The Paradox of Customer Personalization…
The promise of one-to-one marketing has been a tantalizing prospect for much of my professional life. Now with AI, it seems finally within reach.
Yet marketers should tread carefully.
We may have the tools to scale one-to-one marketing. But it’s never been more important for a brand to stay consistent from person to person.
Three Paradoxes of Personalization
As a pioneer of Tesco’s Clubcard and a former director of dunnhumby, I’ve been involved with customer personalization for more than thirty years. I’ve seen firsthand the benefits that personalization can bring. Yet I’ve also learnt there are three paradoxes at its heart that prevent one-to-one marketing’s promise from ever coming to fruition.
Paradox one: The data required for customer personalization can make it feel intrusive
This is the most familiar, often referred to as the personalization paradox. For one-to-one marketing to work, it demands a clear understanding of each person, which involves the extensive collection of personal data. Yet while the outcome can delight customers, the use of this data can feel unsettling, raising concerns around surveillance and privacy. “Creepy” is a word that often comes up in conversation.
The ability to deliver personalized experiences at scale doesn’t change this. If anything, people are becoming more concerned.
Paradox two: The business benefits of personalization can lead customers to disengage
Done well, personalization can delight customers, making them feel seen and valued, building trust and loyalty in the brand. Yet, for the business, much of the value lies in increasing the efficiency of marketing, by eliminating the infamous 50% of wasted spend and boosting conversions. Highly targeted advertising, coupons, and messaging may be great for efficiency, but when over-used can leave customers feeling pressurized and manipulated, undermining trust and leading them to disengage.
The powerful tools now available, including the potential for dynamic pricing, only increases this risk.
Paradox three: Personalized marketing can undermine brand meaning
Brands are based on shared meaning. They act as shortcuts to save us time and energy in making decisions, because we know what to expect. They also allow us to signal something about ourselves to other people. This relies on us sharing a similar understanding of the brand. If it means something different to each of us, there is no brand.
Traditionally, this could be managed by landing the brand idea through advertising, and then personalizing the experience further down the funnel. However, brands today are largely defined by the customer’s experience (and the sharing of that experience) rather than through advertising. They are effectively the sum of all touchpoints, so the entire experience has to convey the brand.
The use of Generative AI platforms for search raises the stakes still further. They pull from a wide range of sources, including the brand’s own messaging but also what customers, employees, relevant experts, and major publications say, to build a picture of the brand and determine whether it’s worth recommending. To be credible, the brand needs to form a clear and coherent pattern across all these sources.
Seemingly infinite variations in messaging and dynamic pricing may be exciting capabilities, but they can’t afford to compromise the shared understanding of the brand.
Practical implications for brands
None of this is to say that personalization has no value. As McKinsey has noted, it can be very positive for customers, making them feel seen and valued. However, it needs to delight customers while complementing and strengthening the brand. This means finding the right balance across the three paradoxes.
The principles for striking this balance are still much as they were back in my Clubcard days:
Be transparent. Explain to customers why you need to collect the data and what they get in return.
Create value for customers. Personalize for the benefit of customers, not for marketing efficiency.
Embody brand values. Ensure every action is consistent with the meaning and values of the brand.
But there’s one final paradox to keep in mind.
Personalization celebrates the individual, yet humans are social animals
By definition, one-to-one marketing is entirely focused on the needs of the individual. Yet as Covid reminded us, humans are social animals who need to feel connected.
Technology may be evolving rapidly, but humans evolve slowly. While we may now have the technology to deliver personalization at scale, a wise marketer might also consider whether there’s more to be gained in giving people something to belong to…
