Santa Claus – Ultimate Logistics

Santa’s logistic team is impressive, and while tracking for Santa has been provided since 1955 by NORAD, perhaps less spectacular, but no less impressive are online web-stores’ logistics.

This is just what we need to remind us that there’s more to client marketing than acquisition and loyalty. The customer is at a center of a bigger chain; a supply chain that needs to be managed.

Making sure that the connection between marketing and logistics has been, and continues to be a full time job. In the Amazon.com case, which continues to be the reference, it’s the capacity of tracking and controlling the voyage of each package and doing it continuously, gives Amazon a competitive edge. They are at all times in control of their supply and distribution. This reduces customer anxiety by reporting and reassuring, even if behind the scenes the job of packaging and shipping hasn’t gotten any more glamorous. Like any distribution business, the back end is fraught with cost reductions, cutting benefits and wages to the lowest possible level. Customer happiness can sometimes be obtained only to the detriment of the elves...

The logistics of call centers is very similar. Anyone who’s worked in one knows well this paradox: customer service is often subjected to process structuring in an attempt to cut costs, reduce call times, ironically resulting in less service.

It’s important to understand that logistics are an essential complement to marketing, and vice-versa, just as it is important to continue to try to harmonize efficiency with human factors. This part needs to be solid if it has to hold while the marketing practices generate demand for immediate satisfaction, and managing the costs while gambling on the return is a difficult balancing act. Nevertheless, successfully balancing these two opposing forces is a key to success.

But let’s get back to Amazon. Of course it’s not just about tracking packages and managing deliverability. It’s also about reducing cost to the consumer. Free shipping is a given when ordering from Santa. Now Amazon integrates that in their service offer also. Of course, this has significant impact on logistics, placing the burden for cost cutting and savings on the back-end, and changing the equation significantly when there are returns.

Fortunately this is where marketing can help. By personalizing, improving satisfaction, offering a delivery solution that is adapted to needs and demand, it’s possible to reduce costly returns, and make the cost center less of a burden.

Santa does all this and more with free shipping, all across the world, with prices that can’t be beat.

He may not be a Coca-Cola invention, as some rumours claim, but there’s no doubt he’s got a handle on the ultimate logistics.

Eric Azara, Varibase President
Christophe Benavent, Professor at the University of Paris X-Nanterre

Brand Content – Giving meaning to brands.

Brand content has evolved, but even though today we have books and manuals defining and explaining it, it began organically, before the words Brand Content were ever spoken together.
Giving editorial space to a brand, creating events that provide opportunity to talk about that brand, its products and ideas is not new. Communicating to a target group by creating entertainment that they want to watch was invented by soap operas in the 30s, first on the radio, then later on television.

With marketing 2.0, these ideas resurface. To give an example, look at Swatch’s particularly clever True Colors campaign. By promoting a contest in some of the world’s most connected magazines asking them to design the best video clip, the brand creates the event and sustains it, in this case turning the magazines into movie directors, ambassadors of the brand, in the spirit of participation and co-creation so emblematic of today’s marketing.

If brand content is an old idea, why the resurgence now, and what shape is it taking today?

From the beginning, associating a brand with content ultimately seeks to garner more interest for the brand. It’s a staple of brand-building. By creating interest in the message, we seek to develop a favourable attitude towards the brand and therefore its products. From this point of view there’s nothing better than a real content bringing real value and gratification to consumers; infinitely better than a simple advertising spot.

The return of this idea is almost certainly a product of the information overload that has become the norm. We are exposed to far more information that we could possibly process. Marketing campaigns are no longer sufficient and it becomes necessary to communicate over the long term, even if at a lower intensity, building loyalty by creating interesting content to have the brand voice heard.

And as far as the content goes, in this 2.0 age, it’s mostly about fun. YouTube videos replace traditional TV series, and while games and contests are on the rise, educational content and documentaries are also on the increase. Brand content is also magazines, books, communities and services. By merging useful and fun you stay front and center in an environment already flooded with messages.

Slogans, even good ones, aren’t enough to attract attention. The goal of brand content is to make the brand part and parcel of both the media and the message by creating content the customer wants to see, thereby competing not just with other brands, but with media attention. If the customer comes to see the brand as a favoured media channel, like his morning paper or favourite TV channel and comes back again and again to see more, then the challenge has been met and that relationship becomes truly substantial.

