Personalized marketing is a strategy that focuses on targeting marketing initiatives and sending messages to a current or potential customer. This is done with the help of data analytics and digital technology.
It is also known as "one-to-one" marketing and, as the name suggests, is completely customized to the individual needs of each consumer.
In contrast to personalized marketing, mass marketing is designed to appeal to a broad audience or demographic group. Personalized marketing is essentially the most focused form of targeted marketing.
How it works
For personalized marketing to be successful, a company must be able to obtain as much personal information as possible from a current or potential customer.
Fortunately, today, data on individual consumers abound. This wealth of information is analyzed and leveraged to make personalized and targeted offers, recommendations and messages designed to appeal to the individual based on their behavior, interests and other previously collected data.
Digital is perhaps the best medium for personalized marketing and is very popular with advertisers. Information can be tracked through the use of cookies or interactive feedback tools on a website, providing a wealth of data that allows advertisers to tailor the messages shown to general viewers and individual users, on channels ranging from websites to YouTube and even television.
There are four steps necessary to create a personalized marketing strategy: identify, differentiate, interact and personalize.
IdentifyIt takes place during data collection. It collects markers such as gender, age and location of the customer or prospect.
DifferentiateIt occurs at the time of analysis and allows companies to segment users into the specific niches they wish to target.
InteractThis is the stage where the data collected is used to make contact with a potential or current customer by communicating with them in the medium and by the methods to which they are most likely to respond.
CustomizeThis is when the one-to-one relationship has been established and when a company can close the deal.
Examples of personalized marketing
Most people have shopped on Amazon. While they may not have realized at the time that they were experiencing personalized marketing, they probably did notice that the platform was recommending products that matched their interests and past purchase history.
Amazon collects a large amount of data about its users, tracking each user's shopping and browsing history to make product recommendations targeted to each individual's interests and needs.
Amazon also suggests products similar to the specific item the user is reviewing. This content is unique to each individual and, while useful for shoppers, is definitely a boon for Amazon and its suppliers, as it increases sales of similar products through intelligent, personalized recommendations.
Another common example of personalized marketing is targeted messages that may have been emailed to you by your favorite stores, most likely addressed to the user by name. This simple personalization strategy allows companies to connect with consumers on a personal level, creating a connection that leads to increased sales.
These messages may be sent at a specific time of day, depending on your previous engagement. However, it's worth noting that personalizing a recipient's name is considered one of the most basic and archaic personalization methods, given advances in technology that allow marketers to go much further to focus on tactics with individual perspective.
Benefits of personalized marketing
The great advantage of personalized marketing is that it allows a company to effectively target current and potential customers, increasing the likelihood of engagement and conversions by appealing to an individual's tastes, needs, interests and other preferences. This type of targeted advertising gets more conversions and is ultimately an incredibly lucrative sales mechanism. According to Experian, personalized marketing messages received 29% more open rates and 41% more clicks than those without personalization. Companies that use personalized marketing generally increase their total sales by approximately 19%.
Personalized marketing not only leads to increased sales, but also to happier customers. When presented with advertising that is personalized and appealing to them, customers feel more connected to a company, which translates directly into paid invoices.
Research shows that, for approximately three-quarters of all customers, email marketing that is irrelevant to them is a frustration. Furthermore, these same customers are less likely to engage with the brand, and these experiences directly influence their purchasing decisions.
Challenges of personalized marketing
Depending on the nature and size of a business, personalization can be cost prohibitive for some organizations. If a grocery store were to target each consumer and deliver to each a brochure customized to his or her needs and wants, it would need some way to track past purchase history and predict future purchases, not to mention the cost of designing and printing hundreds of thousands of unique brochures.
In this case it makes sense to use a mass-market brochure. However, a grocery store loyalty program would be easy enough to set up with this type of tracking system and could effectively target individual shoppers with coupons and special promotions at a lower cost. If a customer buys bananas every week
Best practices in personalized marketing
To ensure the best results with your personalized marketing efforts, you'll want to collect data from as many sources as possible. Social media is an excellent source of audience data, both on a mass and individual level, as is direct email marketing.
You must also ensure that the personal data collected is stored securely and cannot be accessed by unauthorized persons to protect the sensitive personal information of your prospects and customers.
Automating data collection and personalization technology wherever possible reduces overall costs and time investment in data collection and analysis. Freeing up sales and marketing staff to focus on converting leads is a more valuable use of your time than working with a cold funnel.
Continually review data to detect what's working and what's not, and allocate your resources accordingly, to make the most of personalized marketing efforts and get a greater return on your investments.
