Personalization Playbook: A Practitioner's Perspective

Personalization: one of the most talked-about 'levers' of customer experience that can unlock billions of dollars of value for retailers. But how many retailers can do true one-to-one personalization at scale? Very few, if at all.

WHY?

The simple answer is that it is extremely hard. So, if you are in limbo thinking about personalization and need a stepwise playbook, here's one that I used to build such a capability.

The Playbook:

1. Create Vision and Alignment

The value and definition of Personalization are not very well understood within an organization. Digital marketing feels it's about sending targeted campaigns; the Visual Merchandising team thinks it's about showing relevant products to consumers, and the Product team thinks its about running experiments and optimizing the UI/UX. They are all correct.

But who drives the playbook and owns the value creation and capture?

In my experience, if Personalization needs to become part of the Customer Experience DNA, then it needs to be owned by a strong leader in the organization, whether it's the CMO or CDO. Plus, a CEO mandate that creates alignment across the various functions of marketing, technology, analytics, and operations can ensure the necessary long term commitment.

2. Define and prioritize use-cases

This is a critical step. McKinsey's research shows that 70% of digital transformations fail. While there are several reasons why this happens, one of the main ones is the lack of discipline around value creation and value capture.

Value creation: this is a clear articulation of how the new capability will create value for the customers and the organization. For example, Personalization's core promise is to enhance the consumer experience by saving time of discovery, providing ease of transaction, and serving customers where and how they want to be served. Does that translate into a higher willingness to pay or spending a higher share of wallet?

Value capture: How will organizations capture this value created from the enhanced consumer experience? This requires a deep understanding of KPIs that will get impacted and an attribution model that can accurately allocate value capture to different initiatives impacting such KPIs. For example, if Personalization improves the platform conversion rate, then it's important to understand what % of the uplift in conversion can be attributed to Personalization.

Next, create a wish list of use-cases across the customer journey, and plot them on the value creation vs. capture 2x2 matrix. This will allow you to prioritize the use-cases that create the highest value and allow you to capture a significant portion of that value. See an example below:

Prioritization framework of use-cases

3. Create a capabilities stack needed to execute the use-cases

You are going to need a capability across people, process, and technology in order to execute the use-cases listed above. A few key considerations:

a. Think long term, act short term: While a lot of expert publications recommend building these capabilities incrementally, it doesn't mean building it piecemeal. Given the vision of the scale and scope of the business, it is critical to think about a strong foundation to support the long term vision. For example, investing in a Customer Data Platform such as MParticle and an AI-powered Campaign orchestration tool such as Optimove can create significant leverage. However, don't be afraid to jump in with existing tools to execute the easiest use-cases, deliver value that pays for the next upgrade. Speed of execution, and learning, are as important as getting it right, so ensure that progress is not paralyzed by complexity.

b. Build across the 3 key pillars of technology, skills, and operating model (ways of working): All three capabilities need to be in sync or it will result in sub-optimal outcomes. For example, you can have the best technology platform but don't have strong skill-set of data science and Martech in the team, which can work independently with an agile operating model, the full potential of the investment will not be realized.

c. Take the portfolio approach to technology service: assume your current tech stack is flexible with a service-oriented architecture, you should be able to cherry-pick best-of-breed technology services that can collectively serve as a robust personalization platform. Some key considerations around cost, data portability and ownership, financial stability of the vendor, technical flexibility of the solution, and the quality of support and willingness of the vendor to invest in your vision.

4. Build a Business Case

Now that you understand the extent of the value that can be captured and the investments required to build the capabilities, it's time to translate into a business case. Typically, 3-5 horizon cost-benefit analysis that translates into a financial ROI.

5. Identify and evaluate vendors

Based on your set of requirements start with a wide list of vendors, and narrow down to 2-3 vendors for final detailed assessment. One easy way to create a shortlist is by mapping your requirements to the vendor capabilities and picking the ones that meet most of them. See below.

Next, creating a scoring model for the shortlisted candidates. The scoring model has both quantitative factors such as cost and qualitative factors, quality of clients, and referrals.

Finally, update the business case with actual quotes from the vendors. In the case below, two vendors are selected that collectively provide a comprehensive Personalization capability. This is very common since it's hard to find a best-in-class platform that does it all and makes financial sense.

6. Implementation Roadmap

Having finalized the vendors, it's time to create an implementation roadmap. Here's a simplified version of a high-level implementation roadmap.

7. Rinse, Repeat and Learn

You are live with your Personalization capabilities, but now is when the real work begins. This is the final and ongoing step. Perhaps the most critical one for long term success.

Create a culture of continuous experimentation, knowledge capture, and iterative capability building to get closer to a deeply personalized experience.

This pursuit of Personalization Nirvana is endless, since every time you reach your goals, the technological advancements will have pushed out the goal post.

So, most importantly, enjoy the process and don't stop focusing on delivering joy to your customers. Good luck!

Amit Rawal is a Sloan Fellow at Stanford's Graduate School of Business. He has spent the last decade in building and scaling e-commerce ventures for 40%+ of the world's population. At Stanford, he is focused on bringing together tech, design, and data to create joyful shopping experiences. He is a data geek and loves tracking all kinds of health and wellness metrics. He can be reached at [email protected].

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