Custora’s Head of Product, Jordan Elkind, sat down with Michael Krueger, VP of Marketing at One Kings Lane and Liad Agmon, founder of Dynamic Yield, to talk about the challenges of personalization and how the role of storytelling is changing in an increasingly data-driven world.
Jordan: Michael, tell us a little bit about yourself. Who are you, and how did you get to where you are today?
Michael: I think about that every morning...who am I?
Jordan: Me too! Not about you, about me.
Michael: I lead the marketing team at One Kings Lane. I’ve been there for about a year. We’re deep in 2.0. I think most people have heard of the brand from 1.0, which was the flash sale boom and bust. We believe there’s a huge opportunity in home retailing over all. I started my career with business school at the University of Minnesota—I grew up in Minneapolis, so if you want to build a career in design-driven retail, you just stumble your way to Target. I then went on the J.C. Penney rollercoaster Ron Johnson turnaround exercise circa 2012, for the non-millennials in the room who are old enough to remember that.
Jordan: I knew your head looked like it had been spun around a few times!
Michael: I then spent a few years in San Francisco helping e-commerce startups figure out their brand and go-to-market strategy.
Jordan: How is life in New York City treating you?
Michael: Other than my children hating sharing a room in an apartment, it’s awesome. I love it.
Jordan: Liad, Dynamic Yield is such a powerhouse in the world of personalization. How would you define personalization, and is segmentation a step on the path to personalization? Is it a separate core competency?
Liad: Dynamic Yield is an omnichannel, AI based personalization tool that goes through the entire customer journey. Did I use all the buzzwords? Kidding. I think that personalization is a concept—it’s not something tactical or practical, it’s an idea. And the question is how we move towards that idea. One-to-one is the holy grail, but realistically, it takes a long time to get there. So what we’ve seen is that having a great segmentation strategy is generating enough revenue to justify a much bigger personalization program. Every result we show our customers has the average, and then we start breaking it down into segments. A first time visitor to a website reacts very differently from a repeat, loyal customer. So one thing might resonate well with segment A, but terribly with segment B. We see campaigns that work well in California and not New York. Weather also has a big effect. You can break down user segments very granularly and you have to think of the world in a segmented way. Within each segment, you can use AI to determine the best creative and copy. But it’s easier to think segments first, and then machine-learning for what happens within a segment.
So what we’ve seen is that having a great segmentation strategy is generating enough revenue to justify a much bigger personalization program.
Jordan: You’ve touched on this healthy tension between the art and the science of marketing. The fact that machine learning can help us optimize the right message, but we as marketers need to be able to identify with the segments, to attach some meaning about what makes them tick.
Michael, One of the most sought after skills in the world of marketing is storytelling. What exactly does that mean in a world where we are becoming more data-driven?
Michael: I think there are two levels. One is all of the technology, all of the data especially for an emotional-driven brand, it’s got to all be in service of the creative and the message. You’re essentially communicating with other humans about some sort of deeper value. The other piece is what’s really changing now. Media and creative cannot be separate. You have to understand what’s possible in the media to develop a creative plan that goes with that. Because we’re now telling a story over time. It’s easy to tell a story in a 30 second TV spot; it’s much harder to tell a story in a Facebook ad here followed by a piece of content two months later. The two need to come together so you can figure out how to tell a story in snippets over time.
Media and creative cannot be separate. You have to understand what’s possible in the media to develop a creative plan that goes with that.
Jordan: Are there any specific campaigns or marketing initiatives that you’ve undertaken at One Kings Lane that speak to using the constraints of the ad format to generate creative that speaks to a particular segment?
Michael: We’re learning all the time, but our content has been heavily influenced by that feedback loop. Fascinating example is within the realm of designing a beautiful home, there are infinite stories you could think of. One of the consistent things, especially on Instagram, is paint color. Once you hear about it, it makes sense, but if you had the list of 8000 possible topics, it would be hard to pick that one out. Those types of insights are driving how we focus the narrative.
Jordan: If we were to take a poll, most marketers would say personalization is important. If you were to ask customers how personalized are the communications they’re getting, the number would be much lower. There seems to be this gap where we all acknowledge how crucial it is, and yet it’s very difficult to deliver. What are some of the roadblocks that you see companies encountering?
Liad: I think they don’t understand how much revenue it contributes. We see their top line revenue growth when you do personalization. If I were a CEO and I saw how much personalization could contribute to growth... In some cases, the exes come from a merchandising background and don’t come from the world of technology. This is where we’re seeing changes now. Many retailers are now allocating the right resources to personalization technology. Still a lot of companies have companies segmented by channel, but the same customers see your brand across all channels. It is crazy that a customer is being handled by 5 or 6 different teams. Change management and making sure the organization is structured in a way for personalization to scale is the number 1 drawback there. Start simple—optimizing landing pages and once the money accumulates, everyone has an appetite to go all in on personalization.
Still a lot of companies have companies segmented by channel, but the same customers see your brand across all channels. It is crazy that a customer is being handled by 5 or 6 different teams.
Jordan: Michael, One Kings Lane is a fundamentally data-driven organization that doesn’t struggle with the legacy baggage of retailers that have been around for a long time. Is this a challenge that you can relate to, having to articulate the case for personalization? If not, are there other challenges that your team has encountered in selling the notion of customer centricity to leadership?
Michael: No, actually. What is tricky for us, is to get a deep understanding of the customer, when our employee base is not our customer base. From a demographic, psychographic standpoint, our customer is a second-half of her career urban mom, and that is not generally the applicant pool that we get. We can’t assume that we have an intuitive sense of the customer, so bringing data in becomes very important.
Jordan: How do you overcome that empathy gap?
Michael: We measure what content resonates, but we also try to understand from a cultural perspective, so we do a monthly report on trends that are happening with that customer. We know what magazines she reads, and we try to read those and immerse ourselves in that life.
Jordan: One final question for both of you—what is one technology or trend emerging today that will fundamentally change the way that we think of our role as marketers?
Liad: That’s an easy question. I don’t think we’re going to see major changes in the next 5 years. I think augmented reality (AR) is going to make some changes, but it’s going to take time for this technology to mature. On a 10 year horizon, I think it will change everything. Having a computer layer above your vision that can add contextual data to everything you look at will democratize information. The strengthening of the platforms—Google, Amazon, Apple, Facebook—will continue in the next 3 to 5 years. You see the changes happening in the online advertising space. Safari is blocking third party cookies and Chrome is about to do so. We have to succumb to the beasts and figure out how we win in a world where they dominate 80% of what users see. You can start doing CRM marketing at scale with these platforms, which was something you couldn’t do 5 years ago. 5 years ago, I couldn’t take a list of email IDs, upload it to a platform, and then do a lookalike campaign to get more users that the platform has decided are similar to my customers. These are new capabilities that will give companies an advantage.
Michael: Probably two major phases are ahead of us. One is the maturation of mobile, and phase two is post-mobile, whether it’s AR or VR or brain implants. Then the Wild West starts all over again.