Barry Honeycombe, Principal Consultant, EMEA, FICO looks at personalization tools and prescriptive analytics needed to build customer trust and manage risk
In today’s noisy marketplace, irrelevant offers are frustrating and often undermine customer sentiment. When considering the rising cost of living and the difficult financial position many individuals now face, the wrong offer could provoke a customer to abandon the provider and switch to a competitor. To stand out from the competition, it is crucial to deploy pre-emptive, competitive, and attractive offers that are highly tailored to the individual’s preferences, needs and circumstances.
Personalization can mean many things, such as inserting the name of the client/ consumer to individualize digital marketing. The question is: is that enough to deliver a superior customer experience? The answer is no.
To optimize customer experience, marketers use instead:
- Hyper-personalization that leverages real-time data, historical data, behavioral data, customer data, machine learning, artificial intelligence, and AI-powered analytics to obtain a 360-degree understanding of the customer across all touchpoints.
- Prescriptive analytics that go beyond describing what happened in the past (descriptive analytics), what caused something to happen (diagnostic analytics), or predicting what is likely to occur in the future (predictive analytics) to prescribe specific actions that cause a desired future outcome.
With hyper-personalization more relevant than ever before, customers want their purchase preferences and changing needs to be known and understood at every interaction.
Hyper-Personalization: Win More with Less
Hyper-personalization may seem daunting, but it’s always worth the investment because every interaction with a consumer can build long-term loyalty and trust.
Doing it right means using customer data and rapidly delivering hyper-personalized, risk-aware offers that match customers’ needs and financial commitments at any given time via a channel that matches the customer’s preference to maximize the response rate on every interaction.
Making Every Interaction Hyper-Personalized
Prescriptive analytics, the combination of predictive science, decision rules, and optimization, enables organizations to:
- Create scenarios from a set of pre-specified objectives or constraints.
- Run optimization software to find the best strategy within those constraints and objectives.
- Analyse the impact of the optimal strategy on KPIs and understand any trade-offs.
- Convert the preferred operating scenario for portfolios.
Businesses can identify the next best actions to take by adopting this technology. At the same time, decision optimization technology enables firms to accurately forecast the impact and results of personalized marketing strategies.
What Obstacles Are in the Way?
Banks are particularly suited to adopting hyper-personalization because of their large customer bases and high amount of data per customer. This casts doubt over why widespread adoption has not yet taken place.
Deloitte commissioned a survey of more than 2,000 consumers which looked into this delay to widespread use. Overall, the results showed an array of reasons as to why banks are being held back. When asked if they think customers receive a personalized experience from banks, 30 percent agree while 26 percent disagreed. The most common response was neither agree nor disagree (39.3 percent), revealing a real opportunity for banks to step up hyper-personalization efforts.
To accelerate the process banks must:
- Harness the building blocks: Banks are sitting on a potential gold mine with the amount of customer data they hold. But access is still challenging due to legacy technology.
- Solve customer issues: Financial service providers often focus on selling products rather than meeting customers’ needs. This can lead banking services to be seen as unhelpful commodities, and damages customer trust.
- Increase consumer trust: Trust is built on integrity, benevolence, and competence. When choosing which data customers would share with their bank, 39 percent said location details. This indicates they are hesitant to give anything more personal.
Banks interested and capable of meeting the challenge of hyper-personalization will create a significant advantage over their competitors. They will also build that valuable commodity, trust, which has long been on the banks’ side compared to competitors, but is in danger of ebbing away as an increase in digital transactions levels the playing field.
