IBM for Marketing

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The who, what, where, when and how of real-time personalizationIncrease the value of every customer interaction

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Contents3 Key questions that define real-time personalization

4 Who is the customer/prospect?

6 What gets personalized?

7 Where is the interaction happening?

8 When are the personalization decisions made?

9 How is the personalized message selected?

9 Why is real-time personalization important?

10 How IBM enables all aspects of real-time personalization

10 How to get started with real-time personalization

10 About IBM Marketing Solutions

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Key questions that define real-time personalizationPersonalization is on the rise as companies strive to meet customer expectations for a more customized and relevant experience. When used effectively, the rewards of personalization can be enormous —increasing sales and revenue, enhancing online conversion rates, boosting average order value, driving cross sell and up sell initiatives, and strengthening customer loyalty and retention.

Even more powerful than just personalization, a concept marketers have been familiar with for years, is the newer idea of real-time personalization — that is, not just making advance decisions about what message a customer will see the next time you interact with them, but being prepared to make a decision during a live interaction about what personalized message to present.

In a 2015 study with Econsultancy, IBM found that the vast majority of respondents (88% in Figure 1) agree that their

organization’s growth ultimately depends on personalization and better customer knowledge.

Yet, despite widespread recognition of the power of real-time personalization, only a handful of companies are truly effective. So what’s the problem? While lots of people talk about marketing personalization, and some are starting to talk about real-time personalization, these terms can mean different things to different people. Some marketers may be focused more on inbound communications, others on outbound marketing, and still others may be focused on a specific channel like email or website interactions.

Does your company’s growth depend on personalizing the customer’s experience?

Strongly agree

Somewhat agree

Neutral

Somewhat disagree

Strongly disagree

Figure 1: 88% of respondents agree that personalization is imperative to its company.

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The truth is, many marketers focus on just one dimension, failing to understand the full scope of what real-time personal- ization means. This white paper will take you through the key questions that define all the aspects of real-time personali- zation that should be considered when building a marketing strategy that includes this exciting new practice:

1. Who is the customer/prospect (and how much do we know about him?)

2. What gets personalized?

3. Where is the interaction happening (and how connected is it to marketing efforts in other channels)?

4. When are the personalization decisions made?

5. How is the personalized message selected?

6. Why is real-time personalization important?

By answering these fundamental questions, we will define a framework that will help you uncover and understand the various aspects of real-time personalization so you can build an effective and comprehensive real-time personalization strategy.

The most effective real-time personalization solution leverages two kinds of information:

1. Identity — information about each individual customer’s identity and such details as demographics, psychographics, account details, purchase history, social network relations, and so forth. Most of this is the typical information found in your customer database.

Who is the customer/prospect (and how much do we know about him?)

2. Behavior — information about how the person is behaving during the moment of interaction, for example: where a person has been on a website during this visit; location as identified by a mobile device; reason for calling as explained to a call center agent; or products about to be purchased in a store.

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However, most personalization approaches leverage one kind of data more than the other. Consider Figure 2, and see how a variety of personalization approaches can be mapped into a framework that measures the degree of usage of identity versus behavior. For example, if you look at the far, left bottom of the chart you see that SPAM uses essentially nothing about who you are or about what you are doing. That is clearly the worst case scenario in terms of real-time personalization. At the top left, you can see that while personalized email leverages identity information, it can’t take advantage of behavior data because there is no live interaction. The opposite is true for product recommendation engines; they generally take little into account about who you are, instead focusing on what you are doing (for example, what products you are looking at or have put in your basket). Some forms of personalization, such as online behavioral advertising, do a better job of mixing identity and behavior.

The most effective approach to personalization is going to be one that leverages both kinds of information. By taking into account both a person’s identity and behavior, you can target the right message,

Types of information that can be used for personalization:

Behavior

Information about what the person is doing during the moment of interaction:

• Where a person has been on a website during this visit

• Location as identified by a mobile device

• Reason for calling as explained to a call center agent

• Products about to be purchased in a store

to the right person at the right time. This approach is truly a win-win, providing your customers with attractive and relevant offers, and improving your chances for a successful conversion.

