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Most marketing leaders would agree that providing a more personalized customer experience has the potential to drive more purchases, stronger loyalty, and greater customer lifetime value (CLV). But what is the cost of providing those personalized experiences?

To create a tailored customer journey and the content, offers, and experiences it requires, you need the right people, processes, and platforms in place to support them.

This article introduces a framework that helps you meaningfully understand what your organization must do to deliver personalized Customer experiences, and where your challenges and opportunities lie as an organization.

Specifically, I'll cover the five steps you go through to ensure you are set up for success when embarking on efforts to achieve and measure ROI when delivering personalized content, offers, and experiences to your customers.

Step 1: Goal-Setting

Determining your ROI from personalization depends on setting the right goals with meaningful measurements.

Short-Term Results

Let's start by looking at some short-term goals we will want to incorporate into our plan. Short-term results can help you gain support from stakeholders until you are able to prove ROI from your personalization efforts in a bigger and more meaningful way.

  • Effectiveness. As much as personalized Customer Experiences are built for building long-term loyalty and CLV, your efforts must be effective in the short-term as well, so your goals should include more immediate metrics—for example, clickthrough rates on personalized content on a website or in emails, or open rates on timely email or SMS messages. Although such short-term metrics aren't the ultimate measures of your success, they can show quick wins.
  • Efficiency. Another short-term goal should be to increase your teams' efficiency at creating personalized content and offers. Scalability can be an issue for even the largest organizations, so setting short-term goals that emphasize finding efficient ways to create multiple variations of content or campaigns can provide quick wins as well.

Long-Term Results

Next, let's look at some longer-term goals that will be necessary to achieve sustainable success beyond quick wins.

  • Digital Maturity. Although measurements of digital maturity can vary (there are quite a few models to pick from!), it is important for organizations to compare themselves both to other leaders in their industries and their own growth as an organization. Customers' demands for personalization are not going anywhere, and increasing your organization's digital maturity will ensure you are keeping pace with customer expectations, your competition, and your own organizational vision.
  • Customer Lifetime Value. CLV is potentially the most valuable metric of all when gauging the results of your personalization efforts. Because CLV takes into account the overall impact that all of your efforts are causing, it is beneficial when tied to your personalization efforts in particular as you expand those efforts across multiple channels, eventually achieving omnichannel personalization.

Step 2: Understanding Scalability

Personalization can have a tremendous impact on customers' propensity to buy as well as their CLV, but creating the content variations, audience segments, and other supporting elements can be demanding on even the largest of organization. So, you need to understand the impact of personalization on your infrastructure and the teams that will be supporting the work.

Let's look at three areas of scalability that are critical to personalization efforts.

1. Data scalability

This refers to how flexible your customer and other campaign-related data will be when multiple variations of audience segments, tags for attribution, and other data-related issues arise in regard to your personalization. Although that flexibility can be a big challenge if you don't have scalability, a bigger issue with data is often access to the right data, and less about its scalability.

2. Content scalability

This type of scalability refers to how many content variations can be created to fulfill the needs of the audiences for which content, offers, and campaigns will be personalized. In other words, how many different image or text variations need to be designed, created, or written to fulfill those needs, unless there are ways to automatically generate them, or a way to use AI to do so?

Content scalability can often be the most challenging when personalization is performed across multiple teams and channels. Thus, content scalability is often a bottleneck for organizations.

3. Campaign and platform management scalability

This last type of scalability refers to the resources required to run multiple variations of a personalized campaign across multiple platforms, with the goal of reaching audiences across multiple channels.

Often, this type of scalability has more to do with resources and team silos than the platforms themselves, as most modern marketing technology platforms are built to scale to a reasonable degree. So, when you ensure that your platforms scale, ensure that your teams are ready and enabled to work together.

Step 3: Incremental Growth Planning

Next, take your goals and scalability considerations and turn them into a plan that can be reasonably implemented while holding your teams accountable to the KPIs you set forth earlier in this process.

An incremental plan is the smartest and best way to approach the often large-scale changes required to modernize your delivery and measurement of personalized content, offers, and customer experiences. Even a large enterprise organization should think of its personalization team as a "startup" the role of which is to learn before scaling efforts too quickly.

A couple of considerations to make when planning for incremental approach:

  • Agile or Lean approaches can enable your teams to think incrementally and to work together using methods that emphasize creating tests and experiments that offer quick learning while expending minimal resources until a desired result is achieved.
  • Minimum viable product (MVP) or proof-of-concept (POC) approaches are often tied to Agile or Lean, and they can help your teams create small, phased efforts that prove the power of personalization, while helping them avoid areas that may be less effective.

Brands that are successful in their efforts to personalize the customer experience often take an incremental approach that prioritizes high-impact elements and rolls them out in a way that considers the scalability constraints of the organization as well as the experience that can be acquired from a more Agile approach.

Step 4: Continuous Improvement

The second-to-last step we will discuss in our approach to achieving ROI through personalization is related to the previous step of incremental rollout. In this step, however, lies the assumption that some or most of your efforts are launched and live to your customers.

Once that happens, you need to build systems of continuous improvement so you continue to learn from your efforts. After all, customers evolve, as do their expectations, as do the best-practices and the platforms we use to reach those customers. A system of continuous improvement helps a brand maintain a meaningful connection with its customers while keeping pace with trends and best-practices.

Here are some tips that will set you up for success in achieving continuous improvement:

  • Ensure you set measurable goals at the beginning so you can see whether you achieved them or not.
  • Create feedback loops for both your short- and long-term measurements. You will need to learn quickly as you continue to scale, so think about short-term and long-term in parallel.
  • Don't just talk about the finished product; talk about the work it took to create the finished product. Your teams need to grow more efficient and collaborative over time, and much of that has to do with how they work and solve problems together.

Step 5: Prioritization

Last but certainly not least, prioritization of improvements based on your results is key to your long-term success. Once you and your team have a continuous improvement mindset, there will be countless ideas offered, which may cause a whole new set of issues. Specifically, you will need to have methods to prioritize which ideas get implemented, why, and when.

Having too many good ideas may sound like a good problem to have—and it is—but failing to have a way of filtering out ideas that are more or less relevant can cause work to grind to a halt.

Embracing continuous improvement as the ongoing "operating system" for your team can bring about winning short- and long-term results as long as you have methods in place to ensure all of the great ideas that are generated along the way can be prioritized according to the business value and results they can achieve.

* * *

Achieving a return on your investment in personalized content and customer experiences may not be simple, but when they are approached in a comprehensive manner, the results can be stellar.

By looking at the five steps in this article and viewing it as an incremental effort, you can be well on your way to achieving ROI on your personalization efforts.

More Resources on ROI and Personalized Customer Experiences

Funnel Metrics, Attribution, and Measuring Marketing ROI in Any Industry: Christine Vermes on Marketing Smarts [Podcast]

Three Steps to Personalizing the Overall Customer Experience

Beyond Buzzwords: How to Build a Personalization Strategy for Optimal CX and Growth

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A Five-Step Framework for ROI From Personalized Customer Experiences

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image of Greg Kihlström

Greg Kihlström is the principal and chief strategist at GK5A, a digital transformation company. He is the host of The Agile Brand With Greg Kihlström podcast.

LinkedIn: Greg Kihlstrom