Results from the literature study can be applied by looking at companies that apply personalization. Companies actively applying personalization do this for various reasons. Some companies are trying to sell as much as they can to customers and will use personalization to offer them the most relevant product offerings as possible. Other companies are not profit-oriented and want to make sure their customers are as satisfied as possible about their services, which they can personalize in various ways. The third category of companies combines both and focuses on a combination of service and sales. NS falls into this last category. From each of the three categories, one case was explored by conducting an interview or doing online research.
4.5.1 WEHKAMP
An interview was conducted with a data scientist of Wehkamp, which is one of the largest online retailers in the Netherlands. On their web site, personalization is widely applied, in order to have a better alignment with the customers’ wishes and desires. Customer experience is improved by adding personalized content based on data and algorithms. Revenue increase through increased conversion rates is an important goal with regard to personalization. Negative effects were experienced when Wehkamp was considering personalizing product prices, which reduced customer trust. Therefore, those plans were not executed.
Similar motives can be seen with other web shops, like Bol.com (Emerce, 2015) and Coolblue (Groot, 2015), which indicates its three most important Key Performance Indicators to be brand image, web site visits and sales. Booking.com is another example of a web shop which uses personalization to maximize conversion rates in order to increase sales (Barilliance, 2013).
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4.5.2 ZILVEREN KRUIS
Zilveren Kruis is a Dutch insurance company which has a combination of sales and service and applies personalization mainly in their online channel. An interview was conducted with a web analist of Zilveren Kruis. Personalization is done in order to generate extra revenue by trying to convince customers to sign up for their insurance. Also, it is done to decrease service costs. Increasing revenue is especially important in the final quarter of each year, in which customers can change their insurance. A lot of attention is paid to getting ‘switchers’ to transfer to Zilveren Kruis. Decreasing service costs is done, for example, by the reduction of waste calls to their help desk. Customer satisfaction is important because of its effects on sales and service.
4.5.3 DUTCH GOVERNMENT
For studying a case at which personalization is used solely for the benefits of user satisfaction, the Dutch digital government is chosen, as is described at http://www.digitaleoverheid.nl. This program aims to digitalize all governmental services by the end of 2017. As can be seen on their website, revenue increase or customer conversion aspects play no role in the application of personalization (Dutch Government, 2015). The government states that one of their key goals is to improve the accessibility, security and trustworthiness of the services, which have a positive impact on customer satisfaction. Also, digitalization of services will lead to cost efficiency.
4.5.4 COMPARING THEORY AND PRACTICE
When the results of the literature study are compared with the case studies documented in the previous sections, a number of conclusions can be drawn.
An overview of the effects found in case studies is given in Table 5. The literature study showed two primary objectives of applying personalization, customer satisfaction increase and revenue increase. However, when interviewing an employee from Zilveren Kruis and when looking at case material from the Dutch government, a third objective came to light which was barely addressed in literature: cost efficiency. Personalization can be used to direct customers to cheaper channels or to give customers more relevant information, so that less direct contact is needed between them and the company. Eventually, cost efficiency leads to an increase in profit, just like the increase of revenue generally does.
Wehkamp Zilveren Kruis Dutch Government
Customer satisfaction increase X X X
Revenue increase X X
Cost efficiency increase X X X
Customer trust decrease X
Table 5 – Personalization effects found in case studies
In all three cases, customer satisfaction was mentioned as a goal of personalization. However, this goal was often connected to the increase of profit. Customer satisfaction is not always a goal in itself, it can also be used as a means to other goals.
The possible negative effects of personalization were only mentioned by Wehkamp. The absence of this effect in the findings could be because companies are responsibly applying personalization, so that customer trust is not decreasing. However, a more probable explanation is that customers do not indicate their decrease in trust and companies do not directly ask customers if their trust decreases. Companies generally only see the positive side of personalization and are not very focused on possible negative side effects, as can be seen in several reports about personalization (Baynote, 2013; Forrester Consulting, 2013; Koetsier, 2013; McKinsey, 2014).
Also, literature mainly focuses on personalization enabling satisfying factors, like a special customer experience, instead of removing dissatisfiers, such as lowering customer effort. Herzberg has stated in his famous two-factor theory that factors causing job satisfaction are other factors than those causing job dissatisfaction: they are two separate sets (Herzberg, 1966). Johnston has applied this theory on service quality factors. He states: “Maybe without a strategy that includes both dissatisfaction removal and satisfaction increase, or at least dissatisfaction
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removal first, (…) customers could become justly cynical of the organization’s attempt to improve service quality” (Johnston, 1995). Personalization is seen as a key idea to improve customer satisfaction, but the ideas in literature concerning personalization are mostly about satisfiers, while removing dissatisfiers is maybe even more crucial. As stated in section 1.4, this research focuses on decreasing Customer Effort, which is a dissatisfier, instead of aiming to increase a satisfying factor through personalization. The importance of removing dissatisfiers was stated by Johnston and is one of the reasons Customer Effort is chosen as the primary indicator in this research.