Arvind Rapaka

13 Sept 2021

Gartner Says Personalization Is Dead. Is It?


Gartner predicts that 80% of marketers will abandon efforts to deliver personalization by 2025. A very bold and controversial statement.

Looking at similar studies by other institutions gives a different picture.

A Boston Consulting Group (BCG) study found that 40% of shoppers spent more than they planned when the websites they visited were highly personalized.

In another survey conducted in the US, UK, and Canada on 3,000 shoppers, 63% have said they now expect personalization as standard.

Both the latter studies tell a different story to Gartner’s prediction.

Gartner cites two reasons for marketers giving up on personalization over the next five years:

  1. The challenges of managing customer data.
  2. A lack of Return on Investment (ROI) from their personalization projects.Let us take each of the above points and examine them closely

Managing customer data: Customer data is critical in executing successful marketing campaigns. However, most companies depend on legacy technologies for managing their data. Legacy technologies are not programmed to handle data issues such as unstructured data, unverified data, out-of-date information, or missing data privacy. However, the advent of big data and cloud computing has fundamentally changed how data is stored, received, and analyzed, making it is easy to manage customer data.

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At CartUp AI, we understand that the whole process can be harrowing for most medium and small-scale e-commerce companies. CartUp AI helps its clients overcome this challenge by combining big data technologies with our in-house developed algorithms and best practices to achieve a single, accurate and complete view of the customer across multiple sources for hyper-personalized recommendations.

Return on Investment (ROI): ROI for any project depends on how well the cost-benefits are analyzed. The same is valid for investing in personalization. According to a Harvard Business Review (HBR) survey, only 8% of companies adopting AI could harness the benefits from their investments. Most marketing executives think of personalization as a plug-and-play technology that will yield immediate returns. Adopting personalization alone doesn’t deliver ROI; a strategic approach is needed. Before investing in personalization, marketers need to ask the following questions

  • Why do they need personalization? 
  • What are their objectives? (Increased sales, higher margins, automation, customer lifetime value or customer relations, etc.) 
  • How do they plan to harness personalization? 
  • Do they have the right resources, including human resources, to harness personalization? 
  • How to implement personalization to fulfill the objectives? 
  • Establish metrics to track the objectives’ progress and, if necessary, have a plan for course correction. 
  • Personalization is a continuous process; it needs constant attention, resources, implementation, and adaption to realize ROI.

Other reasons that Gartner mentions for marketers giving up on personalization.

  1. The decline in customer trust, making it less likely that customers will share their personal data.
  2. Increased scrutiny by regulators.
  3. Tracking barriers erected by browser providers.
  4. Existing technologies are a significant hurdle to personalization.

Let us examine these additional points too.

The decline in customer trust: According to a survey by Accenture, 73% of the customers are willing to share data if there is transparency. The same survey goes on to say that 87% of customers want to buy from brands that understand their intent. So the lack of declining customer trust doesn’t lie with the customer but with the brands that use customer data for other motives.

Increased scrutiny by regulators: Regulators around the world are focusing on how customer personal data is used. There are strict penalties for violators, and rightly so, companies are apprehensive about dealing with customer personal data. A good personalization vendor can help companies overcome this challenge these regulations and ensure compliance.

For example, CartUp AI uses advanced encryption technologies to anonymize customer personal data in its AI-based product recommendations engine. It then combines the anonymized personal data with the behavioral data (clickstream data) for hyper-personalized recommendations. Fortunately, these regulations do not cover clickstream data.

Tracking barriers erected by browser providers: Browser technology companies such as Google, Apple, and Mozilla Firefox are limiting how cookies can be used by blocking the tracking of cookies or limiting cookies to just a week, making it difficult to track a customer for a more extended period. In 2017, Apple introduced Intelligent Tracking Protection in its Safari browser to stop the use of third-party cookies. Mozilla Firefox followed with a similar technology named Enhanced Tracking Protection, and Google plans to follow suit in 2022. Personalization vendors can help overcome these barriers.

For example, CartUp AI has evolved its software to deal with this cookie-less world with anonymous personalization, where clickstream data is the basis of personalized recommendations and not the information present in the cookies.

Existing technologies are a significant huddle to personalization: According to McKinsey, personalization can create $1.7 trillion to $3 trillion in new value. However, McKinsey also points out that companies need to master new technologies and address the disconnect between older and newer technologies to capture this value. Fortunately, good personalization vendors understand this and can help you traverse this disconnect.

For example, CartUp AI has successfully worked with many e-commerce companies that use a generation old technologies and platforms such as WebSphere to provide AI-based e-commerce personalization.

Personalization is not dead. It cannot be dead because personalization is central to great marketing. There are huddles, as pointed out by Gartner. Most of these hurdles can be overcome. In fact, many studies by the US census have shown that there is growing interest in personalization across different industries, from banking, insurance, travel to e-commerce companies.

— Arvind Rapaka, Founder & co-CEO
    CartUp AI

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