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Wednesday, September 25, 2013

One Size Does Not Fit All: The Promise of Progressive Profiling

According to Forrester, by 2014 the average consumer will receive 9,000 email marketing messages a year. How can marketers engage their audiences more effectively in such a crowded environment?
Currently, most marketers are already ignored—an email open rate of 20% and a conversion rate of 1% via email is considered above average. Consumers are so buried in communication from a variety of media that only the most relevant messages find a target. Revolutionized in recent years by the growth of cloud computing and coupled with falling costs, automation puts a lot of power in the hands of a marketer. But with great power comes great responsibility, and most marketers have used this power for volume and frequency instead of exploiting the opportunity for customization.
Mass customization continues to innovate in the digital world, and it’s found a receptive audience in consumers. An essential technique in custom communication is progressive profiling: the art of breaking down opt-in data into bite size pieces so that consumers can gradually, continually give companies profile information. Spurred by novel techniques in email and preference centers, progressive profiling shows vast promise in its ability to provide a platform for automated, personalized communication.
Recently, PossibleNow (in a joint research project with LadderingWorks) studied progressive profiling and the continuing influence of customization on user behavior and attitudes. We found that behavioral drivers are often subtle and largely transcend traditional demographics. For example:
  • Most internet behaviors are not directly related to demographics and are device/platform agnostic
  • Consumers expect greater control over their relationships with companies and brands
  • The decision to participate via opt-in surveys is based on perceived value
  • Capturing data via social sign-in (such as “Sign in with Facebook”) is rare and not generally trusted
  • Monitoring online behavior by a merchant is acceptable but can be perceived as creepy
  • Design and user experience is important in branding, data collection, and even in Preference Centers
We also found several personas emerging from our research. These clustered groups of personality profiles are likely to have different behavior patterns within progressive profiling, something that companies should strongly consider when developing data collection and analysis.

Naïve users vs. Aware users

Consumers fall into two distinct camps regarding the way they manage their inbox and the way they manage communication from merchants.  One group is highly proactive in their management of messaging: these users eliminate correspondence at the merchant site and keep their email inbox clutter to a minimum by carefully customizing merchant messaging at the settings or preferences level.

The other group takes a reactive approach to managing merchant e-mail by deleting or filing it when they receive the correspondence in their inbox.  The reactive group is much more open to quickly customizing their messaging via bite-sized modal dialogues instead of navigating a full-scale preference panel on a website. As users go from naïve to aware, they will likely become either value conscious or convenience focused (as explained below).

Value conscious users vs. Convenience users

The more that a user trusts the technology, the more likely they are to use that technology to make changes or adapt it to their lifestyle.  They don’t want anything to get in their way and prefer to customize the communication with a company on a detailed level if possible. Value conscious consumers sign up with merchants/shop online, because they want to receive discounts, coupons, offers of free shipping, etc. Convenience conscious consumers are driven by the ability to utilize technology to make life easier and will usually pay more for convenience.

Having a central facility to manage all touch points with the customer helps improve cross-channel marketing efforts and improves the likelihood that you’ll deliver the right message to the right channel. Advances in data acquisition and storage have made ubiquitous analysis available on a scale never imagined; when combined with progressive profiling, this development presents an enormous opportunity to derive not only data insights, but to apply those insights in a contextual manner.  Our forthcoming white paper will address many of the issues raised on this blog post in greater detail.

About the Author: 
John Davidson is a researcher at PossibleNOW.

Friday, September 20, 2013

Netflix Uncovers Clue to Customer Preferences

 The following is an excerpt from a post written by Bryan Pearson, President and CEO, LoyaltyOne Inc. It’s an easy to understand example of the importance of knowing your customer’s preferences.

For the past several months, looking at my Netflix viewing options was like being confronted by a rogue Amazon recommendation engine. Instead of offering me the kinds of programming I prefer, such as “House of Cards” and “Star Trek: Next Generation,” I’ve been subjected to “H2O: Just Add Water” and “Glee.”

