The Reach vs Effectiveness Dilemma

Personalisation is a key tool in delivering value for many organisations. Many have found that they are more effective in reaching their customers when they utilise it. As a consequence, we should aim to do more of the same.

Here is a simple visualisation of the relationship between personalisation and effectiveness:

However, it is important to remember that as we become more specific in our efforts to personalise, we are effectively reducing the reach of any activity. The more we divide our customer base the lower the population there will be in each segment. Here lies the dilemma with personalisation. This specificity is the reason for its power, but also its weakness. The better our level of precision in describing our audience, the better our ability to communicate to them. But the greater the precision, the greater we are distinguishing the targeted audience from the rest of our customers. We might be more effective in reaching the former, but there will not be many like them to reach.

Given that we all have finite resources to power personalisation, it is vital that we find the perfect balance between effectiveness and reach.

Two possible ways to maximise business value through this balancing act are:

High value audiences

Discover and reach out to audiences that have high volume and high conversion rates. We should lean on data science to help us achieve this goal. To help with conversations with data scientists, here are some fundamental approaches to segmentation.

• Class probability estimation aka Classification
  Is a customer likely to respond to our New year offer?
• Value estimation aka Regression
  How much will customer use our app?
• Profiling
  What is the typical online streaming pattern of an audience?
• Clustering
  Do our customers form natural groups?
• Similarity matching
  What other groups are similar to our best customers?
• Causal modeling
  Did the banner on the homepage lead to greater sales of our new product?

Being diligent in your audience selection should help you select the right audience to target so you can optimise the business value of each marketing activity.

Scale personalisation activities

Explore ways to be efficient in discovering and delivering effective experiences to your high value audiences. This means streamlining your operational models, improving your communication channels, managing your resources, etc. Boosting your efficiency will allow you to deliver more activities, thus enabling you to narrowly define your audiences. This will in turn improve your effectiveness.

The beauty about the 2 approaches is that they need not be mutually exclusive. The former deals with the audience selection, the latter is about process improvements. Both can go hand in hand.