Figure 2: Top focus areas for best-in-class marketing organizations.

Personalized email Pre-calculated offers

Online behavioral advertising

SPAM Display ads SEM Product recommendation engines

Identity

Information that sits in a typical customer database:

• Demographics

• Psychographics

• Account details

• Purchase history

• etc.

Most personalization approaches use more of one than

the other

Best option: use both fully

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When we talk about personalizing marketing, it’s important to consider what exactly gets personalized — that is, what exactly can be changed about the message as it is presented to different people:

1. The Message — what message are you trying to convey? For example:

– A special offer with monetary value, like “10% Off or “Buy-One-Get-One (BOGO)”

– Recommended products, for example, letting the customer know that similar customers bought a certain product or service

– A follow-up on earlier events, for example, asking a customer if he wants to complete a purchase or application he started earlier but abandoned

– A thematic message selected from among several options, for example “Holidays are a great time to travel,” or “It’s time for back-to-school shopping”

– An action, for example, perhaps the best action isn’t an offer at all but an escalation of the customer’s case to Level 3 Customer Support

2. The look-and-feel of the content — how do you want the content to appear? For example:

– What does the email look like?

– What does the web page look like?

– Should you use content blocks, background images, a certain color pallet, and so forth?

Depending on a marketer’s area of expertise, he may only focus on one piece — the message or the design. But the most effective approach to personalization will take into consideration both. It doesn’t matter how compelling the offer or message is if the customer is so turned off by the way the content looks he doesn’t read it. And no matter how amazing a web page or email appears, if the message or offer falls short, the effort is a waste.

The fact is, today’s customers are bombarded with offers from every direction. You need to differentiate yourself by offering the most relevant and valuable message using the most attractive and engaging means possible.

What gets personalized?

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It’s easy to think of real-time personalization opportunities as existing in a vacuum. But instead it’s important to remember that each live interaction during which a real-time personalization can occur — be it on the web, in the call center, on the mobile app, or wherever — should be integrated with the rest of your outbound marketing efforts. Customers think of these interactions as part of a broader series of experiences with your brand, so you should, too.

Take booking a travel reservation, for example. The customer books the airline reservation online via the web; he then receives an email confirmation; he may interact with a call center representative if he needs to modify or verify his reservation; and he will finally check in at the airport either via a kiosk or by interacting in-person with an agent. This scenario demonstrates five different points of interaction and five different opportunities for real-time personalization. Many customer interactions will follow a similar pattern, such as opening a new bank account or making an online purchase with an in-person pickup.

The best option is not to make decisions in a vacuum, but to make them in consideration of everything that has happened across the entire omni-channel experience. By coordinating personalization across all channels you can:

• Reinforce offers and messages from one channel in another

Where is the interaction happening (and how connected is it to the marketing efforts in other channels)?

• Learn from previous interactions in other channels to make a better personalization decision now

• Ensure consistent messaging

• Coordinate efforts across channels

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There are two different times a real-time personalization decision can be made: before the interaction or during the interaction.

Before: In some cases, there may be an offer waiting for a customer hours, even days, before he visits a website or phones into a call center. This form of personalization is fairly easy to implement because it only requires batch capabilities. Actually, when a decision is made in advance like this, it’s arguably not real-time at all. But many marketers confuse “inbound” marketing with “real-time” personalization— i.e., they think any offer presented during a live interaction, even if chosen in advance, is a real-time offer. But offers chosen in advance do not use context, and so miss the opportunity to be as relevant as possible, factoring in the newest information learned about the customer (during the interaction itself). Many things could have changed from the time an offer was chosen in advance — new purchases, new visits online or in-store, and so forth.

Those factors may alter the effectiveness of the offer.

If a customer purchased a shirt in your store, yet receives a push notification for a discount on that shirt shortly thereafter, the overall effect is negative: a.) the offer is irrelevant to his needs, and b.) his experience with the brand becomes disjointed; you clearly do not know your customer.

