Marketing 2020: A shift from loyalty to relevance

In a landscape that has brands worldwide revising their advertising and marketing budgets annually, it stands to reason that the “how much” has become less relevant than the strategic direction for the hard-won budget.

According to Mary Meeker’s 2019 Internet Trends Report, digital ad spend is up 22%. While it’s not shocking that we spend far more hours looking at our devices than any other ad vehicle, Gartner confirms that spending on ad and marketing technology has never been higher, accounting for a tremendous 29% of the total marketing budget, making it the single largest area of investment. The most likely reason? An endless need to improve personalization and relevance in advertising.

Marketers have long preached personalization as the future-proof way for businesses to engage with and retain customers, so what’s powering the move toward relevance? The digitization of everything, according to a recent Harvard Business Review article.

Customers now have access to endless information and have more freedom to move between brands than ever. It’s not that loyalty is unimportant — loyalty still matters, but it no longer can be bought simply with rewards or discounts. Today, any brand has access to advanced cloud-hosted data analytics platforms, and consumers know it. When analyzed properly, the data can be a lens through which brands can better understand its customers’ wants and needs, right down to the individual level. And thanks to mobile, it has a channel through which to meet them.

For example, as a full-service mobile engagement agency, we have found a lot of success in maximizing engagement and relevancy through SMS text messaging, MMS messaging and emerging RCS messaging. These channels can be integral for sending messages directly to customers in personal ways and in secure channels they already trust and use daily.

Digital marketers value personalization due to its ability to tailor specific messages to individuals based on their preferences, which unsurprisingly triggers sales conversions. This can be as simple as addressing them by their first name or even sending a communication on their birthday, empowered by just two data points — name and date of birth.

Today’s advances in technology, coupled with the need for enterprises to use messaging to improve customer service and marketing functions, are improving the uses of personalization and messaging to deliver customer engagement — not just at the end of the sales funnel, but throughout the customer journey.

Options for brands to communicate with consumers used to be limited to just a few channels, with a heavy dependency on email, until recently. While email has its benefits — primarily ubiquity and low cost — it also proves very low engagement in marketing and advertising, with an average industry open rate of less than 19%, and a click-through rate under 3%. And the failure can’t be blamed on content quality: Across the board, almost no industry can boast an open rate of much more than 20%. Clearly consumers are fatigued, likely by the sheer volume of baseless ads brands deliver through email, delivering a massive opportunity for brands that are ready to explore less conventional methods for reaching and converting consumers.

Recently, one of our clients, a U.S.-based mobile carrier, moved away from its traditional welcome email for new customers — a run-of-the-mill note containing information about how to set up the new phone, how to buy extras (like insurance), and who to call for more help. Results from the old-school email were unremarkable, driving the brand to experiment by sending each new subscriber a video over the mobile messaging channel directly to their mobile device. The video was personalized based on the individual’s specific device, data plan and account setup information, and the results were incredible: a 98% open rate and a total transformation in terms of reduction in early churn.

Over the subsequent months, the carrier sent more Multimedia Messaging Service (MMS) messages at highly strategic moments in the customer’s lifecycle. Each message addressed the individual subscriber with offers tailored specifically around their usage and behavior. Churn fell by 20%. The program delivered tens of millions of dollars in saved revenue. In this case, video literally killed the email message, proving that the audience preferred to watch a personalized message versus reading it.

Consumers value personalization: According to McKinsey, 72% of consumers expect a business to recognize them as individuals and know their interests, and 76% are frustrated if that doesn’t happen! Historically, what passed for personalization was very basic. Now, true personalization is achievable via innovative platforms that plug into an enterprise’s CRM system. Not only do they result in data that helps to reveal relevant customer insights, but they also allow brands to create more compelling connections.

Consider this: A brand with 2.5 million opt-in customers can send 2.5 million different personalized videos via messaging. And the options are as diverse as the data captured by the brand. In fact, brands that layer additional third-party data can achieve next-level relevance in the eyes of their customers.

Savvy marketers strive for one-to-one personalization. Delivering highly relevant messages in the form of offers, etc., represents a golden opportunity to cement consumer relationships, driving increased loyalty and, ultimately, sales. But the opposite is true, too. Brands need to be extremely thoughtful about how they personalize their content, or they run the risk of irritating customers or, at worst, creating the impression that their personal data is being misused, resulting in alienating customers.

As technology continues to deliver more opportunities for connecting with customers, now is the perfect time for brands to investigate new opportunities, such as mass personalized messaging on mobile. As a medium, MMS is very well-established in the United States and is showing growth in global markets. The future promises even more possibilities, with richer messaging services just on the horizon, that will add features like video, maps, payment screens and coupons within messages. But regardless of the richness of content, it’s vital that brands are aware that they must strike the right balance with the data they use. The era of relevance is coming and the cost for any brand that ignores it? Irrelevance.

Article originally featured on Forbes.