The consequences for brand management are as clear as they are compelling.
The challenge is to stop thinking about one shot communications and start providing, through several channels (direct marketing, social networks, web, ratio, television, print) on an ongoing basis, messages and programs that deliver enjoyment to customers through content they appreciate.

Segmenting has always been the key to marketing

At least since Halley (Russell not Bill) around 1969. A simple idea, to segment you have to home in on popular characteristics: white teeth, preventing cavities, fresh breath. Then you work up the socio-demographic profile of those who prefer one or the other of these features to target them.

In the 80s form over function was the order of the day. Lifestyle was susceptible to drive affinity of certain consumers for certain brands. Today, digital lifestyle continues this direction.

As databases evolved, behavioural segmentations developed alongside RFM segmentations. When it comes to figuring out who to target, the answer today is easy to obtain: clients who ordered recently, who order regularly, who buy the most. When a brand offers a variety of products, it pays to cut this population, however. A behavioural segmentation of the most active customers can provide an offer that better answers client expectations. Qualitative or not, this direction evolves into customer equity models.

In today’s environment, with social networks, comparison sites, notes, comments, buzz, the ability to recommend becomes essential, as does the ability to do it cost-effectively with a simple press of a button. Customer value then is no longer limited to what we hope they will purchase in the future. We add to that the value of purchases that were induced by a favourable recommendation.

The new relationship space is social networking. Here there are two drivers: participation and recommendation which are essential. To communicate effectively you have to identify targets that will echo your message most effectively. A good example of this measurement and segmentation is the Klout platform which measures influence through Twitter. We can expect that consumer H-index⁽¹⁾ may catch on. The Netpromoter score one of the new measurements, in its primitive form. A new market for segmentation studies is dawning.

So which segmentation shall we choose? If every era sees the birth of a new segmentation criterion it doesn’t dismiss the previous models; rather it adds to them. The difficulty lies in selecting each of the segmentation criteria when it is relevant and pertinent to do so.

The threat of spam

Overflowing mailboxes are direct marketing’s single largest threat. The excessive personal advertising saturate attention and, what is worse put consumers on the defensive which naturally reduce effectiveness. To give an idea of the order of magnitude of the problem, email opening rates have dropped 30% (MailerMailer, Email Marketing Metrics Report, July 2010) in the last 2 years.

To fight the veritable pollution that spam represents, various professional groups have taken action through voluntary initiatives such as codes of ethics, signal spam which reduce somewhat the number of abusive routers. Clearly, however, the problem is not yet solved. For an older but much more complete study click here).

On a daily basis, enterprise level spam management is making it increasingly difficult for legitimate emails to cross the multiple layers of filtering. Double, and sometimes triple levels of filtering are routinely in place. A first line consists of server-level antispam solutions. These filters now systematically in place by internet access providers and email service providers have become an industry of their own. A second level is often implemented within the mail client or mail reading system with options to analyse and filter commercial messages, whether they are spam or not, to classify messages that have particular phrases or come from particular addresses. Finally tougher measures can be implemented through email authentification systems such as mailinblack which requires a confirmation of the sender’s email address before an email will even be routed to the recipient.

In this hostile environment the definition of spam is undesirable mail, and that classification is made by consumers. There’s no black sheep, or white for that matter, no good guys and bad guys, or even legitimate or abusive email. As soon as an email is unwelcome by the recipient it becomes spam. While this may seem to be a radical view of things, it very accurately reflects the reality of direct marketing. Even if messages are legitimate, well designed, reasonable, honest and pertinent, a single click consigns them to oblivion.

The main challenge is to pass through these multiple filters which are increasingly intelligent. In this context success measurement must track the open rate. To increase this metric requires rigorous discipline:

- Email design: Reduce the number of images (filtered out by some systems). Use clear text, short and easily understood subject lines, less information, but that information more pertinent to the recipient, links to more information or blog to develop the relationship with those consumers interested in delving deeper.

- Manage message frequency: find the right rythm and segment the messages, keeping track of response and activity of the consumer is essential for this.

- Opt-In policy: Newsletters are less frequently filtered or classified as undesirable because they are initially requested by the consumer himself.

