What is Personalized Marketing? A Comprehensive Guide to Unleashing the Power of Personalization
July 12, 2023

What is Personalized Marketing? A Comprehensive Guide to Unleashing the Power of Personalization

There's a new marketing methodology making the rounds online right now. It's called "personalized marketing."

But is it really new? And, is it any better than the marketing that we've done in the past?

As an eCommerce marketer, I'm going to make the assumption that you follow industry trends and terms closely to stay up to date on new ways of "wowing" your customers - Which is good because today's eCommerce marketplace is more competitive than it has ever been, and your customers have a lower attention span than at any time in recorded history.

Personalized marketing has emerged as a powerful strategy to engage your customers and build deeper connections with them that lead to repeat purchases and long-term loyalty.

But does it work?

In this article, we will dive into the power of personalized marketing and explore how you can use it to create an amazing customer experience that leads to increased conversions and loyal repeat customers…

We're also going to introduce the #1 tool to make personalized marketing effective for your brand... it's called conversational commerce software, but we'll come back to that.

What is Personalized Marketing?

So, you're probably wondering, "What on earth is personalized marketing?" Well, my friend, personalized marketing could be compared to your favorite barista at Starbucks. It knows your name, your favorite drink, and that you like a sprinkle of cinnamon on your Cappuccino every Wednesday morning to kick "humpday" off right!

At its core, personalized marketing, also known as 1:1 (one-to-one) marketing, is a strategic approach that tailors marketing efforts and messaging directly to a customer - going beyond things like name, email, and purchase history, and uses rich customer data collection to understand a customer's unique interests, needs, preferences and desires.

It's all about engaging customers or prospective customers by communicating with each as an individual. With personalized marketing, we wave goodbye to one-size-fits-all and say hello to individual attention.

When developing our conversational commerce software at Humankind, we discovered that we could offer customers personalized experiences while also scaling conversational efforts. This meant that using our platform, personal shoppers and product experts could experience the quality of one-on-one human interactions while supporting up to 20 conversations simultaneously.

Personalized Marketing in Action

But what does personalized marketing look like in the real world?

Great question! Let's look at some blockbuster examples of personalized marketing campaigns that "left a mark" on our popular culture.

Remember Coca-Cola's "your-brand-on-the-bottle" campaign? Coca-Cola sold bottles with customers' names right on the label. This personalized marketing stroke of genius made the soda feel like it was "made just for you," sparking attention and boosting sales.

The funny thing about this campaign was it didn't have to be hyper-personalized to have the desired effect. Coca-Cola took the most popular names in certain geographical areas and shipped thousands of bottles labeled with those names and creating a huge buzz - all while taking market share from Pepsi.

Then there was Spotify's end-of-year Wrapped report, a brilliant example of personalized marketing. It's like Christmas morning for music lovers, revealing their own listening habits and top artists of the year. The custom playlists and data insights make each user feel unique, turning them into eager influencers for Spotify.

Recently Apple, Instagram, and Facebook have begun using similar campaigns to remind people of their highlights over the previous 12 months.

At this point, hopefully, you have some inspiration on what personalized marketing is and how it can work for your customers, but before we move on, let's look at another example.

Who can forget the chocolate company Cadbury, which launched a Facebook campaign that used information from user profiles to match them with one of the brand's new flavors? They created a personalized video for each user, which was a fun way for users to learn about new product offerings and share their videos with friends.

All of these are personalized marketing campaigns that have helped brands make an impact on their customers and boost sales- but the question is, how did these brands decide which campaigns to roll out?

How did they know which ones would have a positive impact on customers and which others wouldn't? It starts with knowing your customers...

Three Steps to an Effective Personalized Marketing Strategy.

In this section, we're going to talk about the 3 steps of Personalized Marketing:

  1. Understanding (knowing) your Customer.
  2. Implementing a Personalized Marketing Strategy.
  3. Executing a Personalized Marketing Strategy Effectively.

Know Your Customers

As we previously mentioned, personalized marketing is nowhere near a new concept. In fact, it comes from the practice of retail clienteling, which is over 100 years old.

Luxury retailers over the past several hundred years have practiced retail clienteling as a way of delivering unique shopping experiences that were far more than simply purchasing items.

Retailers had to understand their customers on a deep level - their wants and needs, preferences and desires- in order to provide a truly personalized experience.

Today, technology has enabled marketers to take this concept to the next level. Using platforms like Humankind to collect rich customer data during the shopping experience, marketers are able to build a highly detailed picture of their customers and tailor campaigns that directly meet each customer's needs.

Let's look at an example of personalized marketing interaction from Cascadia Tents. Jeff is a product expert and personal shopper at Cascadia Roof-top Tents, a supplier of Overlanding products for people who like to deck out their vehicles and explore the outdoors.

When a prospect lands on their website, instead of having to make product decisions with descriptions alone, Jeff can jump in and serve as a product expert guiding them through the entire purchase experience.

They start with a simple survey that gives Jeff an idea of the vehicle they'd like to mount the tent too, their rack specifications, and their budget - with this information, Jeff is able to recommend the best products for them. The customer then interacts with Jeff directly in the live chat, asking questions, getting a tour of the products, offers, and even advice on rigging it up.

This entire conversation is stored, rich customer data is collected, and the customer gets exactly what they need.

Now, this is where we shift from understanding our customers to implementing a personalized market strategy.

Implementing a Personalized Marketing Strategy.

Now that you have customer data, what do you do with it?

