Partner content: Why does personalisation matter so much?
While personalisation is not an entirely new topic, there is currently massive hype around it. This is due to service providers having realised that they need to be more cost-effective in engaging with their customers and because customers now demand to be treated individually and in a personalised way.
McKinsey & Company[1] states that 71% of consumers expect personalisation, while 76% of those same consumers get frustrated if they cannot find personalisation in the brands they interact with, leading to churn. The study also claims that 75% of consumers switched to a different brand because they weren’t satisfied with the experience they were getting. This is even more critical in the aggressive market service providers face today.
The study concludes that personalisation pays off, as brands that capture more value from personalisation will grow faster and can earn 40% more revenue from personalised marketing actions or tactics.
Although some service providers are already delivering hyper-personalisation use cases to their customers, most businesses are still experiencing segmented personalisation. Nevertheless, regardless of the adopted approach, it is easy to understand that, as service providers become more mature in personalisation, it is possible to improve the response rates, increase the conversion rates and lift the customer lifetime value. But one question remains: are they taking action to harvest all the available benefits?
Yes, but not enough!
Several market trends have been adopted in recent years, bringing service providers to the level where they currently stand:
- Customers are segmented into groups by their similarities and offered similar value propositions and experiences. However, what is suitable for the group might not be good for the individual.
- Customers’ deflection to non-assisted channels brings efficiency and allows them to reduce operational costs. Nonetheless, all the interactions are detached, impersonal, and less human.
- Service providers are automating sequential journeys, ignoring the fact that sequential journeys are dead! The new way customers interact with their brands is through a set of non-linear moments and different touchpoints that need to be correlated and orchestrated.
The previous trends already brought benefits and were applicable in a particular context. Today, new approaches are required for service providers to progress, improve, and move to the next level.
Market challenges
Achieving a hyper degree of personalisation can be challenging – it requires investment, time, and the right strategy. Furthermore, it is not a straightforward path, and it’s essential to understand the business and technical challenges that service providers must address and overcome to succeed. Challenges for which Hyper-Personalisation is the answer.
Service providers face intense pressure to deliver superior customer experiences to differentiate from competitors. With products, services, and prices being similar across the board, customer experience becomes the key differentiator. Lack of differentiation leads to increased competition and pressure to retain customers, making customer satisfaction, loyalty, and trust critical. Additionally, service providers need to boost annual revenue in a saturated market, which demands cost-effective marketing strategies. Mass marketing investments often yield low returns, highlighting the need for more precise and efficient customer engagement.
Large customer bases
Although the telecommunications industry has the advantage of having large customer bases and data, the challenge lies not in data availability but in extracting actionable insights from it. Telcos face the technical challenge of creating a unified customer profile from disparate information sources. This requires integrating online and offline data to achieve a real-time, comprehensive view of customer knowledge while minimising reliance on third-party data.
A critical aspect of this challenge is the ability to correlate digital behaviours with customer intent. By anticipating and predicting customer intentions, service providers can proactively engage with customers, meeting their expectations with differentiated services. Furthermore, transforming this data and intent into relevant, actionable insights is essential for delivering personalised services. These insights must be generated in real time due to the rapidly changing nature of customer behaviour, ensuring that the information remains accurate and useful.
The hyper-personalisation approach
Figure 1 – Hyper-personalisation platforms
The hyper-personalisation approach must bridge Digital with Data and Cognitive capabilities to deliver unique, in-context and highly relevant experiences to individuals.
This approach requires three main platforms as the foundations of the solution:
- Customer Data Platform is the backbone of the customer profile. Customer-related data collect different and relevant real-world events.
- Data Insights Platform represents the decision engines that run on top of the customer data to provide relevant and actionable insights, with two primary responsibilities — campaign management and AI & ML.
- Digital Experience Platform, used to activate and deliver the experience in the digital channels as per the insights from the Data Insights Platform.
