Reduce customer choice to reduce customer pain.

Most marketers would argue that choice creates freedom, and on the face of it that’s a good thing. They’d further suggest that an increased freedom of choice is a shift in the consumer choice paradigm. A change from power being in the hands of large companies, to the minds of consumers. Forcing companies to create more and more products to meet individual brand demands.

More choice is what consumers may feel they want, but is it in their best interests? As society moves into its fourth decade since commercialisation of the internet, we’re starting to understand the negative effects of consumer cognitive overload which resulted from an unprecedented influx of information. Too much choice is starting to become damaging.

Companies like Amazon and Spotify go to great lengths to manage their customers’ experiences, mitigating through constantly testing customer’s experience, mitigating any choice anxiety. They do this through constantly testing their audiences, using personalisation to curate choices, and reduce cognitive overload to provide their consumers with the best possible experience. A secondary benefit of this initiative is that they are able to test and aggregate results of new curated offerings, leveraging their own customers to evolve their product offering. I will touch on how these companies accomplish this below.

Personalisation can play a key role in choice reduction.

By using customer data to determine consumers’ individual preferences, companies need only present a handful of choices to broaden their appeal. This will inhibit choice paralysis for customers and lead to greater conversion rates. Unfortunately though, I have observed that a number of businesses still struggle with personalisation. This has led to many failed personalisation initiatives, reducing leaders to view it as nothing more than a buzz word. Personalisation can help companies reduce choice for growth, the key to successfully implementing a personalisation strategy is understanding where personalisation is appropriate and the value it will create for the customer and the business.

When Steve Jobs entered his second stint at Apple, he famously reduced Apple’s product offering by 70%, a move considered by many to have saved the company. By reducing product lines that were not providing value and confusing customers, Apple reduced customer’s choices to only those products which offered higher perceived value, simultaneously increasing the value perception of the brand, whilst reducing production costs. Jobs’ strategy was to produce only four products: one desktop and one portable device aimed at both consumers and professionals. Jobs reduced choice, but he also reduced the amount of personalisation available by building products and software around Apple’s famous closed ecosystem. This meant that personalisation was not appropriate in Apple’s strategy, as customers are made to feel good through service and design instead. The point I want to make is that personalisation is not always appropriate for your business, however choice curation can still have a place.

Given our understanding that both customers and businesses benefit from reducing choice, and that personalisation can play a big part in this if it aligns to the business strategy, I have presented three key issues surrounding personalisation programs from experience working with large enterprises. For each issue I have highlighted an example solution:

Businesses are often not used to offering personalised product offerings and struggle to justify the investment needed to deliver such innovations, negating to agree value up front.

Solution:

Amazon add recommendations at every stage of customer interaction, onsite and via email. In this case it is easy for Amazon to understand the revenue uplift from a personalisation message as they compare average basket sizes, and customers who bought a similar item.

To start with, it’s important that businesses are able to link and articulate how improving customer experience is a value creating exercise in order to secure ongoing investment. Begin with linking personalisation initiatives to the strategic outcomes your business is aiming to achieve. A useful way of doing this is by creating and agreeing on a value driver tree. The value driver tree is a type of diagram used in value modelling. It’s basically a picture of the ‘gears’ or ‘value drivers’ that power a business.

Figure 1 shows an example value driver tree that is used to articulate the value of personalisation within the business. It details the value outcomes which are aligned to expected business outcomes. These flow through to the agreed objectives of the personalisation program. The value drivers are high level initiatives or team objectives which can be tackled in order to deliver objectives. These drivers are also aligned to the metrics the company are seeking to improve and that would highlight leading indications of value creation.

Figure 1

It goes without saying that businesses must know their customers, but this understanding must be particularly strong when it comes to innovation. Executive intuition is a great starting point, but in today’s market consumer preferences and expectations change rapidly. Many companies fail to collect and make sense of the vast customer insights available to them. This makes decision making less customer-focused and as a result less effective as companies struggle to bring relevancy to their value propositions, and rely too heavily on trusted intuition, until someone else becomes more relevant.

Solution:

As a mature company in the personalisation space, Spotify have automated customer insight capture and use it to personalise choices in real time. This acts as a hugely scalable feedback loop where customers augment the product. Figure 2 shows an overview of Spotify’s personalisation pipeline.

Figure 2

Spotify are at the stage where choice reduction and curation via personalisation is as much part of the product as the music it streams. Their personalisation infrastructure is truly impressive, but comes at a large financial cost (which they can justify — step 1). For example, song metadata is combined with play logs to understand similarities in artist choice amongst customers. When Customer A streams, the model clusters them with likeminded people and uses the behaviour of their fellow cluster club members to predict Customer A’s preferences, offering curated suggestions.

For companies who want to start smaller, I recommend first categorising your product offerings, then give these categories context from a customer experience perspective. For example, a car manufacturer I have worked with categorised metadata to personalise car configuration recommendations. They found that customers who fitted specific profiles were more likely to prefer a number of models in a certain colour. Through bringing context to colour metadata, they were able to sell more of the preferred class of vehicle simply by displaying the colour first, then highlight suggested configurations. Effectively curating the customer’s choices for them.

Bringing meaning and context to metadata from a customer perspective can be tricky, and the connections are not always obvious. Therefore I recommend bringing customers into the context-building exercise. For example, Spotify enlisted customers themselves to add and update song metadata. Spotify users wanting to add their opinions had to complete a number of surveys testing their music knowledge and indicating the music they like.

Many companies are still using out of date digital operating models that lacks agility, provide confusion over the custodian of the customer (Clue: it’s everyone), and lack an appropriate customer focus. Additionally, businesses often do not bring the right focus to the initiative, lacking dedicated and empowered owners.

Solution:

Businesses should create their own personalisation platform by investing in the right technology and licences to suit the scope of their program.

It’s important to note that the personalisation platform does not simply include data and technology, most importantly, it involves mobilising the right talent and skill sets. To quickly build maturity in personalisation, and activate scale, it is imperative that businesses assemble and empower a personalisation team. An example of a best practice team setup is shown in figure 3.

Figure 3

I recommend the core team include at least one owner from each of the disciplines of data, technology, and customer experience in order to incorporate all of the skillsets required to ideate on and kick off a great personalisation experience. It should be led by a personalisation product owner to steer the team.

The product owner will do this by liaising with the extended team and steering company to ensure alignment with the wider business as well as alignment with overarching strategic goals. The personalisation product owner’s goal is to chase the value which has been previously identified.

Businesses often struggle when re-starting their personalisation program, which means that momentum and confidence in the program is lost before it has time to prove value. With a documented lack of skillsets in market, businesses also struggle in building their personalisation team. Businesses who persevere with their personalisation initiatives in the short term can build unique value and rise to the top of the customer experience game.

The time to start is now. When technologies take away any complexity and skill sets become abundant, then competitive advantage will be lost. This is even more important in the current pandemic, as companies who know their customers best will be better suited to avoid crises and better prepared to attain growth when markets pick back up.

In the early days of personalisation, teams set about building programs based on heavy customisation and a great deal of manual execution. Costs were therefore higher then, but even so companies still exeperienced a great deal of positive ROI. These days there is a plethora of platforms which help you accelerate your initiatives, taking away the pain and cost of having to build custom solutions. The time to act is now, while competitive advantage is still available.

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