Have you ever heard the phrase, "The fortune is in the follow-up?" The same goes for personalized marketing. It's not enough to just collect data and build customer profiles - you need to use that data to deliver personal experiences that show a customer you're paying attention to their needs.

Humankind's conversational commerce software, a product expert or remote concierge can reach out to the customer following a big event like a marathon or a trip. The platform allows personal shoppers to put reminders into their workflow, bringing a personal touch to your brand - this is the Holy Grail of personalization.

But there are many types of Personalized Marketing tactics that you can implement that allows a customer to feel "understood:”

a) Behavioral Targeting: Utilizing customer behavior data to deliver relevant and personalized advertisements.

b) Dynamic Content: Creating personalized web experiences by adapting content based on customer preferences and behaviors.

c) Personalized Emails and Newsletters: Crafting individualized email campaigns based on customer data, interests, and previous interactions.

d) Product Recommendations: Offering personalized product suggestions based on customers' browsing and purchase history.

e) Geo-targeting: Tailoring marketing messages based on the customer's geographic location.

f) Retargeting: Re-engaging customers who have previously shown interest in a product or service through targeted ads.

As you can see, each one of these tactics uses an existing tool that you have access to in order to deliver a different type of marketing experience- that's hyper-personalized.

Executing a Personalized Marketing Strategy Effectively.

Now that you know your customers and have identified personalized marketing tactics and tools to deploy them, it's time to execute the strategy.

The key to success here is to have a plan that encompasses each of your tactics, as well as the channels that you'll use to deliver them.

Start by mapping out how each tactic fits into your overall marketing strategy. 

Once you've got that in place, the real work begins…

Using personalized emails and advertising, and SMS messaging, work to develop relationships with your customers. Make sure that each message is tailored to their situation and needs.

Track the effectiveness of your personalized marketing campaigns so that you can adjust them as needed.

Test different messages and offers to find the ones that resonate most with your customers and drive the most conversions.

Finally, leverage segmentation and automation to ensure that your personalized campaigns are being continually optimized for the best results.

Benefits of Personalized Marketing

Let's look at three more examples of personalized marketing campaigns to see the benefits they can provide.

The first example is from an outdoor clothing company, Patagonia. Using personalized emails and SMS messages, the brand was able to increase customer loyalty dramatically by providing customers with relevant product recommendations and offers - it also helps that Patagonia believes strongly in its mission, and its customers share a similar mission. They market this idea at length and because customers see this as an internal value system, they respond like the messaging is tailored to them personally.

Second, Amazon's Product Recommendations. Amazon's personalized recommendation engine analyzes customer data, things other customers purchased together (as bundles), and purchase history to suggest relevant products to individuals visiting their site. This strategy has contributed significantly to Amazon's success, as customers appreciate the tailored recommendations that align with their interests.

Finally, consider Netflix's Content Personalization. This is another "out of the box" approach to personalization.

Netflix's recommendation algorithm analyzes a user's behavior, viewing history, and preferences to curate personalized videos that they may like. These "suggestions" are made by machine learning algorithms that focus on keeping customers engaged and providing a more enjoyable viewing experience - which means more time on the platform.

The Future of Personalized Marketing:

Hopefully, thus far, you've been able to see some really cool ways of implementing personalization in every aspect of your customer interactions from the "first touch" to how you follow up with them.

As technology and customer expectations continue to evolve, brands will need to stay ahead of the curve in order to maintain competitive advantage. Artificial intelligence (AI) and machine learning (ML) algorithms, NLP, and LLMs will play a crucial role in refining personalization in the future.

Here are a few examples we currently have access to:

a) Concierge Commerce Software: Let's be honest, you knew we'd start here. Why? After studying more than 1,000,000 customer/ brand interactions, we've seen the power of personalized shopping and 1:1 human connection - and its positive effects on customer satisfaction.

b) Hyper-Personalization: Personalized marketing will evolve to anticipate customer needs even before they express them explicitly. Today, advanced AI algorithms analyze vast amounts of data to predict preferences and offer customized experiences - and these options are increasing in power and scalability.

c) Voice-Activated Personalization: Voice assistants like Amazon's Alexa and Apple's Siri are becoming more prevalent to customers who lead busy lives. 

d) Augmented Reality (AR) and Virtual Reality (VR): AR and VR technologies offer immersive and interactive experiences. Imagine walking into a retail store and talking to an associate from the comfort of your couch. This is the power of AR/VR experiences when they're combined with a personalized marketing approach.

e) Privacy and Data Security: There are many growing concerns around data privacy and protection. As the world grows more connected, customer data becomes increasingly at risk. Striking the right balance between personalization and privacy will be crucial for any business that doesn't want to get caught in the crossfire of a data breach.

As we step into this new era of personalized marketing, brands need to be mindful of the balance between personalization and privacy.

Yes, customers love personalized experiences, but they also value their privacy. So it's up to us to keep the delicate balance between the two so we don't lose their trust.

In Conclusion...

Personalized marketing is here to stay, and it's changing the game.

It's transforming the way businesses engage with their customers and revolutionizing the marketing landscape. As we move forward, it's going to play an even bigger role in how we operate and communicate with our customers.

So, whether you're a seasoned marketer or a newbie just starting out, understanding and embracing personalized marketing is not just an option, it's a necessity.

By understanding your customers, leveraging data and technology, and putting the customer first, you can create engaging experiences that will keep them coming back.

To see how Humankind helps customers like OLAPLEX Haircare create near-perfect CSAT scores (4.94) and deliver personalized marketing experiences to their customers, Book your Demo today!

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