Personalization? Big Data? 1-to-1 engagement?
Sure, I’ve heard of them. I been to this marketing rodeo a few times before, pardner.
It’s predictable as clockwork: Every few years, someone will waltz in with an overflacked approach, platform or PPT-friendly pitch that’s disruptive, that’ll shift the paradigm, that’ll topple giants and upend the industry.
And a lot of the time, said game-changer won’t scrape up enough true revenue to pay for lunch. Some of those make me flinch, even now.
So when I’ve heard platform pundits, agency leads and manufacturing magnates ballyhooing how they’re about to deliver honest-to-Ogilvy marketing personalization, I’d snap off an eye-roll even my 13-year-old envies.
But some recent encounters have made me a convert: personalization is the next marketing reality, because of of a convergence of tech and consumer demand that some companies are leveraging for all it’s worth.
I got to spend some time with one of them, and my eyes never rolled. Not once.
The pocket micromarketplace
If there’s a hierarchy of aspirations in marketing, achieving personalized engagement with the consumer has to sit at the very top.1
Until the iPhone showed up, us marketers were pretty languid about deepening our relationship with consumers. We’d just squeeze out a Super Bowl :30 and watch the cash registers ring. Another martini, Mister Draper?
But now that everyone carries a private portal around in their pocket that gives them access to every brand on earth, that lets them filter who earns any iota of their attention, our “targets” have discovered they don’t have to put up with last-gen baloney2 anymore.
It’s incumbent on brands and advertisers to deliver new and improved baloney. Customized to satisfy the content cravings or material yearnings of people who, it turns out, are actual individuals. Many of whom don’t even like baloney.
Each smartphone is actually a micromarketplace. It’s passage to a global bazaar filled with thousands of brand experiences. Which ones a consumer frequents is completely his or her call...and if you think advertising is going to move their needle, guess again:
- Consumers want personalization in the items they buy: 38% of consumers want personalized products, especially in fashion.
- An IBM survey shows just 10% of consumers listen to manufacturer or retailer recommendations, but 90% trust the word of friends and family, and 68% that of other consumers.
- 74% of online consumers get frustrated with websites when content appears that’s got nothing to do with their interests.
So people are eschewing advertising blandishments in favor the word-of-mouth and community engagement. As individuals, they’re rejecting messages, value propositions, even products that aren’t designed to fit their personal likes.
Marketing automation tried to scratch that itch by serving up content based on buyer personas, so a few clicks on a subscriber newsletter or a landing page result in your next visit to an Amazon or NFL.com being mapped to your preferences. Even a Cleveland Browns fan is worthy of a personalized digital experience.3
Still, those aren’t truly personalized experiences, and they’re often selling identical products to all comers.
But Big Data analytics, the virtualization of design and flexible global production are -- and I’m not using the word lightly -- revolutionizing how some companies are able to deliver personalization.
I shouldn’t have been surprised that the best example I’ve come across is in the fashion industry. Because no industry or vertical is so rooted in the whole notion of personalization.
The happiness equation
Feeding the human desire to express (or repress) personality has been the cornerstone of fashion since time immemorial. Can you think of another industry so totally geared toward fulfilling our ambition to either stand out or fit in?
But servicing any mass market entails epic risk. For every von Fürstenberg wrap dress or Armani power suit, there are, what? Ten thousand markdowns and misfires crowding the discount racks?4 Anticipating the tastes of their audience has always been a high-stakes gamble for designers, manufacturers and retailers alike.
A guy named Tony Hsieh -- who hung his most successful shingle out in Las Vegas, coincidentally -- negated much of that crapshoot. He realized how ecommerce could let a fashion brand create a more fulfilling engagement between marketers (who captured sales and data) and customers, who benefitted from the core value equation his little venture, Zappos, was built upon: “Delivering Happiness.”
How’d that work out?
Better online customer experience!
Fanatical customer service!
Products designed to my exact personal tastes!
Well, 3 out of 4 ain’t bad. Fashion is intensely personal, and making the process of shopping, buying and receiving product as user-focused as possible definitely amps up the joy people get from finding those leopard-print Fryes they’ve been chasing.5
But how could a fashion marketer check off that last box?
- Some brands have rolled out the co-creation model, so a NIKEid gets to charge a premium for personalization. It’s a strategy that’s been used for everything from high heels to oxford shirts. But it’s still got its constraints, as it’s typically limited to options and variations on baseline products already accepted by big swaths of consumers.
- Companies like U.K.-based startup Unmade are trying to deploy a digital production platform where customers directly design and order highly personalized knitwear. It’s a custom-only, zero-stock, on-demand model, but it hasn’t succeeded at scale yet.
But how can you do this at scale -- providing millions of users with products created to satisfy their tastes?
That’s what brings me (finally!) to the company I discovered practically right on my doorstep: TechStyle.
End-to-end personalization in action
I’ve got other martech clients blazing their own trails in personalization -- Message Systems/SparkPost are evangelists for Big Data application to marketing and transactional email, and MarianaIQ is breaking new ground in A.I. and machine learning for insight-driven lead generation and account-based marketing.
