Benefits of Personalization and Customization

The benefits of personalization and customization are substantial for a company, but customization seems to produce the most results. A March 2001 study sponsored by the Personalization Consortium found more than 50 percent of the study’s respondents more likely to make a purchase at an e-commerce site that offers some sort of personalization features. Sixty-three percent said they would be more likely to register at a site in exchange for personalization or content customization features. And 82 percent said they would be willing to provide information like gender, age, and ethnicity, in return for the site’s remembering their user preferences.

There are reports of simple name-slug personalization lifting response rates by 30 percent and true content personalization lifting customer response rates to offers by as much as 300 percent. All of this is great, and some of it addresses the issue of helping customers to manage the relationship, but only when it empowers the customer— or as Scott Martin says, allows the customer to gain control—does it deliver CMR.

Truly empowering the customer requires more than just personalization; it demands customization. Even with the best artificial intelligence, a computer can’t guess a customer’s needs at any point in time. And, consumers who customize are more likely to spend more money online. The Personalization Consortium study found that 28 percent of consumers who used customized websites spent $2,000 more on purchases during a twelve-month period than the 17 percent of users who did not use a site’s option of customization features.^[3] What a customer wants on one visit may be very different from what he or she wants on the next. Reacting to the wrong need of the moment would be like your favorite waiter at the restaurant calling you by the wrong name, or refilling your cup of coffee when you asked for the bill.

When we allow the computer to try to be smarter than it really is and second-guess customers’ needs, we create an inconvenience, forcing the customer to take the time to correct the information. That’s a long way from letting the customer manage the relationship.

Office supplies retailer Staples knows it is not enough to let the computer personalize the site or to try to second-guess the customer’s needs. They allow customers to customize the Staples.com site to create multiple lists, for example, one for items the customer buys once a month, and another for items purchased only when needed. In addition to individual lists, companies can set up group lists for employee use. Customers can also request e-mail reminders. Staples is making it easier for customers to buy by using customization to let their customers manage the relationship.

Most credit card issuers have online account management offerings, but few have found ways to structure them for CMR. One credit card marketer, Metris Companies Inc. in Minnesota, has started to use its online account management offerings to allow the customer to take more control of the relationship. Hundreds of thousands of Metris’s 4.6 million cardholders have registered at the site, and each of them can create a brand experience that is unique. Metris has expanded statement history, added personalized financial reports, and allowed customers to search for specific transactions and request e-mail alerts.

Let Your Customers Know What You Are Doing

Letting the computer loose for personalization can have dangerous consequences. Jack Aaronson, an expert on personalization, tells a story about creating the personalization practice for barnesandnoble.com.

“A customer had bought a book for his sister. The book was about lesbianism, and he bought it as a gift. At the time, the B&N home page had a drop-down box containing fifty different subjects, including history, fiction, adventure, sports, and gay & lesbian. When this guy returned to the site a week later, ‘Gay & Lesbian’ was pre-selected in the box. From a company perspective, this level of personalization might seem reasonable, but there was no personalization on the home page. The list box was powered by a random generator. Whenever the home page loaded, the box displayed a different subject as the ‘default’ selection. One person would see ‘Fiction’ highlighted, another would see ‘History,’ and so on. On this day on this page, on this particular refresh, the highlighted subject was ‘Gay & Lesbian.’ The odds were about one in fifty any particular subject would be highlighted. That day, the odds were not in B&N’s favor.”

The customer may not have noticed if any other default had been selected, as it would have been the week before. The coincidence of the selected default matching his recent purchase had the customer thinking that B&N made an assumption about his reading preferences based on a single purchase. Aaronson reports that the customer’s complaint went through customer service all the way up to the CEO. He learned this lesson and gives this advice:

“The home page had no personalization. But it had a sense of perceived personalization. There was dynamic content that looked different to different users and could conceivably have been personalized. The two principles of perceived personalization are:

1. People think you are personalizing their experiences, especially if your site has dynamic content.

2. If you collect information that could be used for personalization but don’t actually personalize anything, your users will think you are doing a bad job and get frustrated. If you have dynamic content that isn’t personalized, make it clear you aren’t selecting content only for that user.”^{[4 ]}

Patrick Fox, executive vice president, says greater interactivity will be added to the site—if cardholders want it. He says card marketers need to redefine the value proposition on a personal, even emotional, level. The customized website is one way to do that. “Traditionally you never heard from your issuer, except once a month when you went to your mailbox to get your statement. The Internet provides a cheap communication channel for more frequent dialog. Our goal has always been to make our customers’ lives easier and more satisfying. We think this channel gives us a great opportunity to do so.”^{[5 ]}

Mall operator Taubman Centers, Inc. has attracted 350,000 registered users at the twenty-nine websites it operates for the thirty malls it owns and operates in the United States. These consumers have signed up to receive personalized weekly news of sales and other events at their favorite mall stores. Visitors are asked to register for an online bulletin, but to receive that e-mail they have to choose up to twenty of their favorite stores at the mall. They can sign up for a gift-giving reminder e-mail service and a personal wish list. Taubman is responding to consumer feedback from thirty-six focus groups nationwide that said time-pressed shoppers wanted to check their local mall’s site before heading over. The responses also indicated that customers preferred online information over e-commerce functionality.^[6]

^[3]Christopher Saunders, “Survey: Personalization Crucial to Scoring New Customers, Data,” internews.com, May 11, 2001, pp. 1, 2.

^{[4 ]}Jack Aaronson, “Welcome Back, Mr. Lesbian!: Pitfalls of Perceived Personalization,” ClickZ, April 4, 2002, pp. 1–2.

^{[5 ]}Chuck Paustian, “Online Account Management: Time to Start Getting Personal,” CARD Marketing, January/February 2002, pp. 18, 19.

^[6]Mickey Alam Khan, “All Owner Uses Net For Sales News,” iMarketing News, February 25, 2002, pp. 1–2.