Study: Email favored for personalization, but ROI metrics are elusive

Email reigns as the go-to personalization tool, especially in North America. The problem, though, is ROI metrics.

Email ranks only sixth in delivering ROI with personalization, although that may be because it’s difficult to measure, according to The Age of Personalization, a survey by Harvard Business Review Analytic Services, sponsored by Mastercard.

North American companies lead the way, with 56 percent using email for personalization, compared with 47 percent in Europe and 42 percent in Asia-Pacific.

The second-most-popular tactic is product offerings and recommendations, used by 54 percent in North America, 56 percent in Europe and 44 percent in Asia-Pacific.

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Social media is fourth, just behind the in-person customer experience. Among North American firms, 46 percent use social platforms, compared with 50 percent in Europe and 39 percent in Asia-Pacific.

However, only 21 percent say email delivers the highest ROI on personalization, and 12 percent expect it to do so by 2010. It is tied on current ROI with pricing strategies (e.g., dynamic pricing online) and social media. Those tactics beat email on ROI expectations for 2020.

In contrast, 39 percent say product offerings and recommendations now deliver high ROI. That’s followed by in-person customer experience (34 percent) and online customer experience (22 percent).

Email’s poor showing on ROI could be because a small minority can “calculate return on investment for specific personalization tactics,” the study notes.

Specifically, “about a third say they can do so or the in-person customer experience, product offerings and recommendations, and pricing strategies,” the study states. “Only about a quarter or less can do it in most other areas, including marketing via email print, and events.”

Of those polled, 56 percent say they are at the table stakes stage, or starting point, “whether they’ve personalized their own activities in that area or not.” Email tops all other channels, including print media and social media, with 47 percent apiece.

In addition, 49 percent say email marketing is a top personalization focus today, second only to product offerings and recommendations (52 percent). However, a mere 26 percent say email delivers a competitive advantage versus 35 percent for social media.

At 47 percent apiece, technology and health care companies are the sectors most likely to deploy email for personalization, and financial services slightly less so. Still, those groups are more prone to use product offerings and recommendation as a personalization tactic, followed by the in-person customer experience.

Of the firms surveyed, 25 percent say personalization has increased their revenue from 7 percent to 10 percent, while 13 percent report it has risen by 10 percent to 24 percent and 6 percent say it has risen by more than 24 percent. Another 32 percent have seen no increase.

The survey also found:

• Ninety percent say customers expect them to know their interests and anticipate their needs.
• Eighty percent say personalization is crucial to their corporate strategy.
• Over 50 percent feel personalization is an important contributor to revenue and profits, and 81 percent say it will be so in 2020.
• Fifty-four percent say their firms place high priority on investing in personalization.

HBR surveyed 625 respondents from its readership pool.

A version of this post first appeared on MediaPost.

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