During: Those decisions made during the interaction do require a greater investment and real-time capabilities, but the payoff is far greater with more relevant messages and a greater chance for conversion.

If a customer purchased a shirt in your store that morning and is presented with a discount to purchase a complementary pair of shorts, there is a good chance he will accept since the offer is relevant to his immediate needs. Through this interaction you are also letting the customer know that you are aware of who he is, his history with your brand, and that you are focused on his wants and needs.

When are the personalization decisions made?

The best option is to make personalization decisions during the interaction to maximize both conversions and the customer experience.

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How is the personalized message selected?There are two different approaches to how the personalization decision is made:

1. Deterministic approach — marketers structure the logic completely on their own, deciding under which conditions a certain action or offer is presented. For example, “provide offer A if the customer is in our Gold segment, is on the Products page of the website and clicks on the For More Information link…” While this approach does give marketers more control over results and makes it easy to anticipate success, it is time-consuming to build and maintain the logic, and the entire process is limited by the marketers’ own intuition.

2. Predictive approach — uses math and algorithms to determine the best course of action to take. While these models do all of the work for the marketer and are self- learning and self-improving over time, they do take control away from the marketers, and performance can be slowed by processing requirements.

The best option is to blend these two approaches, leveraging the expertise of the marketer with the automation and self- learning function of the algorithms.

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Why is real-time personalization important?Customers have grown increasingly overwhelmed with out-bound marketing offers and, consequently, the effectiveness of traditional outbound marketing campaigns has significantly declined. The ability to connect with customers on their own terms — during those moments when customers and prospects contact you — can dramatically improve the effectiveness of your marketing efforts. With real-time personalization you can:

• Increase response rates in inbound channels by maximizing the relevancy of messages presented in real-time

• Improve each customer’s experience by personalizing their interaction with your company

• Maintain a consistent dialogue with customers across all channels

• Achieve better overall marketing results, including increased sales and revenue, improved online conversion rates, and strengthened customer loyalty and retention

The following are just a few documented benefits real customers have experienced through real-time personalization:

• 4x response rate from website offers selected in real time, not calculated

• 500% increase in click-through rate

• An increased cross-sell success rate from under 10% to more than 40% in call centers and retail shops

• 200% increase in sales attributed to offers printed on receipts at point of sale

• More personalized offers delivered in a week during inbound interactions than previously in a year with only outbound campaigns, with higher response rates

400% increase in revenue per impression from web transactional email personalization

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How IBM enables all aspects of real-time personalizationIBM empowers companies with the technology to meet the multi- dimensional aspects of real-time personalization — addressing the who, what, where, when and the how. The IBM solutions for real-time personalization can help you take better advantage of moments when your customers and prospects choose to interact with your company. During these “inbound” contacts, IBM can determine, in real-time, the most relevant messages and content to deliver to an individual given who they are, their responses to previous interactions, and the context of the current interaction. And unlike other personali-zation solutions, IBM offers a true omni-channel marketing approach, integrating inbound marketing interactions with your other outbound marketing efforts to ensure a consistent and relevant customer experience.

In an age of highly pervasive marketing, the best messaging will be relevant, timely and contextual to individual customers. IBM solutions improve the customer experience by giving your business the ability to quickly recognize and deliver what customers want.

By achieving this connection at each interaction, your business can provide marketing so effective it feels like a service.

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How to get started with real-time personalizationHow can real-time personalization contribute to your company and customers’ experience across channels? Where can you best begin to build your business case or expand upon current real-time practices?

Copyright IBM Corporation 2016 | IBM Corporation, Route 100, Somers, NY 10589 | Produced in the United States of America | June 2016

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About IBM Marketing SolutionsIBM Marketing Solutions make it easier to design meaningful customer experiences across applications, devices and time, accelerating today’s results and tomorrow’s ambitions.

To explore these and other questions, IBM and Business Partner solutions experts are available to help you anchor your priorities. Connect with subject matter experts to explore a solution.

To learn more about IBM Real-time Personalization solutions visit ibm.com/real-time-personalization or contact your IBM representative or IBM Business Partner.