Nathan Kontny is the CEO of Highrise, a CRM tool built by the team behind Basecamp. Prior to Highrise, Nathan was a software engineer and designer for 15 years. He began his entrepreneurial career with two Y Combinator backed startups: Inkling in 2005 and Draft in 2011.

I had a chance to ask Nathan some questions about the current state of personalization. Here’s how that went!

1) What’s wrong with personalization today?

One big problem with personalization is this: When companies get it wrong, it’s worse than not using any personalization at all.

Consider something that happened recently. Amazon sent out emails telling people a gift purchased from their baby registry was on its way. One problem. These people didn’t have Amazon baby registries. Or babies.

Or consider a vendor who recently emailed me about a demo of their service. The vendor had obviously scraped my email address from the web and used AI robots to determine I was a small business owner who might need what they’re selling. They sent an email and a bunch of automated follow-ups.

Here’s the problem: I’m already a customer! I emailed them about their mistake and then it happened again with another one of my email addresses they had found.

Naturally, an incident like this makes me think twice about referring them to others.

When used correctly, personalization can give customers or prospects the feeling that the business can help them specifically.

When a company gets it wrong, it’s worse than being impersonal. Indeed, it’s like the robots have taken over and they are malfunctioning.

(via GIPHY)

2) What are your thoughts on hyperpersonalization?

I completely understand where marketers are coming from when trying to segment their customers so they can send them more useful and meaningful messages. Why send the same exact message to two customers who need very different things?

A customer who signs up for a service on her own and someone who was invited to sign up by a current customer will have (potentially) different needs and a different relationship with the product. That one detail – who referred them – can make communication a lot stronger. Compare “Welcome to our product” to “Hello. We are thrilled Mark invited you to check us out. A friend of Mark is a friend of ours. How can we help?”

My point here is this: A little goes a long way. The more moving pieces, the more “hyperpersonalization,” the greater the chance of a (totally avoidable) “Amazon Baby Registry”-type mistake.

3) How should marketers approach personalization?

Do you remember the first time you got your own car? Your high school graduation? The first day of your first job?

Now, what about lunch last Thursday?

We remember transitions. These big moments where the pattern of our lives change. Lunch on Thursday was, for most of us, like a lot of lunches on Thursday. But getting our first wheels, that’s monumental.

Those moments have a special place in our brain, and, as a marketer, you could be part of those moments if you play them right.

Don’t approach personalization as just another way to deliver a coupon in the most segmented way possible. Instead, celebrate moments with your customers that they’ll remember for the long term.

Make your new customers feel special when they sign up for your service. It’s probably an important transition in their lives that brought them to you. For example, a CRM company’s new customers are often starting new businesses or new jobs. Celebrate that. Raise their importance.

Figure out the least intrusive ways of getting important milestone data about your customers: Signups. Job anniversaries. Things like that.

You can also create your own milestone achievements for them, such as pointing out that they were one of the first 100 customers to activate an account.

The Power of Moments by Dan and Chip Heath explores this topic a lot more in depth.

4) Can you give an example of a great personalization campaign you’ve seen?

It’s from Sapori Trattoria, a small Italian restaurant near my house. They ask for your birthday and address when you first dine with them, then they mail you big coupons on your half and full birthdays. The letters, and even the envelopes, go over-the-top to celebrate the occasion.

On the day of your birthday, they’ll even customize that day’s menu to mention you.

You know they’re doing it for everyone, but it doesn’t matter. It’s such a great feeling when a business makes even a tiny effort to celebrate your birthday (or half birthday).

5) What’s next for personalization?

Right now most marketers are focused on personalization a little too myopically. They are pretty much only looking for a better way to segment an email or improve engagement on a coupon.

But personalization is actually part of a fundamental way industries evolve.

Look at coffee. The coffee industry as we know it started in 1850 when Folgers figured out how to roast and grind beans and sell the powder in cans so people didn’t have to do it at home. Historians call this the first “wave.” It was zero personalization, but it was convenient. The second wave of coffee was Starbucks. They invented hyperpersonalization of coffee. You can get a “Tall, non-fat latte with caramel drizzle” or a “Grande, iced, sugar-free, vanilla latte with soy milk.” The list goes on and on.

But coffee still had a third wave, and it was about the business itself opening up to its customers. You can now know exactly who the farmer was growing your beans. She might even be walking around Intelligentsia passing out samples of coffee made from her recent harvest.

Look at every industry and you start to see these waves of personalization in action. Just think of the journey beer has taken from Bud Light to Microbreweries!

So what’s next? Depends on the industry, but I think many are smack in the middle of their Starbucks age. Lots of options/customization/personalization. If organizations want to beat the curve, they should plan on how they’ll take advantage of that third wave. This means opening up the business to customers and becoming more transparent about how you do things.

6) How does personalization help you strengthen customer relationships?

In 1997, researchers figured out how to actually strengthen relationships among people who start as strangers. It wasn’t small talk. It wasn’t shared religious or political beliefs. It was the mutual escalation of self-disclosure – both parties sharing more and more details about themselves with each other.

Starbucks-like personalization of a message based on personal wants and needs of customers definitely has an impact on relationships. It lets customers know the company is committed to making sure their individual needs are met.

But that’s one directional. It needs to be mutual.

To really form stronger relationships with customers, start opening up about yourself. Why do you wake up in the morning to run your business? What do your employees do outside of their jobs to improve the world? How do you balance work and the rest of life’s giant obstacles?

7) How does artificial intelligence help or hurt personalization?

Artificial intelligence (AI) is a key piece of making the world better. Look at an email inbox. Without AI, we couldn’t sift through our mail or find anything other than offers for sexual enhancement drugs. Or look at transportation. AI is likely going to be the key to eliminating some of the 3,287 deaths that occur driving every day when cars can do some of the driving for us.

As for personalizing our marketing efforts, I look at that Italian restaurant. They don’t need AI to remember and celebrate everyone’s birthdays. And most of us aren’t yet even close to marketing as well as they are. So why reach for AI now before we’ve nailed the basics?

Besides, I can’t even get the fancy AI speaker thing I have at home to give me the weather consistently every day. Am I really ready for the risk of emailing customers about their new baby because an AI bot thinks it’s time?

8) What’s the ROI on personalization?

Short term, it’s going to be pretty easy to measure the improved engagement rates of things like emails, ads, and online services when personalized.

But the true wins are going to be tougher to judge because they will play out over the long term.

Header Image Source (Creative Commons): Mary Witzig.