The digital era has produced a generation of extraordinarily successful businesses which have delivered both global scale, and at a breakneck pace. But what sets them apart from other types of companies, for instance, a traditional retailer or a media business?
According to a new report from Optimizely, it is their ability to deliver highly personalised experiences to customers.
In our report called “Bring an experimentation mindset to personalisation,” we single out companies including Amazon, Facebook, Google, and Netflix for providing extremely personalised experiences.
And the secret to their success is that all of these companies experiment on every aspect of their personalisation strategy.
The report notes, “Netflix famously ran a contest where anyone could submit a better recommendation algorithm and they would test it. Google tests every new search algorithm against the former one. Facebook and Amazon experiment on every part of their user experience to learn about their users’ reactions. “
In each instance, these companies have created a culture of experimentation.
According to Forrester Research, almost 90 per cent of digital strategy professionals say that personalising the customer experience was an investment priority in the last 12 months.
The reason is simple enough – this is what consumers – through their behaviour – have demonstrated they want.
For instance in the same study three-quarters of US online adults said they had chosen, recommended, or paid more for a brand using personalised experiences or services.
Another research company, this time Gartner, says the pay off for businesses who get it right is significant. “An effective personalisation strategy enhances customer experience, leading to reduced costs as well as increased revenue from greater customer satisfaction, loyalty, and advocacy.”
So while the arguments for personalisation might seem self-evident, the trickier question is how do you achieve it?
The Optimizely whitepaper argues that experimentation is both a process and a mindset, one that enables organisations to continuously test and iterate on different hypotheses.
There are different ways to proceed with this, they say, with two of the more common approaches being to run A/B tests and to run personalisation campaigns.
“In order to be successful with any type of personalisation and experimentation, you need to continuously test and learn. Personalisation without constant experimentation can result in wasted time and resources, and in some cases can be detrimental to the business.”
It is important to understand that experimentation isn’t simply the key to optimising this personalised experience. “It’s the only way to develop a personalisation strategy that works. It’s the only way to iterate and discover what genuinely resonates with prospects and customers.”
The whitepaper makes the case that embracing the experimental mindset is vital to personalisation success.
Before you get started, however, there are fundamentals that need to be in place;
- Develop a deep understanding of your audience
- Segment your audience based on factors like demographic, contextual, and behavioral factors
- Know what metrics you are trying to optimise for/personalise for
- Have a plan to identify where you can personalise
“Working through each of these above components will ensure that you have a cohesive personalisation plan, “ according to the report.
“Additionally, it’s important to note that you need to set up repeatable frameworks to define and identify audiences. This is not a one-and-done exercise. Your plan must be flexible enough to change as the individuals your organisation targets change.”
Cutting corners is not recommended, and indeed if any of these elements is missing, it makes it hard to accurately engage your audience, to see a return on your personalisation campaign investment, and to effectively build a personalisation campaign.
The report also tackles some common help misconceptions about personalisation.
“When people think about personalisation, they often imagine creating one-to-one experiences. They envision individualised customer experiences predicated on their detailed customer journey map. Individual personalisation is an admirable goal.”
However, when the white paper refers to effective personalisation and experimentation, it is actually talking about segmenting and creating actionable audiences.
“Maybe you segment into a higher volume audience (e.g., all female shoppers in northern Sydney), or a high-value audience (females with purchasing behaviours that make them your top 1% of customers). Either way, the goal is to personalise for business impact.”
At least initially, when companies are experimenting and personalising, they are not really addressing specific individuals, but instead larger audiences where they can learn what works for specific groups of individuals. “This gives the business substantial ROI, and is a natural activity as your experimentation maturity grows. “
The potent combination of personalisation and experimentation allows organisations to create the kind of digital experiences that engage their customers and impact their businesses.
Indeed, as the report reveals, “Personalisation without experimentation is risky“.
About the Author
Dan Ross is the managing director of Optimizely ANZ which is a member of the Which-50 Digital Intelligence Unit. Members provide their insights and expertise for the benefit of our senior executive audience. Membership fees apply.