- Multi-channel approach: Media diversification is becoming more necessary than ever. Whether a message is acceptable depends on the nature of the contact, and the consumer must be able to choose the channel through which he wants to be contacted.

- Test : Systematically testing within campaigns and accumulating a knowledge base will enable better understanding of customer needs in terms of content, channels and contact frequency)

Obviously each case is unique and for each brand the issues that come up may be different, their solutions may equally require a different mix of communication tools to take the message out to clients. As resistance to spam increases, and as the concept extends to other channels (watch for social spamming soon) it is important to spend some time to think of the strategy behind the actions.

Fighting spam, no matter the channels is not only the job of professional organizations, federal government or consumer groups. We participate daily, through all our efforts, communications agencies, and suppliers by providing the right information, at the right time, through the right channel and garnering the approval of our customers.

The ethics of communication

Let’s start off by affirming that there is no real difference in subject between ethics and morality. Morality speaks to the principles that a society gives itself as a norm, and ethics is the philosophy that seeks what is good for society with a goal to make it the norm. Morality, then is merely an accumulation of norms and often, in a changing world, out of pace or obsolete.

In such a changing world where values change we should not be surprised that we cannot rely on common morality to communicate well. Not efficiently, that is, but with a respect of what is good for each individual. It is not sufficient to think of efficiency. Communication must be good, acceptable, legitimate, and justified in the eyes of recipients.

Obviously on must honour morals, but also be able to cease respecting morality when it becomes out of touch with current values. To do this well, you must return to ethics.

It is imperative that communication be acceptable. Regardless of channel, or place, whether it’s the plane trailing a band at the beach, part of beach folklore and therefore acceptable, or the message of a friend on Facebook, even if it slightly exceeds the borders of personal communication. Generally accepted practices account for a significant portion of acceptability, and it is important to be able to exceed them without going too far.

Innovation in communication is accomplished by not relying on accepted practices and even going against them. That is where ethics plays a role. Ethical communication will be accepted even if it breaks accepted practices. What are some of the guidelines of doing this? Here are three criteria to be considered as a starting point

- Honesty. Relationships are made of intention and attention. Being honest is to make a guarantee of sincerity, if not truth. This facilitates an answer which, if similarly honest, will possess the quality of a real conversation.

- Respect. A sense of dignity will create a space where we can communicate without necessarily completely knowing the other party, leaving room for privacy, while accepting individuality.

- Freedom. It is the only guarantee that we will be heard by the recipient of the communication, never reducing it to a manipulation. It is both a condition of diversity and a result of it.

As to implementation, of course there’s no magic bullet. Just getting into the habit of asking three questions, at the moment of creating the message:

- Am I sincere in the message I’m delivering and am I being honest?

- Am I treating the recipient respectfully, more than a stereotype or group?

- Am I restrictive in my message, or am I leaving room for freedom of the recipient?

This litmus test, taking the form of a 15 minute thought exercise to reflect on the nature of the message, can be sufficient to form an ethical base of our communications.

This summer, while we are reading a communication brief, or building a communication strategy, why not do it out on a sunlit terrace, maybe with an appetizer, and a few pictures of our customers?

We can also put up a few pictures in the office and look them in the eye and ask ourselves whenever we need to: Do they want to hear this?

Custom online stores

In the e-commerce world, when it comes to personalisation, there is a player so big as to define the model itself: Amazon.com. It’s a model that by now should be self evident but, according to a Forrester study, few are able to follow it. Let’s review, then the key elements that make Amazon a custom online store.

The first element is that from start to finish, Amazon speaks to a customer who is identified, recognized and kept informed at every turn. It seems obvious but what’s important is the reason why: engendering trust. By keeping the customer informed of operations as they unfold, perceived risk is reduced and the experience will reassure the customer, increasing the chance of a next purchase or making it worry-free.

The second element is that the store is not just an impersonal catalogue, but rather a custom specialty store. By remembering his last purchases and items viewed, Amazon adapts its interface based on individual preferences, creating a different storefront for each client. This know-how is build into the recommendation selection engines. Remember there is more than one. There are ones based on past purchases, others on items viewed, other based on purchases made by neighbours, as well as expert reviews and editor’s choices. Each contributes to can choose from several recommendations.

