Personalization’s Key to Profitability

Internet businesses invest incredible amounts of time and money driving customers to their Web sites through a variety of marketing campaigns. How can they improve the buying experience on their sites and thus increase return on investment for these massive expenditures? The answer is simple — through personalization and targeting.

Harnessing the power of personalization technology to provide each individual consumer with a relevant Web experience increases conversion and, thus, revenue. Personalization technology can increase the effectiveness of any online marketing campaign, producing higher click-through rates and increasing overall site traffic.

Furthermore, once a visitor clicks over to the Web site, personalization can increase conversion to sale, average sale size, the length of each visit and the number of return visits. Personalization is rapidly evolving into an imperative tool for e-commerce and content delivery on Web sites as well as a crucial component to a successful targeted online marketing program. In addition to affecting sales results, these technologies help merchants become a shopping adviser, giving customers more relevant content, guiding consumers to information they may not find on their own.

To deliver effective personalization, either on a Web site or through a targeted marketing campaign, marketers need access to consumer-specific data — usually a profile containing information on an individual consumer, his preferences, his behaviors and his demographics. The trackability of the Internet allows for extremely robust profiles to be developed on individual consumers. This rich data set, coupled with the real-time nature of the Web, enables marketers to create one-to-one relationships with consumers through marketing campaigns and to provide accurate product or content recommendations on their sites.

It sounds great, but there is one caveat. The use of this consumer data, whether user identifiable or anonymous, is a privilege. And with this privilege comes responsibility. Though consumers have a right to privacy, and the industry debate to define these rights has been long, drawn-out and intense, few laws are in place governing the use of consumer data for targeted marketing.

Organizations are sprouting all over advocating industry guidelines and self-policing tactics to keep the issue under control. Regardless of how the debate turns out and what laws are enacted, smart companies with respect for consumers and a desire to create valuable long-term relationships with their customers will put responsible policies in place to protect consumer privacy.

There are five overall tenets to privacy with respect to using consumer data for targeted marketing, which are being discussed within the industry at varying levels of acceptance. Employing these guidelines will help earn consumer trust as well as afford protection from legal problems in the future or the need to change privacy practices as laws and guidelines emerge in this evolving marketplace. These key ingredients are:

• Notice. Every consumer has a right to know what a company’s practices and policies are with regard to data collection and use. This information — at minimum — should be clearly stated on a Web site’s privacy policy and linked to from any page where a consumer is being tracked or profiled.

Companies that want to be even more proactive may place easily seen and understood language directly on the pages using profiling technology for complete disclosure. These privacy policies should be easily read and digested by the average consumer; they should not be a textbook-long litany of finely printed jargon and legalese. In addition to explaining what a company tracks and collects about its visitors and how the company uses that information, consider discussing the benefits. Show the consumer, with examples, how they will benefit from this technology.

• Anonymity. It is simply unacceptable to collect and use user-identifiable information about a consumer without express opt-in consent. Rich and effective targeting profiles can be created passively and anonymously by tracking a consumer’s browsing, clicking and buying behavior without ever knowing the person’s name, address, phone number, Social Security number or credit card information. These behaviors are actually more predictive of future purchases than demographic information because they reflect an individual’s actual behavior rather than a group’s predicted behavior. Clearly there is a use for declared data to further enhance targeting, such as age, sex, income or education level. But consumers declaring such data should be informed that the data will be used for marketing purposes.

• Security. Pure and simple, consumers who don’t feel confident that a company is keeping their personal data secure will not trust the company with their information in the future. Don’t sell or give away consumer data without express consent from the consumer. Savvy companies will also keep tight control over and continually monitor and test the technology used to store and transfer consumers’ personal data.

• Access. Without complete access to tracked information, consumers will tend to think the worst. Companies allowing site visitors to view the information collected about them will prevent unnecessary concern and alarm. Create a form for consumers to request a copy of their profile or set up an area on your site for them to access the information. If a company is willing to share the complete profile with its consumers, it establishes trust and credibility.

• Control. Consumer control is the most crucial factor. What good is notice and access if the consumer can’t do anything about it? Smart businesses will give consumers the opportunity to add to and edit their profile as well as the ability to opt out completely. This empowers the consumer to take a participatory role in making their personal Web experience — from the content they view and the products they see, to the ads and promotions that are presented — more relevant and personalized. The consumer actually can see the benefit of providing data this way and learns that personalization can be a winning situation for everyone involved.

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