, online and offline consumers often conduct an informal evaluation to decide which company or product offering merits their attention. Three important criteria will help guide consumers' evaluations:
• Their trust in the company sending the message.
• The relevance of the message.
• The frequency with which the message is received.
Given the right tools, marketers can learn extensive information about their customers, and by doing so, they will be able to better serve their customers' needs and desires. The concept is similar to having a personal waiter at all times who asks what you want and anticipates your needs.
The foundation for personalization. The foundation of one-to-one marketing, and online marketing in particular, is building a relationship with the consumer based on confidence and trust. The most basic form of trust in an online marketing relationship starts with permission -- ensuring that the consumer has the ability to opt in or opt out of the conversation at any moment. Without drilling down into the many issues surrounding privacy, it is critical for companies to understand that trust is implicitly and explicitly linked to consumer privacy, and that permission is only the first step in the ongoing process of building and strengthening consumer confidence and trust.
Once the foundation is established, the burden remains on the marketer to deliver meaningful information to the customer. Sophisticated marketers offer customers the choice of how often they will receive the message and the ability to change that frequency. This is just the beginning of what marketers need to do to retain customers.
How do you keep the customers you have spent time and money acquiring? The answer, which is simple but can be difficult to implement, is through personalization.
The definition of personalization. Marketers must define personalization in terms that will grow and strengthen the coveted long-term customer relationship.
Three levels of personalization help guide the evolution of e-mail marketing. In the early stages, personalization is the foundation for defining the customer. As trust is developed and the relationship strengthens, personalization grows to encompass the information the customers want, or information that is tied to their interests. At this level, obtaining information from your customers will be the equivalent of "crossing the chasm" for most marketers, since online privacy today is a key issue.
The three levels of personalization can be broken down as follows:
• Information. Known, captured or volunteered; regarding the interests, inferred interests, demographics and transaction habits of a customer or prospect base in consumer or business-to-business environments.
• Customer interests. Determining what information an e-mail recipient wants to receive based on the above data. Again, this can be volunteered during opt-in or a survey process, or defined/modeled based on behavior patterns (clicks, purchasing, etc.).
• Contact frequency. This truly defines personalization. When you contact someone directly, you have become personal. The information the customer provides determines how personal you can get. Contact strategy is not just how often you contact a person over time but how you contact that person -- e-mail, direct mail that drives someone to a Web site or general advertising that drives mass market segments to a particular Web site.
Making the most of personalization. Companies will use personalized information in several ways. It can improve front-end promotions or product offers, raise performance and reduce the cost/contribution ratio. It can be used to change, alter or reinforce market direction based on the acceptance of branding exercises or product development/introductions. Or it can be used to make back-office processes more efficient -- processes such as inventory control, cash flow and customer service.
Specific to the online world, personalization can be used to build and strengthen a community of customers.
Such efforts often lead to improved branding, loyalty and continuity. Personalization also can be used to create competitive barriers by leveraging the delivery of information as a tool to develop loyalty.
The driving force behind personalization. The concept of personalization has been around since the early days of marketing. Accurately and cost-effectively conducting permission-based, one-to-one e-messaging campaigns is possible because of recent technology advances. This lets us reach customers in a scalable and economic way.
Most people cannot afford a personal waiter. However, the proper mix of research, technology and service can make consumers feel as though a company is catering to their personal needs. Thus, it is essential to continually research technologies that will allow us to learn about, attract and deliver the right information, and the right products, to the right customer.
•Jon Brodeur is president of @Once, Portland, OR, an e-messaging company. Reach him at email@example.com.