Key Challenges With Personalized Marketing And How To Overcome Them

Mike Rowan, President, Founder @KPItarget 

This article originally appeared on Forbes.com.

In 2020, marketers will increasingly turn to personalized marketing to improve customer engagement.

According to the 2019 Trends in Personalization Report by Researchscape International and Evergage, Inc., the majority of marketers (98%) agree that personalization helps advance customer relationships. Among these marketers, 70% claim that personalization has a strong impact on delivering better customer experiences, increasing loyalty and generating measurable ROI.

And while new technology is making it possible to personalize messaging on an increasingly granular level, marketers face mounting challenges when it comes to both tightening regulations and the difficulty of managing all of that customer data.

In order to successfully capitalize on this strategy in 2020 and beyond, marketers must walk a fine line between personalization and privacy and always put the customer at the heart of their efforts.

Personalization Works… 

At its best, personalized messaging can cut through the noise by making an individual feel seen, heard and understood. From product recommendations to personalized offers, these interactions can provide real value by solving a problem, filling a need or providing enjoyment.

These days, personalized communications aren’t just appreciated, they’re expected. A recent Accenture Interactive study found that 91% of consumers are more likely to shop with brands that remember them and provide relevant offers and recommendations.

Personalization also provides marketers with measurable ROI. The majority of marketers (90%) polled in the Trends in Personalization report cited a measurable positive impact from their personalization efforts, 58% reported an improvement of more than 10%, while 15% reported more than 30% improvement.

…But It’s Difficult

At the same time, marketers are much less optimistic about their ability to personalize effectively. According to the same report, only 32% agree that marketers are getting personalization right, and a mere 18% are “very” or “extremely” confident that they have a successful strategy for personalization.

So, where’s the disconnect? Personalization is difficult, and among the challenges marketers must face, data is near the top of the list.

The Data Challenge

Advancements in technology allow marketers to collect more customer data than ever, which can translate to hyper-precise targeting. There’s just one catch: You need the right tools and systems in place to effectively manage — and mine — a massive volume of data.

Unfortunately, customer data often comes from disconnected sources. The only way personalization can work is if there is a single, unified source of accurate customer information (keyword: accurate).

According to The Clear Path to Personalization report by Forbes Insights and Arm Treasure Data, 48% of marketers cite data quality as a leading roadblock to effective personalization.

Targeting based on incorrect information or assumptions can do more harm than good. At best, mistargeted communication will be ignored. At worst, it could cause a customer to turn away from a brand.

Overcoming Data Obstacles

Creating a complete, accurate picture of any given customer is challenging. Practical personalization takes ongoing effort and continuous refinement. This involves both coordination and integration, along with the all-important human component.

The right tools are crucial for translating data into effective personalization. When looking for a customer data platform (CDP), marketers must put more emphasis on quality than quantity. Sophisticated AI-powered tools can also help sort through the data to create detailed, accurate profiles.

A direct, transparent approach can also be invaluable. What does that look like? Zero-party data (data a customer shares voluntarily in return for personalized offers and recommendations). It’s a conversation with customers, which can start with social interactions, surveys or customer service interactions. It’s an open dialogue that gives customers an opportunity to weigh in on their needs, wants and preferences — no guessing required. The increased scrutiny under which personal data can be acquired and used is creating another major challenge for marketers.

Increasing Regulations And Restrictions

Online privacy came into the spotlight in a major way in 2018, thanks to the Cambridge Analytica scandal, followed by the General Data Protection Regulation (GDPR) taking effect in Europe.

While plenty of studies show that consumers expect and appreciate personalized interactions, the Cambridge Analytica scandal and #DeleteFacebook blowback that followed made it clear that consumers are growing uneasy with how their personal data is both collected and used. Increasing regulations on the use of personal data soon followed.

GDPR had marketers scrambling to make sure they were in compliance with new restrictions that included European customers’ “right to be forgotten” (making it unlawful to store data collected from an individual without consent). This year, the California Consumer Privacy Act (CCPA) is bringing similar restrictions to the States — or to one state, for the time being. Under CCPA, which went into effect January 1, businesses must disclose the personal information they’re collecting from customers in California and ask for permission before selling personal data.

Tightening restrictions on location data collection have also made it more difficult for marketers to personalize messaging based on location. Likewise, targeted advertising is getting more restrictive on Facebook due to anti-discrimination efforts. Advertisers running ads related to credit, housing and employment can no longer target customers based on demographic information like ZIP code, age or gender.

The trend is clear: The collection and use of personal data are coming under increased scrutiny, which can significantly impact personalized marketing strategies.

Trust And Transparency

The key to effective personalization is a customer-centric approach and an increased focus on zero-party data. That starts with getting a complete and accurate picture of who customers are and what they want through a transparent, ongoing dialogue.

Personalized marketing works if marketers are willing to put in the effort. It’s not about just collecting data but ensuring that the information is accurate and acquired in a transparent manner that customers are comfortable with.

In the ever-changing landscape of data regulations and consumer comfort levels, marketers must be nimble and be prepared and ready to pivot. As long as marketers keep the customer at the center of their efforts and are willing to play the long game, personalization can pay dividends that are well worth the effort.

If you’d like to chat about using personalized marketing in your digital strategy, contact me at mike@kpitarget.com.