In other words, Netflix has been suggesting my kids’ viewing choices to me. While in some cases that is OK – we do share a passion for the BBC’s “Sherlock Holmes” – their tastes in other programming are not what I’d call entertainment. We were at risk of a brand-relationship rift.

Then I got an email from Netflix that changed all that. With a few thoughtful entries on our computers (phones or iPads), we could create individual personalities, with preferences, for every person in my household, at no extra fee.

Tuesday, September 17, 2013

A Missed Opportunity

A colleague recently told me about a frustrating experience visiting a website that was suggested to her on Facebook. She clicked on a picture of a dress she liked but instead of being taken to the site, a pop up appeared asking for an email address. Then the site asked her to create a password. Then it asked for her full name. At this point, she got frustrated and left the site without even browsing for a single item.
It’s common for potential customers to find sites via social media suggestions from others they know or trust. In fact, a social media suggestion is a powerful way to build a customer base because the customer feels like they are making the choice, much like they would in choosing to visit a physical store because of a friend’s suggestion.
And in my colleague’s case, it worked! She was interested in what she saw and the fact that her friend made the suggestion encouraged her to learn more.
The most important lesson in my friend’s story is that you can drive consumers away before they ever become your customer if you don’t manage the process correctly. Sites should allow consumers to browse before forcing them to create a profile. Even if the browsing experience is limited, the site should at least give customers a taste of what they can expect in order to entice them to become customers.
The currency of the new economy is information and asking for too much too soon can create an insurmountable barrier to attracting and ultimately converting new customers.
As PossibleNOW learned in our recent research, customers vary in the amount of information they’re willing to provide online. For some, it’s not a big deal to supply an email address to gain access to a site or even to provide a full name. Others are wary of providing anything until they have had ample time and opportunity to browse and view information on their own.
Not every consumer that stumbles upon your site is going to end up buying from you or will even be interested in receiving communications from your company. Collecting information from every visitor to your site without an understanding of what they are actually interested in or what they care about is a mistake. Doing so means that you can only send these customers marketing messages that won’t feel appropriate or personalized.
It would have been far better for the site my friend visited to have allowed her time to browse around. By using the data gathered during her visits, this site would have gained enough information to start establishing a relationship with her. Companies must learn to be patient by allowing the customer to take the lead in when and how they choose to provide information.

About the Author: 
Eric V. Holtzclaw is Chief Strategist of PossibleNOW. He's a researcher, writer, serial entrepreneur and challenger-of-conventional wisdom. His book with Wiley Publishing on consumer behavior - Laddering: Unlocking the Potential of Consumer Behavior - hits bookstores this summer. Eric leads the professional services organization to strategically guide companies on the implementation of enterprise-wide preference management solutions.

Follow me on Twitter: @eholtzclaw | Connect on LinkedIn: Eric Holtzclaw

Monday, September 9, 2013

Are you ready for some Football? How to build a “team” of satisfied customers

It’s fall, or as we refer to it in the south…football season. We take football very seriously here! Come September, every Saturday is about “the” game.  I grew up in the Midwest and attended Michigan State University. Big Ten football is also taken seriously; we have our rivalries, our must see games and we can tailgate with the best of ‘em. But, as a southern transplant headed into my 19th football season below the Mason Dixon line, I can say with certainty, ain’t no fans like southern fans.
Why are southerners so passionate about football?  It’s about the experience, of course. You have an instant connection with a stranger wearing your team colors or flying your team’s flag.  That shared pastime gives a feeling of camaraderie.  As alumni or even just as fans of the same school, you feel a sense of belonging. By finding others with the same interests, you have created a sense of community.
How do you create this same team spirit for your brand? What makes your customers devoted to you rather than your competitor?  First of all, you need to understand your fan base.  If you shout “War Eagle” when you should’ve cheered “Roll Tide,” you have just alienated a group of fans.
It is not possible to market to all fans the same way; instead you must know what motivates them and what turns their allegiance to you. For some, loyalty is built after positive experiences with your brand; they’re alumni so to speak. Others may get on the bandwagon at the recommendation of a friend, which is an intangible connection you may not be able to predict.
Big data doesn’t tell you anything relevant about your customers as individuals. To learn what turns a casual shopper into a loyal fan you need to show you care and are relatable. If you don’t…there are plenty of other teams who have a jersey with that consumer’s name on it.
Believe it or not it’s fairly easy to get to know your customer. It only takes a few well-designed questions to capture your customers’ preferences so you can begin to engage with them appropriately. Think about the 3 essential pieces of information you need from your customer in order to begin to know who they are. Does it help you to know what industry your customer is in?  If so, ask.  Or is it more important to know whether or not they have children? It’s ok to ask that too. You cannot create a sense of belonging or team spirit by treating all your fans the same. It’s an individual experience first.
Once you understand your customers you can market to them with relevance. This makes their experience with you more enjoyable. Over time trust will be built, and as a result so will your fan base. Satisfied customers will send their friends your way and before long your stadium will be filled with fans chanting your name.