Most of the industry is still focused on segmented personalisation, delivering experiences and recommendations to grouped users considering predefined rules. This can be seen as the starting point or the primary solution, but it depends on the maturity level of each service provider. Usually, it is the domain in which most of them are working.
With hyper-personalisation, service providers can scale up the personalisation leveraged by AI & ML to deliver experiences and recommendations in real time to individuals, creating a one-to-one personalisation.
To achieve this, these one-to-one engagements must be tailored to specific micro-moments. One of the most used frameworks is that of Google[2], which identifies three main micro-moments:
- “I want to know” – Related to the market. When the customer wants to find something.
- “I want to buy” – Related to the selling moment. When the customer wants to buy something.
- “I want to do” – Related to engaging or with the care moment. When the customer needs to do something or solve a specific issue.
For each of these specific micro-moments, service providers can instantiate a hyper-personalisation solution that addresses the particularities of each moment with a greater focus on the customer’s specific intent:
- Smart Content Experiences: Delivers tailored and behaviour-driven personalisation leveraged on continuous data collection to provide unique content according to customer intent in real time, leveraged by the Digital Experience Platform.
- One-to-one Recommendations: Delivers contextualised one-to-one products and offers recommendations based on customers’ real-time interaction history & preferences, leveraged by Campaign Management or AI & ML models.
- Cognitive Care: Uses AI & ML to predict customers’ intentions and recommend the best experience to engage with them proactively.
The benefits
One of the main benefits of using highly personalised experiences is that service providers can maximise the value of each customer throughout their lifecycle.
Figure 2 – Improving customer lifetime value through hyper-personalisation
This improvement isn’t achieved by engaging with customers only at the beginning and end of their lifecycle, as does the classic CVM approach, but constantly throughout it all. Following this strategy maximises the Customer Lifetime Value and optimises internal costs, especially acquisition and retention costs.
Additionally, according to McKinsey & Company[3], hyper-personalisation instantiation can result in clear and tangible business benefits:
- Engaging directly with customers and avoiding mass campaigns can reduce up to 50% of acquisition costs. This, paired with direct savings from the reduction in marketing investments, enables 10–30% better cost-effectiveness.
- The buying process becomes more natural when directly targeting customers’ emotions and addressing their preferences, interests, and tastes. This approach allows up to 2.5x better conversion rates. Besides this, continuous and closed engagement during the care period, even if representing a slight increase in investment, delivering contextualised and relevant up-sell and cross-sell recommendations, contributes 5–15% uplift revenues.
- Proactively engaging with customers during the care period enables predicting and preventing possible customer service issues. This type of engagement allows up to 30% improvement in customer retention. This proactive care approach can increase the Net Promoter Score by up to 20%, enabling a better overall customer experience.
Article originally published by Henry Stewart Publications in the Journal of Digital Banking,
Volume 8, Number 3.
About the author (pictured above)
Luís Coelho is Head of Hyper-Personalisation Offer at Celfocus and a Senior Manager at Celfocus Offer Development & Innovation team. He has a long experience in IT projects’ delivery and pre-sales activities for the Telco & Financial Services industries, gathered from more than 20 years’ real-life and hands-on practice delivering mission-critical solutions.
Currently, Luís is the Head of Hyper-Personalisation Offer with a focus of providing business and technical solutions to extract value from data for successful digital enablement. This is achieved by bridging digital, data and cognitive capabilities to deliver unique and highly relevant experiences to individuals, allowing service providers to reach customers more efficiently.
Tel: +351 911 036 853; E-mail: luis.coelho@celfocus.com
[1] https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/marketings-holy-grail-digital-personalization-at-scale
[2] https://www.thinkwithgoogle.com/consumer-insights/consumer-journey/micro-moments-understand-new-consumer-behavior/
[3] https://www.mckinsey.com/business-functions/growth-marketing-and-sales/our-insights/the-value-of-getting-personalization-right-or-wrong-is-multiplying