40+ Stats and Benchmarks on the Business Impact of Personalization

Personalization might well be the most impactful approach to customer interaction, driving business objectives from lead generation, conversions / sales, customer satisfaction and loyalty, and also marketing efficiency. There is vast empirical evidence on the business case for Personalization across industries, and this blog article will collect recent stats and benchmarks on a continuous basis. You will find, that those benchmarks have a wide range. This is to be expected, as the impact is highly dependent on baseline and progressiveness (e.g. the employment of state-of-the art predictive analytics and machine learning capabilities) as well as comprehensiveness of Personalization (to get the full picture on what comprehensive Personalization should entail, please check my previous blog post on the 8 Facets of Personalization) approach used. The list of benchmarks lets you pick the ones that are relevant for your case. All give the relative uplift, and they are ordered by KPI category with industry (if stated) in bold:

The 8 Facets of Personalization

Personalization - understood as dynamically curating product offers and experiences to each individual customer and context in a seamless manner across channels - is one of the most powerful levers to both dramatically improve the customer experience and to deliver direct business impact. This is why Personalization certainly enjoys a VIP status among the 10P of Digital Marketing. 

However, instead of identifying Personalization opportunities comprehensively, quite often a very narrow perspective is adopted which reduces Personalization to the mere discipline of dynamically adjusting digital interfaces to individual user characteristics, often referred to as "web personalization". Such narrow view typically takes Amazon as a role model for pioneering personal product recommendations based on individual browsing history and collective patterns in purchasing behaviour. 

While personalizing digital interfaces and product recommendations are two important facets, there are six more, which are of particular relevance to non-retailers like financial service companies. In my view, non-retailers are misguided by taking the Amazon approach to personalization as target vision. To capture the full potential of Personalization, they need to adopt a much more comprehensive perspective is necessary. This blog article introduces a framework which which covers all 8 Facets of Personalization:

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Personalization: Have You Fixed the Basics Yet?

Personalization is about dynamically curating product offers and experiences to each individual customer and context in a seamless manner across channels. Personalization is one of the 10P of Digital Marketing which I introduced in a previous post. It can apparently be exercised at very different levels of maturity. At a high level of maturity, personalization is largely powered by predictive analytics, which combines all sorts of attainable customer data to anticipate the message most relevant to the customer in this very moment and to shape the message (channel, tonality, complexity etc.) according to the individual preferences of the customer. However, by thinking about these advanced forms of personalization, companies often forget that they haven’ fixed the basics yet.

Some days ago I received this letter from Deutsche Bank – I have an account there, they know my details, and the letter was not mass marketing but triggered by a specific trigger: I have not opened some legally binding communication in my digital postbox within a timespan defined – in that case law still demands a bank to send out the communication by whitemail. The letter below is everything but impressive from a personalization point of view. The very least should be to address me in a personal way. Instead, Deutsche Bank entitles me as “Sehr geehrte Frau Kundin, sehr geehrte Herr Kunde”, seemingly neither knowing my name nor gender.

Insurance as Lemonade

Allianz invests in Israel-based player Lemonade. This was big but not surprising industry news last week, and Accenture has Lemonade on the radar since it was founded last autumn. In fact, Lemonade might be the world’s most-hyped Insuretech company of today. Allianz strategic investment makes it time to take a sneak behind the hype and try to understand how Lemonade is innovating the traditional business model of property and casualty insurance.

The traditional P&C insurance business model, put simply, is to compensate their customers for their loss or damage in specified events and to take monthly premiums from their customers in return. Without any loss event actually occurring, this business model would apparently be a very profitable one. This potential profit is partially eaten up as soon as the customer files a claim, and the insurance company grudgingly pays the contractually agreed compensation. Each customer claim adversely affects the P&C insurers business case and the key metric of combined ratio, which figures the total claims cost as a percentage of premium income. This is why claim settlement usually involves a lengthy process with the insurer examining if all contractual conditions are really met by the customer.

Did Psychographics Make Trump President?

Arguably, one of the most spectacular marketing successes this year was the election of Donald Trump. Many are still puzzled how such awkward candidate could win. End of last year, a Swiss magazine offered an interesting, but daunting explanation: London-based marketing and data service provider Cambridge Analytica's huge analysis of American voters' social data, the Psychographic profiling of millions, and the corresponding micro-targeting advice to Trump's campaign team was decisive for the tight victory.

Cambridge Analytica's alleged involvement in the Brexit campaign and Steve Bannon as board member certainly make the story a thriller. While it is not possible to prove or disprove the claim without access to the corresponding data (and there are quite some doubts in place), the interesting message is: Social Data powered Psychographics could have made Trump President; and it will without a doubt be key to target and convert individuals in the future. This is why I put Psychographics as first P in the 10P of Digital Marketing.

The 10P of Digital Marketing

The term "Marketing" is used in very different meanings, ranging from covering all aspects of market-oriented business mgmt to the merely operational planning and execution of campaigns and promotions. With reference to the latter definition, "Digital Marketing" is often confined to the employment of digital technologies for the purpose of delivering communication.

Such confined view on "Digital Marketing" however doesn't capture the strategic dimension, which should come first: in the same way as Strategic Marketing begins with thorough market research and customer understanding to develop the value proposition, position the brand and to define the marketing mix for customer approach, Digital Marketing should contribute to all these aspects  - it should comprise the 10P, which are laid out in this article. Digital technologies have the power to radically augment the entire value chain of marketing: