Personalization: Good or Evil Customer Experience?

Posted on Mar 9, 2009 by in customer experience | 0 comments

data_privacy

It seems to me that the advance of civilization is nothing but an exercise in the limiting of privacy.
Janov Pelorat in Asimov’s Foundation’s Edge

When you go to your next door’s butcher shop, do you mind him remembering your favorite piece  and giving you a nice discount on it as one of his best customers? When you go to the hair dresser around your block, don’t you enjoy to learn a little bit more about the rumors going on in your neighbourhood? Isn’t it the reason why you like to go there rather than to the impersionnal corporate stores were you are nothing else than yet another customer?

But who likes his e-mails to be scanned by Google? Who likes his purchase records to be analysed by VISA? Who likes his PC to send diagnostic reports to Microsoft?

While most people are appalled in theory by the data privacy issues caused by profiling, not so many manifest such disagreement in limiting their usage of services using profiling, sometimes even extensively. On the contrary, personalization creates more adoption and engagement online. This trend is growing so fast that it is quickly becoming a standard.

So when does personalization helps providing a better customer experience and when will it backfire?

What is the difference between Profiling and Personalization?

According to Wikipedia, Personalization can be considered as a sub-set of Profiling. While the objective of Profiling is the extrapolation of information about something, based on known qualities;, Personalization is the art of tailoring a consumer product, electronic or written medium to a user based on personal details or characteristics they provide.

In that logic, when credit card companies profile people’s purchases to improve their financial forecast, the don’t provide any personalization, they simply analyse these data internally. Such practices exist for a long time and are not particularly connected to the online world.

Personalization happens when a company tries to adapt their communication or their offerings on a per customer basis. On the web, this can have a different proportion, as more or less everything can potentially be personalized.

What is the difference between Personalization and Customization?

According to Wikipedia, there is none (as Customization is re-targeted to Personalization, and is defined as explicit personalization). However, I like the definition of a quite old article, probably less correct, but easier to understand:

Customization is under direct user control: the user explicitly selects between certain options (a “portal” site with headlines from the New York Times or from the Wall St. Journal; enter ticker symbols for the stocks you want to track)
Personalization is driven by the computer which tries to serve up individualized pages to the user based on some form of model of that user’s needs.
Jakob Nielsen’s Alertbox for October 4, 1998

The early days of the web: Personalization doesn’t work, keep it impersonal!

We can find an interesting opinion in the same article from Nielsen stating that  “Web personalization is much over-rated and mainly used as a poor excuse for not designing a navigable website”.

For the sake of argumentation, I would like to answer: Customization is mainly used as a poor excuse to justify design defects stating that users have the ability to change things the way they want, even if only 5% of them will be able to figure out how.

We can also see in this article that in 1998, Amazon was already the universal reference of the “Recommendation case”.

Finally it agrees that some good cases did already exist, even if none of them positioned Personalization as the best-of-bread of Artificial Intelligence:

Personalization does work in a few, limited cases that are characterized by being
1. very simple to describe in machine-understandable ways, and
2. relatively unchanging
Jakob Nielsen’s Alertbox for October 4, 1998

In 2003, the same type of opinion could be heard:

If somebody in your company has been building “personalisation” into your website, it’s time to haul them in, tie them down, turn up the lights, pour whisky down their throats and ask them some harsh questions about the returns on their spending. You probably won’t like the answers.
[…]
Jupiter illustrates the point with case studies, removing names to protect the guilty.
One health care site spent close to $US4 million ($A5.6 million) on personalisation, only to find after launching it that not one of the site’s key metrics had moved. Oops.
David Walker, November 11, 2003

What all this implies is that, at the very least, in the domain of Personalization,  it is not because you spend money that you will make money…

Finally, it’s the New York Times in 2006 who sent that last strong negative signal I am aware of, in regards of Personalization:

Spewing out recommendations is not entirely without risk. Earlier this month, Walmart.com issued a public apology and took down its entire cross-selling recommendation system when customers who looked at a boxed set of movies that included “Martin Luther King: I Have a Dream” and “Unforgivable Blackness: The Rise and Fall of Jack Johnson” were told they might also appreciate a “Planet of the Apes” DVD collection, as well as “Ace Ventura: Pet Detective” and other irrelevant titles.
“Like This? You’ll Hate That. (Not All Web Recommendations Are Welcome.)”, Laurie J. Flynn, January 23, 2006

But the topic is already a little more nuanced than before, as Laurie Flynn explains that “for consumers, a recommendation system can either represent a vaguely annoying invasion of privacy or a big help in bringing order to a sea of choices”.

Customers don’t want Personalization, they want a personally relevant experience!

One thing is sure, is that Personalization works for some, and even very well. The most notarious case is surely the one of Netflix, the famous Online DVD rental company, with their 1 million USD contest for whoever beat their movie recommendation system of at least 10% (www.netflixprize.com) running since 2007. Not too bad for only 10%, and yet no one succeeded so far… and all this for the sake of a better customer experience on one single web site!

A recent study brings some confirmation regarding the limit between good and bad Personalization:

When messages are highly personalized, but lack value and justification, they have unintended effects, They can actually have a boomerang effect and cast the firm in a negative light, sending customers running to the competition.
“Personal information in E-mail marketing can backfire, study indicates”, Tiffany Barnett White,  Jul 2008

In this light, it seems to me that, when it comes to customer experience, it is all about relevance and not about personalization as such.

Customers don’t want the be profiled, they want to be better served.

Customers don’t want a relationship with a company, they want relevant interactions while experiencing its services.

Customers are not interested to be welcomed namely or asked how they feel like that day, they came with an  initial intent and they want it to be satisfied in the most pleasant way possible. If personalization helps for this, great, but that’s not what they came for.

The New Wave: Contextual and Personalized Customer Experience for better Information Access

Considering the potential of Personalization coming from the mechanism to accurately pinpoint relevant information, it’s objective is highly similar to the concept of the Context which I mention in my last post, in regards to information access: It’s about what I (the Personalization) want to know now (the Context)!

Some sonsider such aspects as fundamental in the definition of the Web 3.0:

Web 1.0: Centralized Them. Web 2.0: Distributed Us. Web 3.0: Decentralized Me
Robert O’Brien quoted by Josh Catone in “Web 3.0: Is It About Personalization?”, February 5, 2008

and, for the scientists:

Web 3.0 = (4C + P + VS)
Where: 3C = Content, Commerce, Community | 4th C = Context | P = Personalization | VS = Vertical Search
“Web 3.0 = (4C + P + VS)” Written by Sramana Mitra / February 14, 2007

In that logic, the Search, the Context, the Community and the Personalization are the main drivers of the innovation we expect to see helping to provide a better customer experience. Google realized it for a while already as Google Personalized Search is out of their labs since 2005, but even if personalization was used for the right purpose (bringing more relevant search results), it is not easy to exploit the full potential it can bring and 2 years later, most users still didn’t notice the difference, yet another confirmation that the accuracy plays a critical role in the adoption of Personalization.

Conclusion: Personalization is Good when focused on the core Customer Experience expectations!

To conclude this post, even if so much more could (and should) be said, I would like to suggest a tentative answer (as I would like to answer to the questions of my post titles at least once):

Personalization is good when it focuses on helping me achieve the objectives of my current visit.

Personalization is evil when it tries to convince me that the company cares about me because it knows me, especially when it results in making my experience more complicated.

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