About the Author: 
Darci Bullard is the Project Coordinator for PossibleNOW's Preference Management Consulting group.

Wednesday, September 4, 2013

Cultural Sensitivity to Preferences is Required for Global Brands

Once a month I join a group of international expats, people from all over the world that have relocated to Atlanta. It is a really great event; I meet folks that usually have some kind of interesting life story to share. I make new friends every time I go. People help one another out with all kinds of tips, especially if someone has just arrived in town.
At the last gathering I made some interesting observations while explaining to a fellow German what I do for a living. Since Preference Management is a relatively new concept, I usually take every chance I get to find out what people understand about it. Usually they have never heard the term so I have to give some examples.  
I usually start with a relatable scenario about how banks communicate with consumers. Many people are surprised how it all works together, from the call center down to setting personal preferences at an ATM. But, people immediately get the idea. As a next step I give an example of a consumer company. With my German friend, I could literally see how her thoughts immediately shifted as she imagined getting piles and piles of unwanted advertising in her mailbox. 
Now, in Germany the shopping culture is a little different. As you might have heard, Germans like quality. That’s why you still find a lot of specialty shops that offer expertise that cannot be found in discount stores. If something is offered for free or cheap, a German brain usually connects that with poor quality. Or, they think there is some trick involved – i.e. in exchange for the free item you will get huge amounts of advertising because your information has been sold.
Overall, Germans are not into online deals and coupons and don’t like to give their personal data to consumer companies. I can personally relate to that, especially coming from the former East Germany, where brands and advertising were non-existent. I remember how shocked I was when the flood of advertising rolled over East Germany. It felt like I was being thought of as naive; someone who would buy anything that was put in front of me. People that could not resist were seen as poor or not smart enough to look beyond the colorful ads.
With customer service, the focus usually changes. I changed my friend’s thinking when I asked her whether she ever had a problem with a product and tried to resolve it with a company. Of course she had and she knew how painful it could be. I asked her if she would give her information if it would result in a better experience when solving an issue with a company.  She agreed she would likely provide her information. She could see the difference between the need for the company to contact her regarding a service issue, vs. the company using her contact information to try to sell to her.
By talking to my German friend, I can see how my own attitude toward privacy has been changing over the years. I have lived in the U.S. for 15 years, and am used to the American way of shopping. I am probably guilty of giving away my information too many times in exchange for convenience. But thinking about the conversation that evening, I made three key observations:
  1. People of different cultural backgrounds have very different understandings of privacy. There is a fine line between being comfortable with giving personal information or finding it creepy.
  2. As soon as companies can show a tangible benefit; for example, a customer service situation, people seem much more at ease with providing their information.
  3. Not every benefit is valued the same by each individual. For some, convenience is the most important. For others, convenience can be sacrificed to maintain privacy.
For companies doing business internationally this means they have to take a good look at the local consumer. There are different drivers — and barriers — that encourage or prevent consumers from providing their information. In order to build trust with your local audience, it is important to identify cultural differences and core drivers and apply them to the way companies collect and use information from their consumers.

About the Author: 
Sylvia Kay is a Project Manager of the Preference Management Consulting division of PossibleNOW.