In Depth this week: Personalization Branches Out

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Personalization is expanding in two directions. It's broadening from static Web pages to include e-mail, multimedia and even voice messages. And it's moving past simple marketing functions into customer service and logistics.

The result is a growing number of ways that data can be used to support business relationships, improve business processes and help companies sell online.

Take Anderson Trucking in St. Cloud, Minn. Like many other trucking companies, Anderson offers a personalized Web portal for its customers to view the status of their loads and service availability.

But Anderson has extended personalization features to its independent truckers. The portal lets drivers track payments and receive alerts when loads are available for pickup at specific locations.

The tracking application runs over a wireless global positioning system that Anderson requires the drivers to install. Anderson uses the GPS data to create pages that track the location of its contractor-drivers while they're on the move--and then makes the pages available to the drivers' family and friends. The company also offers other online services to truckers, such as free Web e-mail.

This initiative is part of Anderson's overall strategy to retain high-quality drivers.

"There's a limited supply of good drivers in proportion to demand," says Anderson e-commerce manager Larry Weston. "So it's our job to make sure Anderson is the best company to drive for in the industry. Personalized Web content helps make that happen."

Since most drivers access the Web via kiosks in hotels and truck stops, the applications that Anderson offers the drivers don't require any client-side components. The company uses BroadVision's portal technology, which is hosted at local service provider Netgain Technology's data center. The hosted BroadVision servers pull data from Anderson's back-office systems over the T1 line that connects the two sites.

Acting essentially as an ASP, Netgain handles all configuration and support tasks for Anderson's BroadVision implementation.

Anderson's costs for this service include $3,000 per month for hosting the application, $1,500 per month for a support contract and about $200 per month for the T1 line. At slightly more than $56,000 per year, that's less than the cost of a single full-time employee.

The company paid just under $100,000 for the application software.

E-Commerce Link
On the e-commerce side, office supplies distributor Quill Corp. in Lincolnshire, Ill., is using a personalized e-mail campaign that makes use of customer data to encourage customers to buy online. As part of the project, Quill sends thousands of personalized messages every week that focus on a certain number of the company's 50,000 SKUs.

Quill distinguishes between customers who use the Internet, those who order exclusively from the company's print catalogs and those who use a combination of the two, says Lisa Iannuzzelli, the company's senior Internet marketing manager.

"By offering special discounts on orders placed via the Web, we are steadily moving more and more customers away from the print catalog," she says.

Such a migration results in two benefits. For one thing, orders placed on the Web are less expensive to process than those called or mailed in from the print catalog. Moreover, Quill's Web site can offer customized, value-added services, such as pricing alerts, that aren't available to customers who limit themselves to the traditional print catalog.

Like Anderson, Quill uses a service provider to make implementation easier and reduce costs. Instead of sending hundreds of thousands of e-mails from Quill's own servers, the company sends Excel files with the requisite text and images to Digital Impact, an online direct marketing services provider, which executes the mailing.

This offloads the voluminous data traffic generated by the e-mails, which would overwhelm Quill's own infrastructure. It also eliminates administrative overhead. Altogether, the use of Digital Impact's services reduces Quill's per-mailing costs by about 10 percent, Iannuzzelli says.

Interactive Multimedia
Dictaphone Corp. in Stratford, Conn., combines e-mail and the Web to create interactive multimedia sessions with customers that can be highly personalized.

With the help of multimedia authoring software maker Popstick, Dictaphone sends out personalized e-mails to customers and prospects, said Bob Qamar, Dictaphone's senior director of marketing communications. The primary purpose of the e-mails is to deliver a hypertext link, which in turn launches a brief multimedia presentation, hosted by Popstick, in the viewer's browser.

The multimedia session serves several purposes. First, Qamar says, it provides a more compelling presentation of what Dictaphone is promoting than e-mail or regular mail could. A major benefit is Popstick's creative multimedia authoring. For example, a presentation might feature a sci-fi character extolling the virtues of a software company's technology.

"They create material that's a bit more fun for the recipient than you usually see," Qamar says. "I think that goes a long way to improve the response rates."

The content of the Popstick session can also be personalized based on the recipient's profile. If, for instance, the campaign is promoting a seminar, recipients can be given information about the time and location in their specific city, rather than an entire list of national dates.

Second, by launching an interactive Web session, Dictaphone can immediately and more granularly track responses. If a recipient forwards the e-mail to a colleague, for example, Dictaphone can see that someone else has launched a multimedia session. It can also see whether recipients play the entire presentation.

Third, once Dictaphone has a recipient's browser open, it can direct the person to fill out an online reply form or offer a link to some other page on Dictaphone's Web site.

Bottom-line results for Dictaphone have been very positive. Whereas the typical direct mail campaign nets an average response of 2 percent or less, Dictaphone gets response rates of 20 percent or more to its Popstick mailings, Qamar says. The combined e-mail/Web approach also lets Qamar reach his targets more quickly than with conventional direct mail campaigns, which can take weeks to design, produce and distribute.