Personalization doesn’t mean making decisions for the consumer by anticipating his preferences, but to allow him to make his decision more efficiently. This is an element worth exploring. To personalize is not to anticipate desire but, in better understanding the individual, empowering him with the ability to choose more intelligently what he wants.

This empowerment comes from more recommendations, but just as importantly, better recommendations. It’s also recognizing that his purchase behaviour isn’t just repetition. He’s also looking for surprises, new things. He has to be given a chance to stick to his preferences, certainly, but also to leave the beaten path and explore. So in e-commerce, the secret of personalisation resides in the ability to suggest something the client hadn’t thought of.

There is still, however, a personalisation element which Amazon hasn’t yet embraced. A truly personalised, custom online store isn’t just an endless shelf on which we find at the same time what we want and what we didn’t know we wanted. It’s also a space with can colour, decorate, dress up and furnish just the way we like. Like the fridge at home, a bumper sticker laden car, a colourful cell phone shell, we love to dress up the things we like to make them our own. In the online store context, allowing clients to customize their personal spaces and claim them as their own through personalisation is an essential loyalty driver.

What methods and tools will support these three key elements?

Clearly databases are essential to a true understanding of clients, but that is not the only requirement. Increasingly, a social dimension will become more and more important; who better than our friends to know what it is we like? The rise of social shopping is an indicator of this trend: . The success of custom online stores will ultimately depend on their ability to enable the client to participate effortlessly, easily making reviews with a simple click, commenting, organising and customizing his store at will.

A true personalisation program relies on three pillars: The merchant, who anticipates wants in real-time, the client who accepts supplying content and preference, and the social network.

Twitter – Ambient flux

Twitter is still a mystery for some, particularly those who haven’t jumped in just yet. Many don’t even know what to make of it. A simplified blog that reduces every idea to 140 letters or less, the ability to follow a high number of « peers » to keep updated from reliable sources, a search engine that can seek out any number of real time occurrences enabling you to keep an eye on the sea of information, being followed by thousands of readers and a platform on which rumours spread quickly.

How to leverage these capabilities in a marketing plan, however, remains something of a mystery, particularly considering the relatively low number of participants.

From virtually nothing in 2008, to 1.5 million accounts in France, 1.5 million in Canada, 18 million in the US in 2009 and 105 million worldwide in April 2010. The total number of tweets is over 10 billion. Twitter’s growth continues but appears to be restricted to a small, active population of the Web. This is a first element that helps crystallize Twitters’s potential use : It is not a mass media channel, but an information system for an alert, active and selective audience, a population of key opinion leaders.

A second element is that Twitter, not being a blog, or a social network, nor even a search engine only becomes itself through applications that give it a specific use. Twitter is like a river of information that supports a vast ecosystem along its route. Twitter can be automated through these applications, posting automatically when a new entry is added to a blog, for example, or changing statuses on social networks or displaying tweets inside a Widget on a website or blog. Twitter links with websites, infiltrating, irrigating, trickling down and permeating through, feeding with information, gathering it and moving it along. Hence a second orientation : Twitter must be used as a common denominator throughout the digital medias deployed by the marketing plan, linking it with the website, the blogs, the social networks, content management systems, media libraries and bookmark tools. It is not a media as such, but more like digital glue, it keeps a common thread, linking, sewing digital media together.

A third element is in the language: It acts more than it talks. Retweets of links become an introduction to more substantial articles. The @ and –D (direct messages) enable conversations, the hashtag (#) serves as label but also indicates a location for an event. Twitter is action beyond a verb, a way to move on the new web from one page to the next, from one document to an image.

Three things to remember:

- Focus Twitter on the consumers, partners, observers and ambassadors who are most attentive, most involved to the brand. Following a brand’s activities is already a sign of engagement.

- Adding Twitter to media architecture is adding a glue that coalesces an ambient flux of information and irrigates the digital spaces of a company’s peripheral media spaces like Facebook’s « I like » button, retransmitting approval like wildfire in a decentralized platform.

- Define a policy that balances comments, content and conversational messages.

Social Networks – What to make of them?

