Hey Bob! Does Personalization Really Work?
Intelligent personalization means leveraging data and print production efficiencies for greater response
By Michael D. Nelson
The buzz surrounding personalization continues to hum because of the continued advancement of variable-data print technology, which allows text and graphics to change on the fly. Manufacturers of digital printing equipment are associating it with one-to-one marketing, predicting it will change the way companies think about print communication.
Most printing companies, however, still are not buying the case for personalization. Perhaps they don't understand the applications, or they can't sell it. Or maybe they can't actually do it. It would stand to reason. After all, variable data printing isn't really a printing thingit's a marketing thing. And yet, most marketers aren't buying into personalization eitheror at least not the full extent of its capabilities. The main barrier is the lack of a common definition or standard for what personalization means. And there are varying opinions as to how well it really works.
If personalization means dropping people's names on static form letters and direct mail materials, then it's just production gimmickry and probably doesn't work to any significant extent. But if personalization is targeting specific contentmessages, offers and informationto narrowly defined audience subsets based on data intelligence, then, yes, it most definitely does work.
Unfortunately, the vast majority of so-called personalization is nothing more than a glorified mail merge. And there's nothing all that new about it. Mass mailers have been spraying names on mail pieces for years, using high-speed web presses with inkjet heads. It's just that now they can do it in color.
And how do we, as consumers, feel about seeing our names printed on direct mail materials? Does it capture our attention? Does it motivate us to respond? Or does it have an adverse effect, creating instead a perception of a very impersonal and, yes, even hokey, mass mail solicitation? To answer this question as marketers, we probably need to look at personalization from a customer perspective. And as we sort through the mailbox clutter, the answer seems fairly evident.
Are You Talking to Me?
In a customer-centric business environment, companies don't sell, people buy. So the job of direct marketing is to deliver the right information and the right offer to the right people at the right time in their buying cycle; to influence the decision-making process; and to motivate some kind of next-step action that leads to a transactional situation. And this job is no longer limited to a single medium.
Media have changed, as has the way consumers interact with each medium. And that includes mail. Direct mail has become so saturated with junk that consumer filtering has greatly intensified, as it has in all media. This has created a problem, but also an opportunity to gain significant competitive advantage by breaking through the din with more targeted, personal and relevant direct mail.
This move from targeted mail delivery to targeted messaging is part of a broader shift from media broadcast to media narrowcast, which puts a premium on managing the content, not the medium. The measure of success for many media subsequently has changed from cost-per-impression to return on investment; from transaction value to lifetime customer value.
As postage rates continue to increase (marketers are told to anticipate another double-digit increase by 2006) and response rates continue to decline, it seems apparent that the old formulaic direct mail methodsbuilt on a manufacturing model driven by economy of production scaleare no longer effective in the age of information. For 500 years, print technology has been geared to improving production efficiency. The time has come for direct mail marketers to better leverage digital technology to improve communication efficiency.
There are three ways marketers can do this:
* Targeted messaging. This combines the effective use of data intelligence to more accurately identify those customers and prospects who are most likely (or least likely) to respond to a given offer at a given timeand then match the most relevant messages and offers. This ability to target specific messages, offers and information to narrowly defined audience segments allows for great efficiency in direct mail programs and has been shown to dramatically increase response rates, while decreasing total mail volumes.
As marketing intelligence becomes more scientific and less assumptive, specific product benefits can be matched to specific customers, touching different emotional triggers. Messages can be localized and customized. For mature audiences, for example, the copy tone might be more conservative and respectful, and the campaign might use larger type and a BRC response mechanism. The same offer to a Gen X audience might feature copy with more attitude and offer a Web or e-mail response option.
* Personal connection. Another critical use of personalization in direct mail is the ability to connect customers and prospects with a company representative, local agent or channel partner. By introducing the field representative or agent by name, as well as including a photo and personal information about him or her, customers get a sense of familiarity and trust that can help "grease the slide" for follow-up contact and relationship management.
* Personalized fulfillment. In a two-step mailing where an interim offer is being used to generate leads, the perceived value of the offer ultimately is what drives response. So, anything the direct marketer can do to tailor the offer to different audience segments in a way that enhances perceived relevance and information value, will increase response. Fulfillment is managed on-demand using electronic templates with variable-content options, triggered from the data profile of the responder. Fulfillment also can be personalized to appear to come from a local sales representative or agent, which makes for a built-in "hook" that opens the door for follow-up contact.
Case in Point: Personalization and Insurance
For example, a major insurance company was engaged in a two-step lead-generation program, attempting to drive response via an interim-information offer. In this case, the previous offer was a generic brochure describing different insurance products.
By tailoring the message and the informational offer to different audience subsets based on their unique needs and/or motivational triggers, the insurance marketer was able to create a higher perception of relevance and value for the information to be fulfilled, thus dramatically increasing response rates.
The audience was segmented by life stage and/or event, occupation, presence of children, affiliation with a professional association, and past purchases. These data allowed the insurance firm to tailor messaging to specific needs and benefits, and to customize an offer that was highly relevant to each audience subset. The new offer also was a brochure, but it was customizedin both packaging and contentfor each segment. Depending on the customer's needs, he or she would receive a brochure titled, for example, "What every new parent should know" or, "What every livestock producer should know."
Fulfillment was produced on-demand in response to brochure requests made via mail or e-mail. Brochures included a connection to the customer's local agent to facilitate the personal follow-up component of the two-step program.
Did this personalization work? Response rates increased from between 1 percent and 2 percent to between 5 percent and 8 percent in cells where the mailing and brochure offer were customized.
Personalization, in short, is not a digital-print production capability; it's a customer communication tool. The more marketers know about their customers, and the more effectively they can use that information to communicate with their customers on an individual basisrather than talking to marketsthe better the return. A funny thing happens when you talk to people in a way that is meaningful to them: They listen ... and they respond.
Michael D. Nelson is president of Minneapolis-based Digital Marketing, a full-service provider of data-driven marketing and customer communications. He can be reached at: email@example.com.
This article originally appeared in the April 2004 issue of Inside Direct Mail.