‘Personalization Is The New Loyalty,’ Says Neiman Marcus VP
by Ernan Roman
Jeff Rosenfeld is the vice president of customer insight and analytics for The Neiman Marcus Group, where he is responsible for leveraging analytics to drive revenue. His team focuses on personalization, web analytics, media-mix attribution, product and customer insight, and business intelligence.
While not at work, Rosenfeld serves as a board member for charity and academic institutions, is an instructor for the SMU CAPE Digital Analytics and Insights Certificate Program, and enjoys traveling with his family.
Rosenfeld recently participated in our “4 Questions for Marketing Innovators” series. As you’re about to read, his topic of choice was very timely.
1. What is one marketing topic that is most important to you as an innovator?
Personalization is a hot topic these days, but in a recent RIS News study on who does it best, “no one” was a top-ranking answer. This pains me to see as I know at Neiman Marcus we’ve done a lot of great work in this space and driven substantial incremental revenue as a result. That said, when we put ourselves in the customer’s shoes, most of what the entire industry is doing today doesn’t feel that personalized yet. On the bright side, this means there is substantial opportunity here to improve the customer experience.
2. Why is this so important?
Traditional loyalty programs have gotten a bit stale. Personalization is the new loyalty. Ironically, it was probably also the first form of loyalty between shop owners and their customers even thousands of years ago. As the world has gotten more digital, the personalization from a top sales associate has gotten harder to replicate.
Neiman Marcus is a 110-year-old brand with a legacy of great service and personalization. For most of that time, personalization has been primarily driven by our world-class sales associates. Our best sales associates do three things: They observe what customers say and do, they act on that information, and they remember those observations over time.
In the digital world, observing and remembering is easy. This is data collection. Acting on that data is the hard part. This is where the algorithms come in. The first step in acting on the data is having solid identity information. You can’t personalize if you don’t have a complete picture of how each customer interacts with your brand. Identity information generally comes in two flavors: people we probably know (probabilistic) and people we definitely know (deterministic).
Most of today’s personalization for the entire industry is in the probabilistic bucket. At Neiman Marcus this includes machine-learning-driven actions, like product recommendations, private personalized offers, and working with partners like Coherent Path to help determine which of millions of possible combinations of email content will be most appealing to each customer. While these are critical to improving the customer experience and driving revenue, the average customer doesn’t realize the extensive curation the algorithms do on their behalf. As a result, most people don’t “feel” the degree to which their experience is personalized.
This is where the deterministic bucket comes in. Only when we can confidently link specific behaviors to unique individuals can we execute personalization that customers clearly realize is truly just for them. Beyond the basics, like cart-reminder emails and display remarketing, Neiman Marcus is doing things like remembering customers’ filter preferences across sessions and our “quick links” predictive site navigation from email.
3. How will this improve the customer experience?
Personalization improves the experience by making the entire journey, from initial exploration through post purchase, much easier. We like to call it “friction reduction.”
Quick links is actually a good example of initial progress on this front. It was born from the insight that most customers open email on their phones, which make it difficult to navigate and quickly get deep in the site. My team built a machine-learning algorithm to recommend three unique links for each customer to help them quickly navigate to where they are most likely to visit but also be so clearly personalized that customers would have no doubt it was custom for them. This is only the beginning, and I truly believe that the largest benefits to both us and the customer will come from further expanding this “explicit” personalization track.
4. How will this improve the effectiveness of marketing?
Marketing effectiveness is essentially a ROI calculation. It can be improved by increasing revenue relative to the associated costs. Great personalization helps drives a virtuous cycle of loyalty in which the customer is engaged, provides data that improves the personalization further, which increases customer engagement, and so on. As loyalty improves, revenue goes up. Generally speaking, marketing to loyal customers is more profitable than spending elsewhere.