The Growing Personalization Conundrum for Marketers

For more than two decades, the value of personalization has been largely unquestioned in marketing circles. Most marketing leaders now view personalization as essential to marketing success, and providing personalized marketing messages and customer experiences has become a top priority in many companies.

Several recent research studies have confirmed that marketers strongly believe personalization drives improved marketing performance, and that most are committed to making personalization a core component of their marketing efforts. For example:

• In the 2019 Trends in Personalization survey by Researchscape International and Evergage, 70% of surveyed marketers said personalization has a strong or extremely strong impact on advancing customer relationships, and more than half of the respondents said personalization produces increased conversion rates, increased visitor engagement, improved customer experience, and increased lead generation/customer acquisition.
• In the 2018 State of Marketing research by Salesforce, more than eight out of ten surveyed marketers said personalization delivers major or moderate improvements in brand building, lead generation, customer retention, customer acquisition, and customer advocacy.
• In the 2019 Digital Trends research by Econsultancy and Adobe, targeting and personalization was the second most frequently identified priority for 2019 among survey respondents from larger enterprises.

There are also several studies showing that consumers want (and increasingly expect) personalized experiences.

• In a 2018 survey of 8,000 consumers by Accenture Interactive, 91% of respondents said they are more likely to shop with brands that provide them relevant offers and recommendations.
• In a 2018 survey of more than 6,700 consumers and business buyers by Salesforce, 76% of all respondents said they expect companies to understand their needs, and 72% of the business buyers said they expect vendors to personalize engagement based on their needs.

Given these research findings, it shouldn't be surprising that many marketing pundits are now advocating the use of "hyper-personalization," which generally refers to the use of real-time data and artificial intelligence to deliver more relevant content to each recipient.

So the correct strategy for marketers is to personalize everything they can, whenever they can, as much as they can, right? Well, not so fast!

Why More Personalization Isn't Always Better

There is a growing body of evidence indicating that consumers and business buyers are increasingly concerned about privacy and do not always welcome personalized marketing. For example, in a 2018 survey of nearly 6,400 individuals in France, Germany, the U.K., and the U.S. by data security firm RSA, less than half of the respondents (48%) agreed that, "There are ethical ways in which a company can use my personal information."

When survey participants were asked about specific types of personalization, the results were even more stark, as the following table shows:

Note that more than half of the respondents in this survey believe all four of these personalization practices are unethical, not just annoying or ineffective.

Other research has confirmed that people will react strongly when they perceive personalization goes too far. In the 2018 Consumer Personalization Panel research by Gartner/CEB, survey participants were asked how they would react if a company sent them irrelevant or annoying emails. Forty-eight percent of the respondents said they would unsubscribe, and 12% said they would stop doing business with the company.

But when they were asked how they would respond if a company sent them personalized messages that were "creepy," 57% of the respondents said they would unsubscribe, and 38% said they would stop doing business with the company.

When all of the recent research is considered, it's clear that marketers are facing a Catch-22 when it comes to personalization. On one hand, most customers and potential buyers say they want personalized offers, messages, and experiences, and large majorities also say they are willing to provide personal data in order to receive such offers, messages, and experiences.

At the same time, however, most customers and potential buyers are growing more concerned about privacy, and they aren't comfortable with how companies are collecting, accumulating, and using their personal or business information.

So, how can marketers deal with buyers' inconsistent and contradictory attitudes toward personalization? How can marketers balance the benefits produced by effective personalization against the risks of creating personalized messages or experiences that buyers will perceive as intrusive, presumptuous, or otherwise "creepy?" In my next post, I'll provide a few suggestions for dealing with this growing conundrum.

Top image courtesy of Anders Sandberg via Flickr CC.