Until now, most personalization apps centered on using existing data in a customer relationship management (CRM) database to target and tailor content to specific users. But personalization can also be dynamic, says Kim Crossen, a project director at Veterinary Pet Insurance (VPI) in Brea, Calif. In other words, responses to customers can be personalized based on short-term characteristics, and on more fixed attributes such as location and purchasing volume.

VPI's RightNow Web eService Center software, from RightNow Technologies, sports "SmartSense," a feature that uses exclamation points, strong adjectives and other text cues to flag messages from particularly dissatisfied customers. When VPI's customer service reps see these messages they make them a top priority.

This use of personalization is central to realizing the full benefits that the technology offers, says Forrester Group analyst Paul Hagen.

"If all you're doing is some targeted marketing, you're really not accomplishing that much," Hagen says. "But once you start applying the CRM data you have across all the channels through which you communicate with your customers, you have the opportunity to really meet their needs. And that kind of competitively superior service is what's going to add to your bottom line."

Clothing retailer Norm Thompson Outfitters in Portland, Ore., takes this principle to heart by applying personalization technology to its outbound customer service phone calls, as well as to its Web site and e-mails. Using technology from CRM software developer Par3 Communications, the company can trigger automated voice messages to its customers, either confirming the shipment of their orders or letting them know that a certain item isn't in stock and will be delayed.

Rather than using artificial speech synthesis--which Steve Jones, marketing vice president at Norm Thompson, says is less appealing to customers--the app uses pieces of natural human speech that have been recorded and then electronically spliced together for a more natural-sounding message.

All of the information that is required for calls to the company's customers--such as clothing styles, sizes, colors and dates--resides in the Par3 call creation system.

Calls are created using transaction data that's sent to the Par3 system from Norm Thompson's order entry application. The data is sent using an XML transfer technique. A customer can automatically receive a phone call saying, for example, that two of three ordered items were shipped Tuesday via UPS, but that the third item is back-ordered until next Monday.

This is very effective for the large numbers of customers who either don't have an Internet connection or don't care to do business with the company via Web or e-mail connections, Jones says. It also provides substantive operational advantages for Norm Thompson. For one thing, proactive calls reduce the inbound call volume to the company's call center.

"Every call that a human operator has to take reduces your margin on the sale," Jones says. He estimates that each Par3 call costs the company 25 cents, vs. $3 or more when an operator handles a customer query.

Reducing incoming call volume is particularly important during the holiday season, Jones says, adding that it's often difficult for companies to hire qualified operators to ramp up for a few weeks of peak load. The automated call system lets Norm Thompson manage peak holiday loads without the usual scramble to scale up its staff.

The Par3 system is also important to the company's customer service strategy.

"Today, if we're out of stock on an item, we can let the customer know by mail or by a phone call," Jones says. "But that can take days, and if they've ordered the item for Christmas or someone's birthday, we may not leave them enough time to buy something else."

With the automated phone call, on the other hand, Norm Thompson can alert its customers to a potential back order within hours. And, using interactive voice response, the customer can be given the opportunity to cancel the order, leave it as is or select something else.

Turning to outside service providers to support a personalization project offers advantages in time to market and ease of deployment. But it also has security implications, especially when companies are handling sensitive customer data.

That's why e-business managers need to seriously review their service providers' security measures. They can also take precautions to protect themselves. In the case of Norm Thompson, customers' credit-card numbers simply aren't included in the data transfers that are sent to Par3.

Another important issue is whether companies are really prepared to take advantage of the flexibility and programmability that today's personalization tools offer. For all of the new features to serve any real business purpose, e-business managers have to come up with business rules that make sense.

Remington Arms e-business development manager Ned Moore, for example, is happy to have RightNow Web's SmartSense emotional content monitoring, but he still isn't certain what to do with it.

"Do we always want to prioritize an angry customer who doesn't have any purchase history with us?" Moore asks. "Or does someone who has spent a lot of money come first, even though their inquiry might not seem so urgent?"

Other questions to consider: How big a change should take place before an automated message is sent? How long must an account be inactive before it's flagged for some special action? Can CRM data be used to determine whether any given customer is particularly interested in a specific set of products or is more of a bargain shopper?

"Effective personalization is not a technology issue, it's a business issue," Forrester's Hagen says. "Most companies still aren't building CRM data that fully captures the behavior of their customers across all their channels. And without that data--or a clear idea of what to do with it--you're not going to be able to accomplish a whole lot with personalization."

E-business managers should consider exactly what they want to accomplish with their personalization initiatives before buying new technology.

The technology already has proved its ability to treat customers as individuals, even as it automates communications and interactions. But without sensible business rules to drive those interactions and good CRM data on which to base those rules, the return on personalization investments will remain limited.