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.

Digital marketing is a complicated that demands collaboration across such diverse disciplines as branding, content, and data science. The 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 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 segments behave -- what they have done in the past and, ideally, what they will do in the future. Among the reasons that 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 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 complexities of marketing. Organizational and process challenges, the need for skills like data science, and the for human empathy make digital marketing hard.

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

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 that I look at and I hear a lot of people talking about is personalization. I think the 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 . 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 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 , 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 a lot faster than we've ever done before.

I think CMOs are trying to figure out all five of those things to 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 . 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 . 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 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 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 so many companies still in that of making decisions in one of their channels. They judge a campaign with a click, and that's how they deem 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 , where people are not buying a mortgage on the last click, yet 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, those out and understanding how they work, and expanding our measurement systems is to doing personalization and great modern marketing.

There's got to be a real 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 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 that test and culture through your organization.

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

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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 and implemented across the board my organization. Often, we have silos that create the upper brand, the upper funnel , the bottom funnel team, the 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 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 , so I can continue to iterate and drive on my business.

Why is being customer-centric so hard?

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

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.

agile, smaller, cross-functional pods that are outcome based. I now am no longer in the 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.

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