“Get closer than ever to your customers. So close that you tell them what they need well before they realise it themselves” – Steve Jobs.
Steve Jobs is on the list of the world’s greatest marketers and his obsession with customers is today being shared by more businesses than ever. Understanding the customer has become a focal point for marketers alike across the globe. In the eternal battle to satisfy our hunger for customer insights, marketers invest heavily in big data, user profiles and artificial intelligence (AI) to make sense of various audiences. Nonetheless, marketers understand that every customer is unique and that only through truly personalised marketing can we convince increasingly savvy shoppers to show loyalty towards our products and services.
The benchmark
The benchmark for modern-day personalisation is set by tech giants such as Netflix, Amazon, Facebook, and Google. These companies are leading the way for leveraging customer data to better market products and services. Estimates from McKinsey and Company suggest that Amazon’s retail business drives 35% of sales through its personalised product recommendation algorithm. In 2018, Amazon reported that its retail business generated $46.78 billion in revenues. This suggests that its personalised product recommendations accounted for more than $16 billion, highlighting the power of personalisation and why every marketer must pay close attention to this topic.
For Netflix, the same McKinsey report estimates that 75% of streamed content originate as personalised recommendations.
Solutions like Google Ads and Facebook Ads are simultaneously raising the bar for what marketer’s require in an advertising tool. Targeting and segmentation capabilities have become the norm and more and more KPIs are set to improve metrics like cost per click (CPC), conversion rate (CR), average order value (AOV), customer lifetime value, etc. These are all metrics that are trackable in real time with modern day marketing technologies.
The heart and brain CRM
Before e-commerce and big supermarket chains, day-to-day shopping was done at the local corner store. Back then, the shopkeeper would greet his customers by name and he would know that Mr. Jensen always buys the Financial Times and that Mrs. Cooper always gets chicken for her friday night dinner. The heart and brain of the shopkeeper was the customer relation management system (CRM) and every customer interaction was stored as real life data. This allowed the shopkeeper to build a strong relationship with his customers and leverage it in order to improve business tomorrow.
Everything changed when the internet was released in 1991. The internet allowed us to scale our businesses faster and with greater efficiency to a global audience, in a way that had previously been unimaginable. The internet also brought increased competition and accelerated the decline of the local shopkeeper, and with him, his heart and brain approach to customers. No longer were one-on-one relationships sufficient to deliver customer centric service to a global customer base. The internet created a whole new playground for marketers, a new form of performance based marketing, where broad data analytics superseded individuality.
Should affiliate marketing adopt personalisation?
While Google and Facebook invested in personalisation to understand their customers better, the affiliate marketing industry lagged behind. Affiliate marketing, where couponing and cashback represent about 50% market share, has only in recent years adopted personalisation, but is now starting to give the tech giants a run for brands’ marketing budgets.
Several global couponing companies, including Global Savings Group, RetailMeNot and SmartCoupon, have introduced personalised, dynamic coupons that allow brands, in real time, to run targeted campaigns based on a customers’ shopping behaviour.
By leveraging the latest in tracking technology, brands can pursue targeted coupon strategies and extend their reach outside of their own shops and onto partner platforms. A customer searching for a coupon will find a tailored voucher that is in line with the brands’ coupon strategy. Brand’s strategies might include up-selling, cross-selling, conversion, and more. Insights from Global Savings Group indicate that up to 44% of coupon customer will spend more in exchange for a 10% discount voucher (hence untapped potential for affiliate marketers). Brands known to be first movers already benefit greatly from having full control of when, where and what kind of coupons are displayed to customers on their partners’ portals.
The adoption of personalisation, mainly driven by publishers, has sparked a flame of innovation in the affiliate industry. Large affiliate networks like CJ and Rakuten have recently announced the launch of different technological initiatives to leverage their large databases of customer transaction data, in the pursuit of being more relevant to their partners in an increasingly customer-centric world. According to estimates, affiliate marketing in the US is set to grow to US$6.8 billion by 2020, and investments in personalisation are going to fuel further growth past 2020.
Double down on personalisation
Personalisation technology is the cornerstone of Amazon, Netflix, Google and Facebook’s success, as it has brought the heart and brain CRM into the modern era of the internet.
The tech giants have set the benchmark and now it is the time for affiliate marketing to double down on personalisation and propel the industry to new heights. As leading industry players invest in technology that gives them access to more customer data points, the overall ROI for affiliate marketing spend will improve. As Steve Jobs said: “Get closer than ever to your customers. So close that you tell them what they need well before they realise it themselves.”