The McKinsey Guide to Achieving Personalization at Scale

In 2018, retailers need to personalize the customer experience at scale and across all channels. Here’s the step-by-step guide from McKinsey & Co. to doing just that.

If you’re a retailer, you may already be familiar with this statistic — but we think it’s pretty mind-blowing nonetheless: a whopping 55% of customers begin their product searches on Amazon. That’s right: more than half of all consumers go directly to the e-commerce giant to find the products they’re looking for, thanks to the unparalleled convenience, speed, and choice the platform offers.

Of course, Amazon’s not the only place to reach consumers. The average American receives 130 emails per day (but the average email CTR is only 10%), and 50% of all online and offline sales are now influenced by Facebook.

These fun (daunting?) facts all come from top-tier management consulting firm McKinsey & Co. McKinsey’s consultants believe that now is the time to optimize your marketing efforts — but not just for Amazon, email, or Facebook. As consumers have more choices and retailers face fiercer competition than ever before, the bar is a lot higher than just optimizing your communications on one channel. For retailers to successfully break through the noise in 2018, they need to curate personalized customer experiences at scale and across all channels.

Why Personalization is Important

Here’s the McKinsey definition of personalization: “using customer and prospect triggers to optimize the timing, content, offer, and design of every experience tailored in real time to each customer, depending on their attributes, contexts, and behaviors connected seamlessly across channels executed through new operating models transforming one’s way of working.”

Try saying that three times fast. The demand for this type of personalization is higher than it’s ever been before, but retailers are consistently falling short: 85% of consumers want personalized experiences, but only 23% of consumers think retailers are doing a good job at delivering them. That disparity demonstrates just how badly retailers need to change up their communication strategy — but many don’t know where to begin.

While customer personalization is a journey that demands a lot of time and energy, the value it drives is too significant to ignore. McKinsey cites a 4-5x increase in channel revenue, a 5-6x faster execution of emails, and an 8-10x higher testing throughput per month to be gained from effective personalization at scale.

McKinsey’s Step-by-Step Guide to Personalization at Scale

If your retail organization is struggling to achieve personalization at scale, McKinsey’s four-step guide can help you get started.

Start with your data foundation.

Many companies ask McKinsey where they should start when they’re trying to achieve personalization at scale, and the answer is always with data. Modern marketing is all about “data activation,” meaning that companies need to centralize data and create a single decision-making mechanism that connects to all channels and can identify the up-to-the-minute state of your relationship with the customer.

To accomplish this, you need to enable data unification from owned channels, like your transaction data (i.e. customer, call center, and engagement data) with data from paid media (i.e. social, clickstream, and third-party data).

Listen to consumer signals and act on them.

Whatever you’re doing now to reach and engage with customers, odds are high that your strategy can be significantly improved with the use of new technology. For example, a targeted, trigger-based email has been shown to garner a 25-40% open rate, compared to a 5-15% open rate for a mass email.

Plenty of retailers already use cart or browser abandonment emails, but with the right technology, you can make improvements based on predictive analytics, geography, customer lifecycle, and more. The ability to deploy relevant messaging at the right moment for a given customer is your most powerful tool for increasing engagement and ROI.

Keep your marketing agile.

Agility is vital to your organization’s operations. Personalized marketing is all about scale and speed, and you won’t be able to maintain either if your teams (and the data they rely on) are siloed. Traditionally, it takes weeks to design campaigns cross-functionally — and in today’s retail environment, that’s way too long.

In contrast, cross-functional teams composed of marketing channel specialists, legal, risk, IT, and business development members can create a campaign in just a few days. With this type of agility and speed, you can test every week and let the data tell you where to go next.

Channel new technological capabilities in order to act across the customer decision journey.

Before 1995, marketing skills were essentially an art, housed within creative, agency management, and PR teams. From 1995 to 2010, marketing evolved into a combination of art and craft that encompassed content creation, influencer marketing, and digital agencies. But today’s marketer has to be a triple threat — a master of art, craft, and science, acting as the functional translator between creative, data analytics, business, and IT teams.

In other words, marketers have to be Swiss Army knives, because achieving results at-scale in 2018 requires a versatile skill set and cross-channel fluency. However, marketers can’t turn technical information into marketing action without the right tools. Retailers need to bridge this gap by equipping marketers with the technology they need to turn their lofty goals into action.

Remember that achieving personalization at scale isn’t about perfection. In fact, it’s about the opposite: getting your efforts off the ground, and always being honest with yourself in identifying gaps and mistakes. Achieving personalization at scale is a continuous journey of learning, testing, and regrouping — that’s how you achieve sustainable growth that lasts.

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