What is personalized marketing? Exploring the benefits of tailored strategies

Personalized marketing involves leveraging data to engage with target audiences and customers, providing tailored experiences. By analyzing data, businesses can effectively identify potential customers, nurture leads, and optimize the buyer’s journey.

Furthermore, personalized marketing helps businesses reach more individuals efficiently by avoiding ineffective methods and targeting the right audience.

It goes beyond simply inserting a customer's name into generic emails; it's about delivering the right message to the right person at the right time with relevant suggestions. Personalizing marketing efforts not only adds a human touch but also drives revenue, making it essential to tailor content to each customer.

What is personalized marketing?

Personalized marketing involves customizing your marketing efforts based on data collected from your contacts, including their interests, shopping preferences, purchase history, and other relevant information. This customization is applied to the content your contacts receive through various channels like email, advertisements, and other platforms.

Personalized marketing trends

As businesses have become more adept at employing this approach, personalization has impacted various forms of customer communication. Here are several recent trends:

• Tailored emails: Emails featuring personalized subject lines are 50% more likely to be opened.
• Reduced generic advertising: With the surge in personalization, consumers are increasingly less tolerant of generic advertisements. Nearly three-quarters of customers find impersonal shopping experiences frustrating. Conversely, over 70% of shoppers engage with marketing only when it's tailored to their preferences.
• Personalized product suggestions: 75% of consumers are more inclined to make a purchase after receiving personalized recommendations.

The benefits of personalized marketing

When implemented effectively, personalized marketing benefits both businesses and customers. Some of its key advantages include:

1. Enhanced customer experience

Understanding their needs helps build trust with customers. Personalized experiences demonstrate comprehension of their pain points, easing their customer journey and shifting the buying process from a mere transaction to a relationship. This trust encourages customers to rely on your recommendations, fostering loyalty.

2. Increased customer loyalty

Customer satisfaction is crucial, as 65% of a company's business comes from repeat customers. Personalization can boost customer loyalty, with over 40% of consumers likely to become repeat customers of businesses offering personalized shopping experiences. Additionally, 80% of frequent shoppers only patronize brands that provide personalization.

3. Improved return on marketing investment (ROI)

Personalized marketing is more cost-effective than traditional advertising. While general ads may not resonate with all viewers, personalized recommendations can lead to increased spending. Nearly half of surveyed shoppers made impulse purchases based on personalized brand suggestions, and 85% were satisfied with their purchases. McKinsey & Company suggests that personalized marketing can increase sales by over 10% and deliver up to 8 times the ROI compared to traditional marketing efforts.

The challenges of personalized marketing

Based on a survey of marketing influencers, nearly two-thirds found data-driven personalization to be one of the most challenging digital strategies to implement. However, despite its difficulty, it can be highly beneficial. Here are some common challenges and strategies to overcome them:

1. Collecting data without inconveniencing customers

To personalize experiences effectively, you need data about your contacts, typically stored in a CRM. However, gathering this data can be tricky. There are two main channels for data collection:

• Analytics: These track user behavior without intruding on the customer experience. However, some customers may feel uncomfortable seeing ads for products they recently viewed.
• Customer surveys and forms: While more transparent, these take time to complete. The more questions a form has, the less likely a participant is to finish.

To strike a balance, consider whether the data collection method would bother you as a customer. Always prioritize transparency and convenience.

2. Achieving the right level of subtlety

Consumers appreciate personalized content but dislike overly aggressive tactics. For instance, only 6% of consumers in a 2017 survey liked retargeted ads.

Balance is key. Clearly communicate the value of personalized content without being overly intrusive. Emphasize privacy but avoid overemphasizing it to the point where it raises concerns among your audience.

3. Ensure adequate resource allocation

To develop a successful personalized marketing strategy, companies must allocate sufficient staff, funds, and time. While automation can streamline data processing and reduce labor costs, the overall strategy still requires human input.

Personalized marketing necessitates thorough planning, precise targeting, and meticulous tracking. Technology can handle data aggregation, but determining which data is relevant and how to utilize it requires human insight. Understanding your customers' willingness to share information, knowing when to collect it, and when to deploy personalized messages are also crucial.

It's essential to monitor the effectiveness of your efforts to focus resources on the most productive channels. This requires human analysis, as algorithms alone cannot make these decisions. Ensure your marketing team has the necessary resources and avoid relying solely on automation for all aspects of your strategy.

How can you develop an effective personalized marketing strategy?

1. Establish a dedicated team

To effectively implement and oversee a personalization strategy, assemble a team of experts, including:
 

• Technologically savvy individuals
• Use case development specialists
• Customer service professionals for handling inquiries
• Strategic campaign designers with personalization experience

   Coordinate with senior management to ensure alignment with broader organizational objectives. Develop a plan for generating high-quality content with an appealing design.

2. Collect data while respecting privacy

While customers desire personalized experiences, they also value their privacy. Therefore, focus on collecting relevant data that enhances customer experience without compromising privacy. Consider how you would prefer a company to handle your data:

• A company that merely states "We care about your privacy" at the end of emails
• A business that provides a comprehensive explanation in its welcome email, detailing how it will use your information, the benefits you'll receive, and how you can opt out

Consumers are more likely to trust and engage with the latter approach, especially when the company consistently delivers high-quality personalized content.

3. Utilize data for audience segmentation

Leverage collected data to segment your audience based on:

• Demographics
• Spending habits
• Product preferences
• Purchase behaviors

Tailor your messages based on these segments to ensure they resonate with your audience.

4. Select the areas for personalization

Personalization can be applied across various platforms, such as automated emails, remarketing ads, and even landing pages. The choice of platform should be guided by your customers' preferred channels. Utilize your data to identify the most effective placements.