At What Point Does Personalization Stop Paying?

R2integrated CEO Matt Goddard has a specific definition of personalization: “The most relevant message to a customer at a given time.” He’s happy to deliver on it for clients ranging from Hershey to Mastercard to the University of Michigan. To a point. Goddard has a belief about personalization that he says is not shared by many other agencies, or considered by many clients. His credo is that doing personalization correctly—acquiring the data, doing the analytics, executing all the creative iterations—is a pricey game to play and that it should be shut down at a point where investment exceeds return.

“Say you’re a big IT company and you’ve invested in customer lifecycle marketing and gotten trial and purchase and want customers to renew,” Goddard explains. “You’re gathering information on them from the website and the call center and are trying to map issues they have with the product. You cut them into 10 segments and create tutorials to address them, but at what point does all that work, all that creative energy…at what point in time does the return on all that investment start to wane?”

Goddard (left) and his management team is working on what he calls a “Google-like equation” to help marketers determine when it’s time to shut the personalization engine down. Actually, they’re working on two different equations, one for high-consideration and another for low-consideration products, because it’s also his belief that the return on personalization varies greatly by vertical. The equation must be different for a candy bar company, his thinking goes, than it is for a machine tool company.

“E-coms are great at personalization, but even Amazon, which is often considered the best, needs to address this issue,” Goddard says. “Because Amazon sells a mix of considered and unconsidered products, they can’t necessarily use the others-who-bought-this-also-bought-this strategy for everything. Maybe if we looked at it, we’d find Zappos or Nordstrom.com are returning a higher ROI.”

Central to Goddard’s conviction is that all marketers and all agencies owe it to themselves and each other to have a formula in place to determine when to stop wasting resources and shut down certain functions on their costly data-driven machines. For one of its clients in higher education, R2i executed a complex content “wireframe” of where each prospective student persona intersected to make maximum use of creative. The client went the agency one better, deciding its budget could only handle a single landing page, that R2i then equipped with multiple personalization points.

“In an ideal world,” Goddard says, “we could get this to the point where we have customer data, upload behavior, do an API call, and put this on a dashboard running in real time so that a marketer can make the call that, once the sixth piece of creative is done, the ROI starts petering out.”

Call it the Personalization Petering Principle, but it’s a long way off. Goddard predicts it could be years before R2i’s equations have been perfected.

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