The Social Media wave continues: Twitter, Facebook, Flickr, Youtube, Deezer, Wordpress. They have different goals and create different types of relationships, but they all share the capacity to transform spectators into actors, give them the means to keep in contact with others, broadcast, share, relay, comment, annotate and note information they deem worthy of interest.

But what to make of it all? What to make of Facebook, Twitter and all the others? A potential audience of 400 million people (Facebook users as of February 2010) can lead a marketer to dream of huge campaigns; after all, these are new publicity spaces to be leveraged. Let’s keep things in perspective, however, and not give in to the old demons of mass marketing. If a target segment represents a mere 0.1% of the audience, that’s still 400,000 people! Don’t forget that all the accumulated data makes it possible to target specific behaviours and we’re only just starting to see the incredible returns of this methodology.

Even more relevant is the ability to create communities. Fan pages, groups, events, are all multiple ties making it possible to connect to the most loyal, engaged, customers, sold on the brand. Some have met with success, like H&M with 2 million fans,  others have clearly failed. (Nestlé, for example)

And then there’s the magic Buzz effect, circling the globe in a few days confirming that 6 degrees of separation are increasingly easy to navigate. It often doesn’t amount to much, and for the most part it’s just a question of arithmetic. If a fan has about 100 friends, the probability is that he will carry a branding message to his fans is on the order of 0.8%. That translates into 0.8 converted friends, who themselves will convert around 0.8*0.8=0.64 friends… etc, generating around 4 contacts. A direct campaign targeting 10,000 might actually reach 50,000, but will tend to die quickly until the average value goes from 0.8 to 1, and that’s not very likely. So yes, social networks can have a resonance effect, but that resonance is limited, even if it is sensitive.

Publicity space, Community, Propagation. These are the three potential uses of these networks, not forgetting, of course, that when it comes to keeping the pulse on your customers’ opinion, the networks can be an excellent way to stay on top of things.

So what to do? First, don’t go overboard. Merely consider these networks as extensions of your media plan: website, portal, blogs, picture galleries, documentation – all these elements form an additional media distributing information, images and documents daily. This extension is used by a narrow population of fans. The militants, ambassadors, true fans who, over and above consuming the products, they buy into the brand. We estimate that population to be around 2% - 3% of the total clientele. Through their own networks they can touch a population 3 to 5 times they own number ; somewhere around 6 to 15%.

When you look at it this way, it’s easy to understand that the social media will not become the new mass media, which will remain necessary, but will make sure that they allow this crucial population to strengthen their relationship, and increase the frequency of interaction with the members that form your hardcore clientele. Social networks take traditional media a step further, maintaining this first circle, and enable them to touch a second circle. This by itself should earn social networks their own place in the media mix.

Mobile Marketing

After ringtones and the explosion of SMS, mobile phone dark ages are about to end. If we look at smartphone trends it’s easy to see a new age is dawning; work is being done to standardize contactless payment by mobile phone and in other areas, the adoption of QR-Codes is supplying information faster and directly on the mobile screen . Get ready for significant innovations to come our way in mobile marketing.

One word of caution before jumping on the bandwagon: On this medium, more than any other, concern about intrusion is highest. Clearly the more intimate the device the greater the concern for intrusive communications.

New generations of devices that will follow in the iPhone’s wake will be increasingly unlike the traditional telephone. By allowing users to easily read emails, access social networks, SMS itself will being to take an increasingly limited role, and perhaps become the next discarded technology in the chain from telegram, to fax, to email on the mobile end of the telecommunications spectrum.

But the future is not here yet, and in the present, SMS is still breaking new ground even though Twitter has taken the glory by synthesizing it into a new communication form ; an immediate, action driven, group and viral communication.

Immediate communication because it is spontaneous. The relationship of SMS to telephony is like the relationship of a Post-It to paper. To be effective, it must be intimate, and the value of the message relies on its timeliness just as much as any Web giant. Instantaneity being the very reason Twitter or Facebook enjoyed their tremendous success.

Action communication, since given the short length of the message, if it doesn’t invite to action it would be less effective, even if the action is merely to click. Linguists have, for some time now, taught that language is not merely a way to say something but is also an action all its own. Its active function is fulfilled by this type of interactive communication.

