McKinsey on digital marketing: Personalization is not what you think

A top advisory consultant to large organizations shares his thoughts on critical issues that every CMO must consider. Watch the video for practical and important advice from an expert.
Written by Michael Krigsman, Contributor

Digital marketing is a complicated beast that demands collaboration across such diverse disciplines as branding, content, and data science. The best marketers combine company strategy and brand goals with a keen understanding of what makes the customer tick; listening to customers is truly the secret sauce of successful marketing.

Digital tracking allows marketers to aggregate user data into segments based on relevant actions. For example, "people who responded to an offer" and "website visitors that came from our newsletter" are two simple categories.

Data analysis gives us a schematic view of how people in our target segments behave -- what they have done in the past and, ideally, what they will do in the future. Among the reasons that Amazon is so powerful, and feared by competitors, is because its data can even predict buyer intent.

However, a strong caution is necessary. Despite the utility and seduction of data, we must not forget that a real person lies behind every data point. This human understanding is called empathy. When united with data, empathy fuels the relationships that bind buyers tightly to a brand. Bringing empathy and human understanding together with data is the most powerful formula.

All of which shows the practical complexities of modern marketing. Organizational and process challenges, the need for specialized skills like data science, and the demand for human empathy make digital marketing hard.

Seeking to find a path forward, I invited a top digital marketing advisor, and former CMO, to be the guest on episode 256 of the CXOTalk conversations with innovators. Robert Tas helps lead the digital marketing practice at advisory consulting firm McKinsey. Previously, he was Chief Marketing Officer at Pegasystems.

The conversation with Robert was insightful and sheds light on many of the critical issues described above. It's definitely worth a careful listen.

Watch our whole discussion in the video embedded above and read edited excerpts below. You can also check out the complete transcript.

Which digital marketing trends or issues are important to your clients?

The first one that I look at and I hear a lot of people talking about is personalization. I think the idea of not treating every customer the same is really, really important in today's world. A lot of companies are trying to figure out how to do that better.

The second is data. You talked about it at the beginning of your intro. Data, data, data: everyone is trying to figure out how to harness the volume of information we now have and put it into action.

The third is design. I think this is one of the newer areas that's getting a lot of traction. Understanding how to do user-centric design and how do I make my experiences relevant to my customer base.

The fourth that I like to talk about is marketing technology, one of the biggest buzzwords going there, but understanding the components of the MarTech stack, and CMOs are now becoming integrators.

Then the fifth one, which is the most evolving, is this new concept of the operating model, the speed at which we work. The reality of digital marketing today is the tools we have. We can do things a lot faster than we've ever done before.

I think CMOs are trying to figure out all five of those things to transform their marketing organizations.

What is marketing personalization?

I appreciate the question because I think people think they know what it is. I'm going to start by saying what I don't think it is.

The first thing [is] that people, when they talk about personalization, often confuse it with targeting. Absolutely every client that I talk to and every person in the industry, we all want to do better targeting. I think personalization has a piece of that, but I think of personalization as really helping manage a customer through their journey. That could include advertising. That could include experiences, both physical and digital. But it's that end-to-end view of helping the client, the customer, get through that journey in a thoughtful way.

One of my favorite examples is when people tease me about [how] I'm a big coffee guy, so I drink a lot of Starbucks. Everybody knows I use my mobile app to get it every day. Everybody thinks that that's where my personalization example stops.

The reality is, I do love the Starbucks app. But what I think the most impressive piece of personalization that Starbucks does is they put my name on the cup. What an amazing experience that is. Being able to tie my journey all the way through with that little name on it, it just makes that whole experience work.

I think companies need to figure out how to build their version of that for their customer. How do you delight them across that journey? That's where real personalization is.

Where do measurement and data science fit into digital marketing?

Understanding measurement is an important battleground area. My second point on the list was that insights piece, which has many connotations.

Number one, we must move away from this last click model. Today I see so many companies still in that silo of making decisions in one of their channels. They judge a campaign with a click, and that's how they deem success or not and are spending lots of money to do that. We have to move away and understand how the customer buys.

I came from financial services, where people are not buying a mortgage on the last click, yet Google search does extremely well for mortgage buyers because that's where we start our journey. Being able, as you said, to understand our customer across the journey, mapping those out and understanding how they work, and expanding our measurement systems is paramount to doing personalization and great modern marketing.

There's got to be a real culture change in the way we seek and use data.

We've been in this culture of reporting, and we've got to be in this business of insights. I want to see my clients step up their game and build out their data strategies, the number of data sources they're using, how they're connecting all those data sources, and really testing and learning their way in.

There are no silver bullets. It's not one tool that you can buy. There's a combination of things that you must do to understand what works for your customers and your specific segment of customers, to drive that test and learn culture through your organization.

Best in class marketers are leading the way with data and how they approach their marketing programs. They're leading the way in testing and learning. They're leading the way with agile approaches to their marketing, constantly striving for more information around the customer to be smarter about it.

As you said, there are challenges. The first one that comes to mind is the data silos that exist in organizations, especially larger organizations. Connecting all those customer touch points is hard.

The second piece is understanding who owns the customer experience and how is that managed and implemented across the board within my organization. Often, we have silos that create the upper brand, the upper funnel team, the bottom funnel team, the post customer experience team, and things like that. We've got to figure out how to build our strategies more holistically.

The third bucket is, there's a lot of technology, a lot of legacy systems in these organizations that need to be cobbled together. You need a diligent strategy to do that.

The fourth, as you said, is to shift thinking from that last click conversion campaign thinking to enable the customer journey. How do you go about delivering that? How do you remove friction through that process? How do you get more data to enhance it and help the customer get what they want?

Exactly. Exactly. Data scientists are critical pieces to putting data together, but I've got to enable my marketing team to use the data. I've got to enable my marketing team to be able to put it into action and hold themselves accountable to it so that I can see results and I can manage it. I need data scientists to help me figure out what I need to do. I need my marketers to know what to do. Then I need the system to give me feedback in a timely fashion, so I can continue to iterate and drive impact on my business.

Why is being customer-centric so hard?

We have to focus our programs on customer needs: an outside view, not an inside view.

One of the challenges we have, Michael, is that most [companies] are [organized based on] products. We are in a certain product category. Then we have channel people. Then we might get to a customer insights group.

We've got to flip that on its head. We've got to start with that customer need and manage ourselves through that and how they want to communications, how they want to engage with us, and then figure out what the right product is.

I love agile, smaller, cross-functional pods that are outcome based. I now am no longer in the linear process where it's my job just to press that email button. But if I'm in that cross-functional team and I'm focused on a customer outcome, I can now really get excited about the impact I'm driving through that customer journey. I can be thoughtful about how I'm connecting the dots and say, "Oh, well, that's what you want to do. We're not going to send him another email. Let's do this," and start to optimize my organization's ability to meet that customer need.

CXOTalk brings together the most world's top business and government leaders for in-depth conversations on digital disruption, AI, innovation, and related topics. Be sure to watch our many episodes! Thumbnail image from Wikimedia creative commons.

Editorial standards