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Personalization – How much are you about your customer?

Goutham Belliappa

Amazon is often considered to be a master of personalization. One often hears about Amazon’s ability to predict and meet customer expectations with processes that have predictable operational efficiency. This is a significant achievement, and those processes are setting the standard for mass personalization.

The customer and retailer seems to be getting what they want, but there seems to be a dissonance with what they actually need to be happy.

Simple cross- and upsell recommendations on e-commerce sites are the very basic first steps. In fact, that kind of mass personalization is simply table stakes in the retail market. My question is: is it time to become much more customer-centric, create win-win, deeply vested relationships that turn customers into partners?

Maslow’s Pyramid is still a useful tool to better understand the hierarchy of needs of customers. Based on the work of psychologist Abraham Maslow, the pyramid is built on the assumption that people are motivated to achieve certain needs, and some of those take precedence over others. The most basic need is physical survival, with items like food, water, warmth, and the rest. It makes sense that it is our first motivation.

Maslow’s Pyramid is a classic representation of our needs. Thinking of our customer interactions along the continuum has helped create sticky and vested relationships between entities.

The goal of course is to reach the top of the pyramid, moving from customer or retailer to family, and from vendor or buyer to partner. This is the key to move from transaction-based relationships to vested partnerships within a family or ecosystem.

The challenge for all of us, whether we are a supplier or a buyer, is to aim to move from satisfying basic needs of consumption at the very bottom of the pyramid toward esteem and actualization by increasing the emotional connection.

So much of our commercial relationships seem to be based on consumption. Consumption is directed at the lowest level of the hierarchy. Consumption is also tied to the first of four basal Darwinian modulessurvival, reproduction (mating), kin selection, and reciprocal altruism. Like with Maslow, relationships with the highest value involve reciprocity and a degree of selflessness along with all the counter-intuitiveness that the highest gain comes when you give the most.

In discussing Darwin’s module 4 or level 5 of Maslow, I don’t want us to lose sight of the fact that we do place significant value on reducing friction to consumption. Some of the highest-valued companies, the unicorns, are in the business of reducing friction to consumption.

Today’s marketing technology, supply chains, e-commerce, apps, and recommendation engines all seem oriented toward the increase of consumption. Two important points that I keep in mind include

  1. We are irrationally motivated by our wants and needs even if those needs were unknown to us at the time.
  2. As Jens Kuerschner writes: The “manipulation of our decisions is the reason why marketing and advertising works at all. If this were not, almost any form of advertising would be useless.”

Most of today’s marketing technology, from data-management platforms to customer-data platforms, portals, and apps are oriented at increasing consumption without trying to understand the customer. Early adopters have had successes. Simple techniques of flooding mailboxes, pricing high, and applying or advertising discounts have a reactionary and often positive bottom-line impact

It is very easy to focus on consumption until consumption itself, as it always does, becomes the problem, as it has become with food. Today, there is as much money in selling food as there is in increasing the friction in food consumption. There are unicorns in every segment of food -consumption friction, from sugar-free sweeteners to diet-pills to exercise to imitation meat.

Consumption can be disrupted easily. Customers, like nature, are lazy and will find the path of least resistance to consumption and, like nature, are easiest to disrupt when another more efficient channel opens up.

The path to long-term growth lies in moving up Maslow’s Hierarchy and up Darwinian modules to reciprocal benefit. Reciprocal benefit requires a fundamentally different way of thinking, where the basis for acting requires a fundamentally deeper level of understanding of the partner (often called customer), their motivations, constraints, fears, drivers, and their unique situation and circumstances.