A group and viral communication. We have been conditioned by mail and phone operators to believe that communication occurs in pairs of two. That communication is a match between an emitter and a receiver and vice-versa. We discover now, through SMS and even more through tweets, that the same message can be sent to many recipients, and again resent to many other individuals. This is the function that marks the evolution into the new age. Our marketing messages will no longer be sent to the masses, but to small groups that will forward them onto other groups, and so on.

For the moment, it’s important to consider that 15% of users are 3G users, in other words mobile Net users. Their growth is about 30% per year. In two years they will compose at least a quarter of all users. SMS messaging has quadrupled in the last two years and are approaching a saturation point. The message is clear, however; mobile messaging is becoming the communication that is re-communicated.

Loyalty is Rewarding 

Loyalty cards took off at the beginning of the 2000s. They weren’t new but became a fundamental tool for many brands and companies. Today their existence is a necessity; the company that doesn’t have a loyalty card is missing something. Its mere presence, however, doesn’t mean it necessarily has a positive effect.

The mere principle is no longer sufficient to be effective. Content drives today’s programs: the nature of the rewards and methodology. The initial method relied on point accounting and management, rewarding at a later date the behaviour we wanted to encourage. Today more finesse is required.

In the design of loyalty programs, and the definition of their reward system, two issues must be addressed: The nature of the reward, and its capacity to motivate.

The first evolves from an ancient communication theory of usage and reward. It’s simply this: An audience will select, among the flux of message they’re exposed to, those that are of some personal benefit. This or that advertisement is selected because it brings a monetary, amusing, hedonistic, practical, relational, community or status benefit. Loyalty cards are a means of communication also, but communicating with a customer in providing the card and keeping him interested enough to use its benefits are two different things.

Usage is tied to the relevance of the reward. Should the reward be monetary? Should it involve a service? Should it be a fun game? More information? A different way to pay? Answering this question is essential while keeping in mind that for any given company the answers can be very different.

The second issue is one of motivation. There are many different ways of saying this, but without a doubt one of the best is here: Deci and Ryans demonstrate why the deepest, most lasting elements of motivation are intrinsic ones. They are self-determined; chosen by the client regardless of outside factors. This kind of value is preferable to extrinsic ones that, as a rule, are extraneous to the activity, create constraints and even if well perceived in the short term tend not to last long.

Granted, this may be a bit abstract, so let’s have an example:
The student rewarded for good grades, rewarded outside the study activity, very quickly will stop producing positive results, unless the reward is constantly increased. If the work done and the positive results are perceived as reward, however, he will continue to study without outside pressure.

Our consumers are no different; let us not motivate them with savings. What they’re looking for most is novelty, variety, quality and immediacy. Why provide multiple levels such as gold, silver or bronze membership when the point is simply to travel for less. Let’s adapt the reward to the goal intrinsic in the act of purchase to create a lasting and self-reinforcing motivation. Why not give a financial reward to the client concerned about his budget, while promoting time-saving rewards to the client who shops in a hurry and provide recognition to the client who proclaims himself as a loyal customer?

Here are two essential capabilities with important consequences:

• First, having the capability to segment clients based on their preferred rewards and the level of relationship they seek.
• Second, when today loyalty cards are increasing in complexity, becoming a means of payment, credit vehicle, passport for multiple media channels, access key and even virtualized, what clients are looking for is still: simplicity.

Eric Azara, Varibase President
Christophe Benavent, Professor at the University of Paris X-Nanterre

The many flavours of personalization

Words are like flavours that we like to savour, but find difficult to describe or name on the spot. Personalization is also like that, we know what it is, but find it difficult to describe. We quickly realize there’s not a single meaning, but many different degrees, each of which has implications in the practice of personalization.

The first degree of personalization is that of directly addressing the client, founded on the ability to identify and individualize messages (one-to-one). This individual message can be constructed on the basis of the tendency of the entire client base, or on the history of individual activity. The risk is a possible adverse reaction to a feeling of intrusion and manipulation if the individual feels information too specific or too private was used.

A second degree is to design a custom communication. To personalize is to ensure a match between the service offered and the desired service by catering to individual preferences. To be cost-effective, it has to be deployed massively. (mass customization) The limitation is that consumers don’t always know, or can’t formulate their preferences, and prefer not to become engaged.

