Subscription Engineer #31: Personalization demystified

One of the hottest topics of recent ShopTalk 2023 (which was a blast by the way) was personalization. I’ve made a couple of small posts about it but now I want to make a longer post because I was able to answer my own question - what personalization is.

First of all let’s start with personalization layers:

• Communication layer - channels, frequency and timing that we tailor to meet specific customer where they are ready to consume it and act on it
• Messaging layer - text, video and audio that we customize so person will more likely to consume it
• Product layer - from customizing product itself (for example, engravings) to helping customer to find the right product
• Offering layer - prices, discounts and offers that provide balance between desired margin and customer ability to buy it
• Experience level - combination of 4 layers above combined into a flow that makes it convenient for customer to finally make a purchase

As you can see, personalization is a big area and that explains why companies that claim that they are a personalization service can do different things.

Now let’s see common types of personalization services:

1. Product recommendations: Using data analytics and machine learning algorithms, e-commerce sites can analyze a customer's browsing and purchase history to recommend products that they are most likely to be interested in. These recommendations can be made on a website's homepage, on product pages, or through email marketing campaigns.
2. Customization: Online retailers can allow customers to personalize products, such as adding their name or initials to a product, choosing from different colors or styles, or even designing their own products from scratch. This not only provides customers with a unique and personalized shopping experience, but it also allows retailers to offer a wider range of products and increase customer engagement.
3. Personalized promotions: E-commerce businesses can offer personalized promotions, such as offering discounts or rewards based on a customer's purchase history or loyalty program membership. This can encourage customers to make repeat purchases and increase customer loyalty.
4. Personalized messaging and content: Online retailers can use personalized messaging and content to communicate with customers, such as sending personalized emails or displaying personalized content based on a customer's preferences or location. This can help businesses build stronger relationships with their customers and increase engagement.
5. Personalized search results: E-commerce businesses can use data analytics to personalize search results for customers, showing them products that are most relevant to their search query and browsing history. This can help customers find what they are looking for more quickly and easily, and can also increase the likelihood of a purchase.

So, what if you want to implement personalization for your business? Here is a potential strategy for implementing some of the services above:

1. Define personalization goals: The first step is to identify the personalization goals of the subscription company. This can include increasing customer engagement, improving customer retention, or increasing revenue. Once the goals are defined, the company can start identifying the personalization services that will help them achieve these goals.
2. Collect and analyze customer data: The next step is to collect and analyze customer data, such as purchase history, browsing behavior, and demographic information. This data will be used to develop personalized recommendations and promotions for customers. There are various tools available to collect and analyze customer data, such as customer relationship management (CRM) software and marketing automation platforms.
3. Develop personalized product offerings: Based on the data analysis, the subscription company can develop personalized product offerings. This can include recommending products that are relevant to each customer's interests and preferences, or offering customized products that are tailored to each customer's needs. The company can also use the data to develop personalized promotions, such as discounts or loyalty rewards.
4. Implement personalization services: Once the personalized product offerings have been developed, the company can implement them on their website and in their marketing campaigns. This can include personalized product recommendations on the website's homepage and product pages, as well as personalized emails and promotions sent to customers.
5. Measure and optimize: Finally, the subscription company should measure the effectiveness of their personalization services and continuously optimize them to improve their results. This can include analyzing customer engagement metrics, such as click-through rates and conversion rates, and using this data to refine the personalization services and improve customer experiences.

But before you jump into action keep in mind what usually could be a biggest problem:

• Privacy - make sure that you are compliant with all the data regulations when you do data collection
• Data quality - don’t gather garbage data and enrich sparse data
• Team - you need team that is very proactive and feels comfortable dealing with both data and business stakeholders?
• Scope definition - don’t start with massive 3 year project, start small but win big
• Content generation - you will need a lot of content for all that custom experience

Hop that helps and good luck with your journey!