Introduction

THE PIZZA CHALLENGE

Art Sebastian had a problem. The affable, Chicago-born VP of Digital Experience at Casey's convenience stores joined a team on a journey to transform the company into "a more modern, contemporary and digital brand" - one that recognized each guest as an individual with their own preferences and needs.

"With retailers in the digital era, what consumers want is more relevance," he said. "They don't want marketing that goes to everyone but rather relevant promotions, messages that speak to them as individuals."

The problem? In a word: data. Not a lack of data, but a lack of connection, organization, and accessibility. A frustrating inability to create a customer profile that can be used to deliver a seamless digital experience.

"We had made some good progress," said Sebastian, "but with the progress, we accumulated more data. We have a website and mobile app that collect purchase behavior. We collected pizza orders in one system and loyalty in another. We spent a lot of time thinking about how to unify these multiple data sets."

Casey's logo is well known across the Midwest and the South, boasting 2,200 locations in 16 states and counting. It has a customer base devoted to its heart-of-the-community convenience stores, which are famous for comfort foods, like the tasty Taco Pizza, and friendly staff that treat you like their neighbor.

"Half of our stores are in small towns with a population of 5,000 or fewer," said Sebastian. "We really play a central role in those towns. We're the grocer, the restaurant, and the place where people meet. We support the local high schools and nonprofits some of the area's bigger companies don't focus on."

Like many retailers, Casey's aspired to deliver a better digital experience to its guests, one that paired relevant promotions with the soul of the brand. "When you look at all the things that people love about Casey's," said Sebastian, "it's authentic to be friendly and relatable."

Pulling insights from his customer research team, Sebastian knew that most customers actually bought the same or similar items every time they dropped in or ordered online. This was particularly true for pizza buyers, who nearly always bought the same pie.

What would happen if Casey's could personalize the emails to customers based on their pizza preference? Specifically, what if they could put an image of the customers' usual choice in the email, rather than the generic pepperoni they'd been using?

The challenge: Casey's email system was not integrated with its point-of-sale system. This mattered because it was not possible to know what a person's preference was without the point-of-sale data, showing what they bought. Lacking a connection, the email system could not personalize the message or offer.

"There was a lot of data stitching," said Sebastian, "but we did manage to do it."

His team ran a test in email using different pizza images, all featuring $3 off a large pie with a promo code. The image selected was based on the most recent pizza type each guest had purchased.

The results? There was a very significant 16% lift in conversion rate compared to the previous generic image.

"It feels almost silly to be talking about this in a world where people are doing so many sophisticated things," admitted Sebastian. "But we've been able to build on it for other initiatives, like better default settings on the website. Everything improves as we're able to hone in on the guest more and get more personalized."

Personalization works. Casey's story is repeated dozens of times by many customers we've met, and doubtless thousands of others across the globe. The value of relevant, personalized communication cannot be overstated and companies who don't provide it risk seeing their response rates decline and more organized competitors - or nimble startups - eat their pizza.

Although results vary based on factors such as the industry, product, and starting point, studies show that using key customer data - such as product purchase history, in Casey's case - to build more personalized messages yields results. For example, conversion rates on e-commerce websites rise an average 15-20% and engagement rates rise 30% after implementing better personalization. Personalized emails have at least a 6% higher open rate. Targeting ads on social networks based on website visits can increase click-through rates by a factor of two. Multiple studies estimate going from large segments to more one-to-one targets - even in a simple, incremental kind of way - quickly raises average customer lifetime value 20% and engagement rates 30% and more.

How do consumers feel? Our research shows that they not only tolerate but actually expect some level of personalization from brands. Salesforce runs a number of global surveys each year, enlisting thousands of consumers and marketing leaders around the globe and across industries, including business-to-consumer (B2C) and business-to-business (B2B) buyers and practitioners. These surveys, compiled into detailed annual reports, tell a compelling story of empowered consumers and marketers battling to keep up with their demands.

As should be obvious by now, customers are increasingly willing and able to move their business when a brand lets them down; they are in control. Across the globe, we see customers exerting their power in reasonable ways, demanding better products and services, and above all better experiences, built on data. Starting in 2018, 80% of customers told our researchers that the experience a company provided was as important as its products and services. And even more (84%) said that some level of personal treatment was key to winning their business.

Defining concepts like "personalization" and "1:1" is not as easy as it seems. But it is clear from the data that at a basic level, personalization requires different brand channels to behave in concert. According to our "State of the Connected Consumer" report, 69% of customers say they expect "connected experiences." They believe that behaviors and preferences expressed in one channel should be reflected in others; that they won't have to enter the same data twice, and so on. The same report showed that 57% of consumers said they had already stopped buying from a brand because a competitor had a better experience. Loyalty is an increasingly fragile asset.

Loyalty to consumer brands continues to decline, as the importance of in-the-moment experiences outweighs brand equity (or the psychological-emotional value of a logo). The consultancy Interbrand, which tracks changes in brand equity over time, showed the average equity of consumer product brands (e.g. Coca-Cola, Pepsi, Kellogg's) declined by 4% in recent years, and retail brand equity declined further. (The study was done prior to the impact of COVID-19.) Meanwhile, equity in the big four platform brands - Google, Apple, Facebook, and Amazon - went up almost 10% in the same period.

Why do proprietary ecosystems such as Facebook and Amazon see their perceived value climb while traditional brands suffer the opposite? In part, because these platforms have a personalization advantage. They treat a universe of mostly logged-in, repeat users, about whom they have amassed a deep data file. For example, Facebook and Instagram see about three billion monthly active users globally; and, astonishingly, more than half of those users access the platforms every day. About 62% of US households are members of Amazon Prime, and they spend an average $1,400 per year.

Having more data, these platforms can provide more personalized marketing and experience on channels such as websites and mobile apps. Greater personal depth yields a beneficial flywheel effect, as experiences yield data and loyalty, which increases over time - even as competitive brands, who generally lack the customer data and the ability to personalize, fall behind. Research shows, for example, that Amazon's product recommendations, based on greater customer-level information, perform about 2x better than those of other large retailers.

Few brands today would deny the benefits of deeper customer data, better insights, and the challenge of rising consumer demands for personalized experiences. Given these realities, and the competitive heft of large platforms such as Facebook and Amazon, we want to pose a simple question: Why doesn't everyone just start doing highly effective, one-to-one marketing now?

What's the problem, exactly?

THE PERILS OF PERSONALIZATION

Around 2010, Coca-Cola execs realized they faced a make-or-break moment. Sales of the #1 consumer brand were falling each year, around the globe, and there was no obvious solution. Aware of the experiential imperative outlined above, Coca-Cola wasn't sure how to act. It had the burden of being a mass consumer product that appealed to many people but lacked basic individual-level data about its customers. Its MyCokeRewards loyalty program was discontinued in 2017, after a decade of disappointment. If there was one brand that would never really be customer-driven, it seems, it was Coke.

But then somebody had an idea. The enterprising field team at Coca-Cola's Australian subsidiary had a brainwave. Sure, they couldn't...