These two degrees fail to satisfy a common desire among consumers: that of being recognized as people even more than individuals. Personalization is also that recognition. When you have genuine personalization it can create, quite beyond a commercial connection, a certain friendship and openness. Authenticity is the first condition. The challenge is to begin a real conversation. This video by Sholz & Friends illustrate that necessity.

A fourth degree can become a kind of humanization. It requires creating an atmosphere in which communication is transformed into a complete experience requiring a true participation on the part of the customer by making him a co-author of the communication. Some call it “Customerization�. It may be simpler to talk about participation. Personalizing, then, is to incite participation, even if the stubborn facts indicate that participating consumers are a tiny proportion of the overall consumer base.

The fifth dimension of personalisation is a consumer initiated appropriation of the product or brand. The stickers on the skateboard, the tattoos on the mobile device, the used sneakers, the computer background… It consists less of personal communication and more of empowering the consumer with the tools to make the brand his own.

These five degrees of personalization help us to understand the delicate balance of choosing the right strategies, in the correct dosage following a few principles.

- The degree of personalization is tightly linked to the protection of personal information. There is a point past which any gains that might be made by the use of personal information are lost through a perceived loss of privacy; the question being how to personalize without identifying individuals.

- Personalized is expensive when, beyond mere identification, we attempt to recognize an individual as more than a client. Here social networks can play an important role, like something of a mentoring system.

- There can be no strong relationship without personalizing communications in a way that adapts based on history. Indeed it is necessary to have a backstory.

Keep in mind that techniques are not an end in themselves, but tools to reach the best advantage possible from a one to one relationship, delivering a custom product, engage in a real conversation, creating a complete experience an creating a desire for appropriation. Personal brands are those that consumers make their own and communications are the words that consumers repeat.

Eric Azara, Varibase President
Christophe Benavent, Professor at the University of Paris X-Nanterre

P.S. for further reading, two key references of the past year:

Nikolaus Franke, Peter Keinz, & Christoph J. Steger (2009) « Testing the Value of Customization:When Do Customers Really Prefer Products Tailored to Their Preferences? Â» Journal of Marketing, September, Vol73, 103-121

Jie Zhang, Michel Wedel (2009) "The Effectiveness of Customized Promotions in Online and Offline Stores" Journal of Marketing research, 46:2, April 2009 190-20

For those of you who still remember, the internet bubble was also a period of great debates regarding the protection of personal information (privacy policies). Today, as another bubble, financial this time, is almost done (we hope) deflating, the debate seems to have gained new life.

Among other things it has led to the adoption by the European parliament of the ePrivacy Directive and was the object of a report to the senate last spring and more recently a proposed law.

We won’t engage here in the legal and political debate on the protection or personal information or the broader issue of the protection of private life. Let’s simply note that in a time of social media this question is once again of paramount importance. Naturally a certain number of events have played a key role: the Facebook controversy in Canada, less anecdotally the rampant increase in behavioural targeting and IP targeting.

Behind this issue there is a concern manifested by consumers that the European Bureau of Consumer Unions has recently brought to the front in a forum named “Consumer Privacy and Online Marketing“ but which larger organizations like the IAB temper by encouraging best practices for companies. Since the opt-in policy that has long been favoured by the European Union is proving to be practically impossible to put in place, the debate is renewed today between partisans of a self-policing industry and partisans of legal regulations.

What are the consequences for companies? First be aware of evolving regulations, but also sensitive to consumers in using their personal data. Even if they don’t seem to object to the principle of conceding information in exchange for personal services, a few studies do seem to indicate the market may be going in that direction. Second, explore methods that enable personalisation without identification. Last, but not least, review the laws and regulations and the way they are communicated to ensure consumers’ trust. Otherwise, consumers may start putting a price on the data they share with us.

Beyond this general advice, a more precise recommendation: Is it not time to review the way collection forms are designed, and for every question we ask the consumer, ask ourselves how we’ll be using the data we gather to better personalise future communications. This way we’ll limit asking useless questions thay may be perceived as intrusive. Just because we can want precise and detailed information, doesn’t mean we shouldn’t ask for it sparingly.

Eric Azara, Varibase President
Christophe Benavent, Professor at the University of Paris X-Nanterre

The Personal Information Protection and Electronic Documents Act (PIPEDA)