9 Reasons Why Personalized Marketing Still Isn't Accurate

Today's customers expect timely and accurate personalized experiences. However, most organizations are still unable to deliver them. Despite significant technology investments and the availability of more data sources than ever, companies are still falling short of their own objectives and the promises they're making to customers.

"Today it's about one size fits many. Organizations overlook very important behavioral differences and differences in need states -- what people might want at that particular point in time. The ability to collect and mine the right data is the biggest challenge now," said Khalid Khan, head of analytics at global management consulting firm A.T. Kearney.

Personalization isn't the sole responsibility of marketing, although it still often treated that way. Customers can tell the difference between a truly customer-centric company and a company that only claims to care about its customers.

"The most important thing firms can do right now is to reinvent themselves from the outside in to win, serve, and retain customers by connecting all the digital experiences across the customer lifecycle -- marketing, sales, procurement, using a product and servicing a product," said Brian Hopkins, VP and principal analyst at Forrester Research.

One reason marketing messages and offers are still so off-base is because companies are doing quasi-personalization rather than actual personalization. They're using a group approach to marketing that targets individuals, but it inherently includes some false assumptions. Demographics help, personas help, and the combination of the two is better than either alone. Nevertheless, more companies are embracing sophisticated analytics and data science to improve the accuracy of their efforts even more.

"Customers expect you to know who they are regardless of how they've come into contact with you whether it's technical support, walking into your store, or visiting your website," said Brad Shimmin, service director, business technology and software at market intelligence firm Current Analysis. "The context and history of interactions need to be considered to understand who that person is."

Sadly, most marketing departments don't have the information they need to accurately personalize offers to customers and prospects. Most of them also lack a holistic omnichannel view of their campaigns and customers despite significant efforts and investments. Meanwhile, their organizations may be unable to provide the data access and integration necessary to deliver personalized customer experiences across touch points. More importantly, many organizations have still not developed a culture that places the customer at the center of their corporate strategy.

Here's more insight into why personalization is still falling short.

Companies have multiple views of a customer stored in various enterprise systems. Even when the systems are interconnected, customer records may not have been normalized, which is one reason why communications are misdirected and offers are irrelevant.

"You can have 12 John Smiths, 6 of which live at the same address. How do you know which is which?" said Leslie Ament, SVP and principal analyst at Hypatia Research Group. "If you don't know, you may be wasting your money sending $12 catalogs to all 6."

Marketers often talk about a 360-degree view of the customer, but few of them are actually achieving that goal. Organizations tend to think they know their customers, but they're often relying on a subset of information that paints a distorted picture.

"Part of it is internal information, part of it is external information, and part of it is deduced information. In quite a few cases when I talk with customers that haven't focused on data sufficiently, they think they have a 360-degree view of the customer but they may have a 180-degree view," said Adriaan Bouten, CEO and founder of digital transformation consulting firm Digital Prism Advisors.

Businesses want to wring as much value as possible out of legacy systems because they've invested millions of dollars in them and mission-critical applications are running on them. To prolong the value of the systems, companies may adapt the UIs or otherwise attempt to modernize them so they can deliver next-generation-like capabilities. Still, they're using technology that was designed for yesteryear's business challenges.

"Companies think that customizing Salesforce, investing more in the data warehouse, or trying to do some ETL to move data from one database to another will solve the problem. People need to be willing to transform [themselves] and let go of systems that are too rigid, too expensive and too separate to build a holistic view of the customer," said Nik Rouda, senior analyst at IT research and strategy consulting firm Enterprise Strategy Group.

Organizations are rushing to embrace external data sources so they can gain new insights. What they're often overlooking is a wealth of information buried in internal systems that can provide important insights about individual customers and customer relationships.

"The explosion of data sources can overwhelm people when it comes to pulling relevant insights. It's a needle-in-a-haystack kind of mentality trying to find that silver bullet," said Angelo Licursi, VP of the research, data, and insights division at marketing agency PM Digital. "Companies underestimate the power and richness of data within their own [walls] and the technology and expertise required to connect it all together."

Of course, when internal data sources have not been linked in a way that provides a unified customer view, it's only natural to assume the missing data requires an outside source.

Some people forget, and others don't know, that not all data is equally reliable or valuable. Sometimes, too much faith is placed in a particular data source or dataset, or a combination of data sources or datasets.

"There's not a lot of correlation between social sentiment and what a customer is likely to do. It influences it, but there are a lot of nuances," said Brian Hopkins, VP and principal analyst at Forrester Research. "The voice of the customer program used to be around a social sentiment tool and a text analytics tool that draws some conclusion out of emails and notes so I can make some rough conclusions about how customers feel about us. But that's a far cry from actual, proven insight about what's going to drive a customer to buy a product or service at a particular point in time."

Marketing has transformed from gut-instinct voodoo to a metrics-driven practice. Marketers are using analytics to optimize their campaigns and to more accurately target customers and prospects with relevant offers. One reason the outcomes are still falling short is that their analytical methods are too basic.

"Companies are building a view of the customer using things like factor analysis and basic types of clustering techniques. That's not going to get you to the level of specificity you need in terms of understanding what individuals actually want," said Khalid Khan, head of analytics at A.T. Kearney. "You have to do more sophisticated things like collaborative filtering."

Using basic techniques like clustering, marketers may be able to identify 60 people out of a population of 100 who might be interested in a particular offer. Using more sophisticated techniques, it is possible to identify the 5% who are likely to respond to an offer, said Khan.

Effective personalization requires significant technology investment that is enterprise-wide and use-specific. Given today's highly competitive environment and the rapid pace of technological change, departments, business units, and entire enterprises continue to look for a panacea that, like all the other products before, will usually fall short of its sales and marketing claims.

"A lot of marketing and IT folks think there's a single platform that will do anything, and they don't understand what it will take from integration and strategy perspectives," said Feliks Malts, VP of analytics at digital marketing agency 3Q Digital. "The platform sits there [but is hasn't been configured properly]. It requires data to understand the product, the product's attributes, how the product is used, and individual customer attributes so it can make recommendations."

Sometimes organizations buy products, platforms and solutions that have overlapping capabilities. When that happens, it may not be obvious which role each should play, Malts said.

Personalization is usually synonymous with marketing, but customers expect personalized experiences throughout the lifetime of a relationship with a company. Delivering that requires organizational commitment, culturally and technologically, as well as greater degrees of collaboration among divisions with different functions in a company.

"Companies that want to benefit from analytics teams can't view problems as a business problem or a database problem. [IT, data science, and marketing] have to be on the same page," said Brad Shimmin, service director of business technology and software at market intelligence firm Current Analysis.

Despite the personalization gaffes individuals encounter daily online and offline, personalization technologies and techniques have improved over time. While there's a debate about the maturity state of the technology, what's less debated is the need for organizational change.

"A lot of personalization is shot-in-the-dark kind of stuff, so the technology is not really able to understand my context and what that context really means in terms of what I need right now," said Brian Hopkins of Forrester Research. "It's not just a technology problem. It's a problem of people, process and technology being able to work together in a way that really deploys insights about customers' wants and needs into systems that can deliver on those wants and needs.

Despite the personalization gaffes individuals encounter daily online and offline, personalization technologies and techniques have improved over time. While there's a debate about the maturity state of the technology, what's less debated is the need for organizational change.

"A lot of personalization is shot-in-the-dark kind of stuff, so the technology is not really able to understand my context and what that context really means in terms of what I need right now," said Brian Hopkins of Forrester Research. "It's not just a technology problem. It's a problem of people, process and technology being able to work together in a way that really deploys insights about customers' wants and needs into systems that can deliver on those wants and needs.