Yet until I had a tour of TechStyle’s operation, I hadn’t seen a company where data-driven personalization provides the backbone of an entire vertically-integrated enterprise, from initial consumer engagement through production. Not to sound too fawning about it.
What’s their secret? It’s ludicrously pragmatic: TechStyle is home to a set of hot brands -- from Fabletics to Shoe Dazzle and Just Fab -- that leverage the data they capture via membership subscriptions in order to produce and sell products that are designed, merchandised and produced according to the precise tastes and preferences of its members.
Personalization = happiness. It’s the bullseye the TechStyle model hits.
When I reached out to TechStyle to learn more6, I actually got the grand tour of their El Segundo, CA HQ from from their CMO, Shawn Gold, who’d written a pretty revelatory blogpost about overcoming his own initial skepticism when he was first approached to join up back when the company was still called JustFab:
“People inside JustFab Inc., painted a picture of a company that was innovating the fashion world through its membership program; where employees were thrilled to come to work; where customers loved the fashion; and where they were making real money.”
What’s “real money?” TechStyle will be booking $650MM in 2016 revenue, pretty good for a business that’s not yet seven years old, with 4MM+ active members and a place as one of the top 100 global etailers.
The membership machine
Membership is the core of the TechStyle model, as Shawn Gold made clear to me:
- Members agree to a $39.95 monthly subscription fee that’s only conferred when they make a purchase, or fail to visit a TechStyle brand website that month.
- When a member signs up with any of TechStyle’s brands, they’re given an immediate online quiz about their preferences and tastes.
- Each month, they’re sent a selection of fashion choices from a “personal stylist” that’s customized on the basis of their responses.
- They commit to visiting at least one site per month.
- If they visit a site and don’t buy, that month’s fee is skipped.
- If they don’t visit any of the sites, they’re charged their fee, but are also issued a credit of $29-49 (depending on brand) toward a purchase.
Everything the member experiences with TechStyle -- from brand advertising to dynamic site content, customer support and loyalty incentives -- is personalized by the in-depth data being culled on each of them.
That data goes beyond member questionnaires and tracking site behaviors, as TechStyle gathers millions of datapoints from social media and third-party sources, too, processed through a proprietary enterprise analytics engine.
I saw the data, personalization and analytics team behind that engine at work in El Segundo7, as well as other in-house groups like a full-service media and creative studio producing advertising and content and managing all media buying, a membership commerce systems group handing sales and customer service, and fashion and merchandising studios where member preferences were turned into “data-driven design” of products predictively sourced from TechStyle’s integrated suppliers, a number of them onshore in the States.
But that uber-chic workspace, and the equally impressive people populating it, were just one node of an expanding global network. Soon, it’ll include actual retail stores.
As Shawn explained it, they’re anything but a cross-channel cash grab: the 1-to-1 touch that drives customer love for a brand like Fabletics in the online space will bring a similarly gratifying, high-engagement experience to brick-and-mortar.
Innovating satisfaction, hedging risk and cutting costs
The results of all this platform integration?
- Products have higher relevance and perceived value to members, so they sell -- to the tune of 500,000 TechStyle transactions per month, or a rate of one sale every 6 seconds.
- Brand-to-customer direct communications are personalized and see higher open/clickthrough rates.
- Customer support is personalized, propelling higher resolution rates (and purchases).
- Brand and direct response advertising realize higher engagement, reaching 50-65% national awareness (depending on the brand).
- Dynamic content is better targeted, more cost effective, and drives an average of 25 site visits per year.
- Customer satisfaction is superior, proven by NPS scores in the +45-65 range (by brand).
- 95% accuracy in forecasting production needs, and a 30-50% reduction in overhead, so members receive on-trend designs tailored to their tastes at half the price of competing retail.
- Sizable savings happen in advertising and customer acquisition, since members are being given a pocketbook incentive to visit a TechStyle site every month.
This year’s fashion? The future
In tech marketing, we go on a lot about all the glorious inevitabilities of innovation, about the awesome tomorrow that’s only a few years out. In our own way, we can get just as starry-eyed as a 1950s Imagineer sketching out Tomorrowland.
Someday, I’m sure, we’ll hold meetings via VR telepresence while riding in our autonomous cars, as Big Data salesbots are hitting our acquisition numbers using hyperpersonalized pitchmanship.
So it’s a wakeup call to learn how some innovators have already turned the promise of personalization into a real, thriving and growing business.
TechStyle was a transformative show-and-tell, for me. Not only as a -- yes, I’ll use the word -- disruptive model for fashion commerce, but as a template for how a lot of other marketing and manufacturing enterprises could use data-based personalization to nurture extraordinary customer happiness.
Not tomorrow, but right now.
1Alongside getting a great job doing something that’s not marketing.
2By baloney I mean, of course, hooey.
4Completely unscientific estimate based on a personal retail survey, a.k.a. I really needed a new pair of cargo shorts.
5In case you’re wondering, they look great! Especially with cargo shorts.
6My conversation starter? “Hey, your company is really cool! Got any work?”
7Wearing the only khakis and oxford collars in the place, the universal uniform of the data scientist.
DISCLAIMER: At no point during the preparation of this blogpost did I get to meet Kate Hudson.