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The impact of personalization on the bottom line

CHICAGO -- To find out how to make money, companies need only look at their customers, according to Scott Martin, president and chief executive officer of Nextclick, The Personalization Agency.

"Personalization is the act of tailoring the product or service to the individual with the goal of increasing quality interactions that turn into repeat transactions," Martin said. "If CRM is a flashlight, personalization is a laser."

Personalization focuses on the customer, not on the product, he said. Very few examples exist today where personalization is complete, Martin added.

It all began with the general store in the 19th century, Martin said, where shopkeepers stocked their stores with the needs of their customers. Quoting Paul Underhill, author of "Why We Buy," Martin said, "A good store exposes the greatest portion of its goods to the greatest number of shoppers."

The personalization industry is big and growing today, according to Martin. Personalization took off because companies began putting information into databases, he said.

In personalization, companies need to focus on retaining the customer, Martin said. But how do you get customers, close sales, and keep the customers coming back? "It all starts with trust," he added.

Permission-based marketing is one example, where customers identify how and if they want to be reached, Martin said. Customers want to be private, which is an obstacle to gathering their data, he said.

In CRM, there is a lot of hype about sharing data between systems, Martin said. But with the privacy issue, "the truth is that you may not be able," he said.

In the future of personalization, a third party may audit how a company handles customer data and give a seal of approval, which Martin thinks is a "great solution" to the privacy and ethics issue in personalization. "When you deal with consumer information, the backlashes are incredible," he said.

Customers want to know that their information is being protected, Martin said. They want to know how secure the data is so that no one else can access it. For example, through a customer's buying and browsing habits, a company may be able to determine that the customer has a life-threatening illness. If the data falls into the hands of an insurance company, this customer may be denied coverage, he said, which turns personalization into a legal issue.

Customers also want their data to be accurate, so that they are not denied a credit card because of some typo, Martin said.

"The result is that customers are willing to share information," Martin said. "The more information you can get, the better experience they're going to have."

The bottom line, he said, is an increased willingness to spend. As for the return on investment (ROI), companies typically spend $10 to acquire one customer and $1 to retain the customer, according to Martin.

"Enterprise information management today is a competitive advantage," Martin said. "Tomorrow, it's a competitive necessity."

FOR MORE INFORMATION:

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