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Personalize for Profit

Published
  • November 01 1999, 1:00am EST

Welcome to Personalize for Profit, the new Internet economy corporate game show where the best customer experience wins! The customer experience applies to all available channels ­ telephone, bricks and mortar, and others ­ but the Internet is totally customer-focused. On the Internet, a customer's experience is not only memorable, but defining. If a customer has a bad experience, he or she does not have to physically go to a different store or place another phone call. Instead, he or she can go somewhere else instantly, with the click of a mouse. The customer has the ultimate power.

The question being addressed in our game show is whether the ability to generate sales by customizing how an individual views the product/service market space defines competitive advantage for a company. Forrester Research says, "Yes," and calls it smart personalization ­ the ability to tailor content and services interactively to individuals based on knowledge about their preferences and behavior. The idea is to design a customer experience right, where customers not only complete transactions but return to your site time and again because they find value in doing so. Build it right and more customers will buy and use your products. Build it wrong and they'll get frustrated and go elsewhere. Pioneers in personalization have reported that customers who use customized features consider more products, spend more money, return more often to the site and spend more time at the site.

So, back to the game show. The prize package at stake is either behind Door #1, Door #2 or Door #3. Behind Door #1 is superior profits through selling, cross-selling and up-selling. Behind Door #2 is business as usual, with moderate customer retention. And behind Door #3 is the ultimate customer turn-off where customers, even though they may fill out a profile with relevant information, are provided with a suggestion to purchase a product that they either already have or have absolutely no interest in purchasing (the "I'm outta here" syndrome).

Let's delve a little deeper into what's involved in the ultimate prize package behind Door #1. The goal of personalization in the Internet space from a customer's viewpoint is to deliver information relevant to the customer and within context. Personalization can increase a site's usability, customer satisfaction and customer loyalty. The goal from the organization's perspective (in "e- vocabulary") is to increase both the "look to book" ratio and stickiness. "Look to book" measures the number of people who visit a site versus those who actually consummate a transaction. "Stickiness" measures how long someone stays on a particular site. These measures are really about selling, cross-selling and up-selling.

Personalization is different from profiling. Profiling is the collection and segmentation of customer data. Personalization is the result of using customer profile information as well as other data to present something (it could be content, advertising, products, and so forth) particular to an individual or a group of individuals. It's about tailoring a customer's experience by using information that is known, interpreted or predicted about them.

Within personalization is an implicit need for information interaction, which has a profound implication for e-business intelligence within an organization. Information can flow two directions. One, the information obtained through analyzing clickstream data and profiles from Internet transactions can be made available to the data warehouse and to customer relationship management (CRM) applications for use in multiple channels. Two, detailed customer information obtained from other channels and stored within legacy applications (including CRM) and the data warehouse can be shared with Internet/e-commerce transactions. Both interaction methods can and should be used to target individual customer needs.

Many examples of personalization on the Internet exist. One of the early, and perhaps most famous, is Amazon.com. If you haven't been there recently or haven't noticed how they implement personalization, check it out! Once you have selected a book, for example, they dynamically create a message that says, "Customers who bought this book also bought:" and list several other titles that might pique your interest, with automatic links to more information on each one. Amazon.com also uses profiling to achieve personalization. Click on "Amazon.com Delivers" and you'll see the message, "Tell us what you like and we'll e-mail you recommendations, articles, interviews and auctions ­ all tailored to your tastes." The goal? More sales. And happier customers, since they are not presented with options in which they have no interest.

While Amazon.com's achievement in personalizing the customer's experience is memorable compared to other organizations, it was relatively easy. Since they only have an Internet presence with no physical stores, they only have to gather and analyze Web/clickstream data to generate additional Internet sales. Even more difficult, however, for companies with multiple sales and service channels, is using clickstream data to generate sales in other channels, and vice versa.

Personalization is a key factor in defining a customer experience that brings people back. In the Personalize for Profit game show, the winner potentially takes all. Select Door #1 where you have increased revenues and more satisfied repeat customers, and you're still in the game. Select Door #2 or Door #3 where you fail to deliver on the promise of personalization and ­ for the customer ­ another site is only as far away as a click of a mouse.

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