en•ovation group

January 21st, 2009

Source: Management Portfolio: Digital Printing Report: Volume 16 Number 1

The Chief Marketing Officer (CMO) Council has released a study designed to gain greater insight into the relevance and value of customized content, collateral and communication, and how this can influence marketing effectiveness. The report, titled The Power of Personalization, provides a global snapshot of what’s working - and what’s not working - as marketers continue to explore, define, and apply personalized communications strategies. The report highlights the technologies, practices and solutions such as proprietary on-demand personalization technologies, customized content creation and digital print systems, one-to-one delivery and interaction channels, and the emergence of new applications such as transpromo documents that integrate transaction and marketing communications.

The study surveyed over 700 senior executives ranging from CEO, CMO, SVP, and VPs of Marketing from across different market sectors, including technology, internet, telecommunications, media, professional services, banking/finance, retail, consumer goods, and manufacturing. The study made clear that there is a new emphasis on the importance of individualized lifecycle marketing techniques as companies see the impact, differentiation, loyalty, and word-of-mouth results of customized communications.

Consider these statistics:

• Investments by marketers totaled $58.4 billion in 2007, and that figure is expected to increase to more than $70 billion by 2011 (source: Winterberry Group)
• More than $3 billion was spent in the U.S. alone on email marketing (source: EmailInsider)
• 56 percent of marketers believe personalized communications out-perform traditional mass-market delivery (source: The Power of Personalization)

Survey participants were able to identify key trends in companies’ design, implementation, and integration of personalized communications through media such as email, personalized URLs (PURLs), digital advertising, direct mail, word-of-mouth, dimensional mailers, etc.

The principal takeaway from the study: personalized marketing techniques are still in the infantile stages of being integrated intomost companies’ marketing budgets and campaigns. Despite the need for quantifiable tools for gauging effectiveness and ROI, marketers lag behind on adoption due to the void of accurate and reliable customer data sources. However, the majority of marketers who have actuated strategic personalized marketing techniques have seen decidedly greater success over traditional mass marketing approaches.

Other key findings derived from the study include:

• Improving customer retention and loyalty is the primary catalyst of personalization efforts; while the value of customized communications is perceived as high, actual usage is low.
• Over 56% of marketers content that personalized communications out-perform traditional mass-market delivery; digital, database-driven channels offer the most upside potential for engaging in customized communications. However, 38% of marketers don’t know whether their personalized communications have performed better than their traditional marcom techniques.
• Nearly 50% of marketers report having fair-to-poor or little knowledge of customers, and almost 47% rate their company’s data integration capabilities as being deficient or needing improvement. Although, 56% of professional services respondents rated their customer data as “extremely good” or “reasonably reliable.”
• Chief marketing executives are seen as the primary owners of personalized marketing initiatives. However, sales and customer relationship management groups most frequently maintain control of the data that provides the foundation for these campaigns.
• A majority of marketers currently spend less than 10% of their budgets on personalized communication; in the future, 55% say they will spend more than 10%.
• Purchasing history/activity - as well as size, profitability, and location of customer - are key data for designing personalized communications.
• Multi-channel integration is still lagging in personalized communications as nearly 50% of marketers report a low level of integration.
• While many marketers are still working at tracking the overall effectiveness and ROI of personalized communications, almost 40% say they are generating either “extremely effective and measurable ROI” or “better response rates than other programs.”
• Individualized letters and email are the most common form of personalized communication.
• Marketers are somewhat intimidated by the investment required for personalized communications as there has been limited testing across all areas.
• Conversion and close rates are the primary measure of success, followed by email actioning, website traffic/page views, and impact on retention and churn.

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