On a dreary, bleak, rain-soaked Monday afternoon, I enter my local establishment of a global coffee chain. I step up to the register and place my order, a drink that’s on the menu, but a drink that I customize to my individual tastes: nonfat milk, specialty syrup, a small amount of whip cream, etc. It’s also a drink that doesn’t come in the standard sizes (small, medium, large), but instead in sizes that have become part of the vernacular of this specific coffee-chain-visiting subculture. The cashier asks for my first name, writes it on the cup, and tells me, “Have a good day, Olivia.” I wait for my drink in line with other people willing to shell out $4 for a tall latte, the majority of who receive drinks they’ve tweaked and altered to suit their unique gastronomic partialities (some of these drinks aren’t even on the menu), health conscious with skim milk and epicurean with extra whip and a caramel drizzle alike. People are camped out with hand-crafted coffee drinks, culinary creations, textbooks, and laptops. After 3-4 minutes, the barista calls out my name and hands me my drink.
This series of events appears mundane, and it largely is, but with someone like me who always has marketing and branding on the brain, it’s a fascinating case study on personalized marketing.
This anecdote is interesting in and of itself, the way in which Starbucks makes marketing ploys like addressing people by their first names and making customized drinks part of their day-to-day operations, but it’s especially interesting to me because the day after I visited Starbucks, I visited another coffee chain and received a starkly different and antithetical experience. An experience that looked like this:
On an equally dreary, equally bleak, equally rain-soaked afternoon, I walk into a coffee shop. I order a large coffee with two creams and two sugars (what’s endearingly referred to as a “double double” in this alternate coffee-and-bakery universe that has a cult-like following equally as fierce at Starbucks’). I hand over my cash to a taciturn, close-mouthed employee and utter a “thank you” as people flood in and flow out of the store and cars line up at the drive thru, placing their orders and receiving those moments later. Thirty seconds after ordering, I receive my drink as an employee loudly calls out “Large double double!” There are no trained baristas, no steaming of milk or methodical ladling of foam into a cup with a metal spoon: the hot chocolates, lattes, and mochas are all just powdered mixes. Even when I order my coffee, I don’t have the option of adding my own cream or sugar. Employees press a button that adds a set amount of cream; it’s the same thing, without fail, every time. All customers receive carbon-copy drinks.
Juxtapose these two anecdotes and what you get is two very different ways of doing business and, consequently, two very different customer experiences.
These two experiences, one personal, handcrafted, and individualized and the other brief, efficient, and quite detached, prompted me to start thinking about what consumers want from brands. Do people want a Starbucks experience (the tremendous commercial success of the chain might suggest they do), do they want a Tim Hortons experience, or do they want a Starbucks experience sometimes and a Tim Hortons experience other times?
And what about personalized marketing?
It seems like our society is inundated with people and businesses trying to offer customized, relevant experiences, some more aggressive than others. On the less-aggressive side of the personalization spectrum, we have things like Tailored Trends on Twitter, Genius on iTunes, and first names in emails.
On the more-aggressive side, we encounter things like targeted ads and Facebook Sponsored Stories.
I think it would be difficult to find someone who doesn’t prefer relevant information. However, oftentimes, a major part of receiving a personalized experience online is being tracked, targeted, and analyzed. Do people like this?
I turned to research, and here’s what I found:
People do in fact want personalized content. Emails that use individuals’ first names have higher click-through and conversion rates than emails that don’t. And according to HubSpot,
- 80% of mobile internet users prefer ads that are relevant to them locally.
- 62% of adults under 34 are willing to share their location to get more relevant content.
- Personalized campaigns consistently beat out static campaigns in generating response rates from recipients. (Source)
I recently read a post by Greg Ciotti on the KISSmetrics blog in which he summarizes a research study focused on restaurant tipping in which waiters offered mints to diners after presenting the check. In the control group, waiters did not offer mints to customers. In the first test group, waiters included mints with the check but did not mention the mints to customers; this group saw a 3.3% increase in tips. In the second group, the waiter brought the same amount of mints, but mentioned the mints and brought them out by hand; this group witnessed a 14% increase in tips. In the last experimental group, waiters brought out mints and then returned moments later to give the customers another mint, letting them know they brought out more mints in case anyone wanted another; this group saw a 23% increase in tip amount.
The researchers concluded that two components were key to the increase in tips: follow-up and perceived personalization. It wasn’t the mints that people cared about; rather, it was the experience they engendered. According to Ciotti, people love personalization, and they’ll pay more for it. Perhaps this is one of the many reasons behind Starbuck’s success, and one possible explanation as to why people willingly pay twice as much for a Starbucks beverage.
Yet, people have definite reservations when it comes to the more aggressive form of relevancy: targeted ads.
- Pew Research reported in March that 68% of Internet users view online targeted advertising negatively, because they don’t like having their online behavior tracked and analyzed.
- The majority of every demographic group says they are averse to online targeted ads.
- Additional research also confirms that the majority of people are against targeted ads: 69% of American adults feel there should be a law that gives people the right to know everything that a website knows about them.
What’s a business to do when people want relevant information but not necessarily the surreptitious tracking that comes along with such information?
I recently listened to a webinar on conversion rate optimization by Rand Fishkin of SEOmoz in which he talked about the connection between visitor intent and webpage purpose. If a webpage does something different than what people expect, that page will have a high bounce rate and low conversion rate. A business must align customer intent and webpage purpose. I think this overlap between people’s expectation and the products or services a business delivers is pertinent outside of websites; it’s pertinent in the day-to-day operations of businesses, small and large alike. Gauging and analyzing the intent, needs, and desires of everyday consumers (and perhaps in most cases that is personalization) and delivering on those is key for any business.