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In the beginning, there was Amazon.com Inc., and it was really good at crunching customer data to sell more products. "They have been at it for a long time, accumulating a lot of data," says Harley Manning, an analyst at Forrester Research Inc. "They don't talk about what they do, because that's their competitive advantage." But personalization's second act has been a long time coming. "Ten years later, every conversation about personalization still comes back to Amazon," says Rob Cosinuke, president of Digitas Boston, an office of the national marketing firm Digitas LLC. "What does that tell you about the state of the market?"

Amazon, with its huge investment in technology and an enormous customer database to mine, turns out to be a model that few companies can successfully emulate. "That kind of personalization is the highest fruit on the tree," says Matthew Berk, a former research director at Jupiter Research whose 2003 report, "Beyond the Personalization Myth: Cost Effective Alternatives to Influence Intent," helped quell the personalization hype.

Hype had been in plentiful supply. "There was a giddy, Internet bubble interest in personalization," says Manning. For a while it was a feature everyone had to have." But that vision of personalized marketing, first popularized in the 1993 book, The One to One Future: Building Relationships One Customer at a Time, by Don Peppers and Martha Rogers—and pushed by software companies such as BroadVision Inc., Epiphany Inc. and Blue Martini Software Inc.—was not for everyone. "It was a beautiful conceptual framework, but you can't go to the run-of-the-mill business and make it work," says Berk. "When this started, even companies that were able to do personalization to some degree didn't know how to measure their results. Nobody really knew what was going on. We didn't understand online behavior."

Berk, who went on to found Open List Inc., which tracks customer preferences by doing targeted searches for the restaurant and hospitality industry, remains skeptical of one-to-one personalization for most companies. "Unless you are Amazon, it's a silly thing to fantasize about," he says. "It is incredibly valuable, but only at scale. For 90 percent of all other folks doing business on the Web, it is a fantasy." There are better ways to spend your money, he says. "When you line up all of the possible investments to make in order to help a business do better on the Web, personalization is last on the list. You don't need the complicated things."

The result: Setting out to really know your individual customers, and then guiding them to buy more stuff by building their personal preferences into the online shopping experience, has gone out of style. Says Manning, "We still ain't there."

Recently, Forrester has been seeing an upsurge in client interest in some less ambitious but more productive methods of personalization. Says Rhiannon Rail, director of participant marketing for John Hancock Retirement Plan Services, which used personas to redesign its retirement benefit Web site: "Initially, we looked at Amazon and said, 'Hey, that's where we want to get to.' But when we realized the volume of data needed, we decided that we didn't want to get into that kind of data-management business. You can get there if you get the data, but the cost can be prohibitive."

This article was originally published on 08-05-2005
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