Issue 16: Personalization is tricky business

July 26, 2019

This week, we're diving into personalization. We'll start by looking at how companies can convince consumers of personalization's value, consider how to balance personalization with data privacy concern, look at personalization in a range of industries and close out by considering ethical concerns surrounding this rising trend.

Then, we'll look at to ensure innovation labs are successful, look at how texting has changed grammar, and learn about leadership from Megan Rapinoe.


Focus: Personalization and Personal Information

While many consumers are skeptical about companies' handling of their personal information, they remain interested in the benefits of personalization. As the New York Times' ongoing experimentation with personalization (which, after previous limited experiments with personalization, is now a full feature called "For You" in its iPhone app homepage) proves, everyone thinks personalization is key to keeping customers engaged.

With this in mind: how can companies convince customers of personalization's value and overcome data privacy concerns?

HOW IT WORKS

Personalization technology uses insight based on users' personal data, along with behavioral data about similar individuals' actions, to deliver an experience to meet specific needs and preferences. Personalization technology creates unique experiences for consumers and can increase cross-selling, upsetting, overall conversation rates, shopping cart value and consumer loyalty.

891d3be4-9252-4d73-b2ea-38e54f35593e.jpg

ETHICAL CONCERNS WITH PERSONALIZATION'S RISE

Some observers argue that there are both "extreme promises" and "extreme risks" with AI. In a post on the medical student blog in-Training, Sidney Kimmel Medical College student Kelley Yuan raises ethical dilemmas in personalized medicine. In a 2019 survey, fraud prevention and security company RSA found that only 48% of consumers believe companies can ethically use their data for personalized advertising; in response these concerns, California passed the California Consumer Privacy Act, often referred to as "America's GDPR," in June 2018. 

Applications of personalization have had mixed results. In the case of personalized learning, companies' track records are decidedly mixed. In the news space, personalization has been found to lead to serious ethical risks that should worry content creators. Sony's Aibo — a cute robot puppy that learns from its owner's behavior — gathers enough user data to make many skittish. Similarly, concerns about just how much Alexa and Google Assistant are listening in to users have made headlines.

PERSONALIZATION ENCOURAGES DATA AVAILABILITY

In a survey of 1,012 U.S. consumers ages 18-70 who had purchased online in the past six months, McKinsey's Phyllis Rothschild (co-head of the loyalty service line), Julien Boudet (North American lead of the marketing service line) and Gadi Benmark  (an expert in digital marketing and personalization) found varying degrees of concern about brands tracking users' activity.

While tracking content consumption, purchase, online searches and opt-in wristband (e.g., Fitbit) usage wasn't particularly concerning to consumers, allowing algorithms full-text access to emails, the use of facial recognition in physical stores and voice recognition devices listening in while connected to homes raised more concerns.

Importantly for companies, the researchers also found that as personalization's benefits become more attractive for surveyed consumers, the level of concern about privacy declines. For many consumers, individualized pricing or free products or services assuaged their data privacy concerns.

HOW TO BALANCE PERSONALIZATION WITH DATA PRIVACY


Penny Gillespie, VP Analyst at Gartner, says, "Organizations are losing their best changes to create great customer experiences due to needly risk-averse privacy ideas that limit the use of personal data. The key is to bring value to customers and keep data use in context." Thus, Gartner suggests eight steps to help companies mitigate risk while driving revenue.

PERSONALIZATION YIELDS MAJOR RETURNS

Done right, personalization rewards companies that do it well. Here are a few examples of how personalization is changing the future of a range of industries:

Disneyland is tracking guests and generating big profits doing it

By Targeting Each Patient's Unique Tumor, Precision Medicine Is Crushing Once-Untreatable Cancers. But Only a Fraction of Patients Currently Benefit. Can Medicine Close the Gap?

Hippeas Creator Turns from Puffs to Personalization with Buddy Nutrition Launch

How Personalization Has Shaped Media Over the Past Decade

Recommender Systems for the Department of Defense and Intelligence Community

The Future of Personalized Beauty Lies in the Tech Industry

Personalization in Travel Marketing: Moving Beyond the Buzzword


Extended Reading

Why Innovation Labs Fail, and How to Ensure Yours Doesn't

We've previously written about how innovation labs are one of a number of archetypes for corporate innovation. For those who go the innovation lab route, HBR has some useful tips to help ensure that your innovation lab is successful. Using your innovation lab as a "cell of innovation," often driven by intrapreneurs, is the key.

Hiiiiii! THIS is how texting has changed grammar & the way we communicate

In the latest video in his The Language Files series, YouTube Tom Scott takes a look at the nuances in digital communication and how they've widely come to be accepted at the norm. He starts with capitalization: while it can help make paragraphs easier to read, it doesn't serve the same function in digital messaging, which is designed for brevity. 

In the rest of the video, he takes on the meaning of all-lower-case (either a laid-back attitude or deadpan humor), why we repeat characters in texts ("hiiii"), why we use question marks to denote uncertainty and why question marks aren't used to denote rhetorical questions.

Megan Rapinoe: How a 'Radical Individualist' Led The U.S. Women's Soccer Team

As companies flatten and abandon "command-and-control" strategies in favor of moving to less hierarchical organizations, "peer" or "lateral" leadership is becoming a critical leadership technique. Competitive athletes — such as successful Team USA co-captain Megan Rapinoe — have much to teach corporate leaders about leading one's peers.

Subscribe to Innovation Monitor Here