The Future of Retailing is All About Personalization

Stephen DeAngelis

October 28, 2013

“The individualization of customer relation,” writes Bertrand Duperrin, Consulting Director at Nextmodernity, “is the new concern of marketing departments.” [“The individualization of customer relationship: why and how?Bertrand Duperrin’s Notepad, 24 June 2013] Tresilian Segal, head of Adobe’s Digital Marketing across Northern Europe, agrees that “a commitment to personalisation seems a relative no-brainer.” However, she asks, “Is the case for personalisation is well understood?” [“Maximise your personalisation process with these 8 tips,” Fourth Source, 14 June 2013] A February 2013 survey conducted by inContact helps make the case. According to the survey, “Consumers are making less of their buying decisions based on brand loyalty, but rather on which companies can match their desired experience.” [“Consumers Value Personalized Service Over Brand Loyalty,” Progressive Grocer, 25 March 2013] The article continues:

“According to the findings, 56 percent of U.S. adults would be at least somewhat likely to switch to another brand or company if it offered more options and channels than their current provider. Additionally, younger consumers aged 18 to 44 (64 percent) indicated this was true significantly more than their counterparts aged 55 or older (45 percent), showing a major shift among the younger consumer base in terms of decision making. Based on the findings, the younger generation of consumers — who are used to an influx of information and a variety of choices — showed a desire for options that allow for a tailored experience in their interaction with brands. To that end, younger consumers demand more options and availability to handle these interactions, while companies are at risk of losing customers if they neglect to accommodate preferences or adopt evolving channels of communication in providing service. ‘The survey results are clear: consumers expect more choices and more ways to interact with business today,’ said Paul Jarman, CEO of inContact. ‘The smartest companies are quickly adapting to changing consumer behaviors and needs, extending customer service beyond just phone and email to mobile apps, text messaging, chat and social media.’ Survey respondents showed overall that they not only prefer, but expect, companies to offer options for a variety of channels and devices.”

In previous posts, I have discussed the fact that consumers are increasingly looking for an “experience” as they shop (be it online or in store). Lauren Hertler insists, “At the end of the day, creating an optimal experience for a customer is determined by the ability to deliver personalized communications.” [“Driving Performance through Personalization,” ExactTarget Blog, 30 September 2013] Although most pundits concern themselves with online experiences associated with multi-channel retailing, Gavin O’Malley believes that personalization is just as important when a consumer is in a brick-and-mortar store. “Consumers are craving more personalized, less siloed shopping experiences,” he writes, “and [they] could be convinced to stop ‘showrooming’ and actually make in-store purchases.” [“Consumers Desperate For More Personalization During Purchase,” Online Media Daily, 26 September 2013] The one thing that all of these analysts agree upon is that there is a case (they believe a strong case) to be made for understanding and engaging in retail personalization.

Natasha Hritzuk, senior director of consumer insights at Microsoft, told O’Malley, “Consumers are absolutely desperate for more personalization during their purchase journey. The idea of personalization isn’t new, but [the industry as a whole] is still not delivering on its promise.” O’Malley continues:

“The retail industry is also failing to appreciate consumers’ desire for a more seamless shopping experience, according to Hritzuk. Consumers don’t want to encounter gaps between a brand’s online, mobile, and in-store presence, she said. ‘They want to operate seamlessly.’ Along with breaking down the barriers between digital and physical-store experiences, retailers can also use ecommerce learnings to increase in-store purchases, according to Hritzuk. ‘We need to understand why people showroom,’ she said, referring to the increasingly popular consumer practice of testing products in-store, but preferring to buy them online. For one, ‘It’s easier to buy [products] online,’ said Hritzuk. ‘You can [buy something] online in 3 to 4 minutes compared to the 20 minutes it can take to buy [a product] in stores,’ she said. ‘We need to take that friction free purchase transaction, and [implement] it in stores.'”

Eric Tobias, Vice President of Web Products at ExactTarget, told Hertler that “personalization can be achieved using four main building blocks.” They are:

  • Collection and identification of data
  • Data aggregation
  • Taking action on the data
  • Providing continuity to the customer by nurturing the 1-1 relationship

Tobias continued, “The primary goal, of course, is to deliver the right experience at the right time using the right channel.” He then offered four tips “to help all marketers get more personal”:

  • “Let data be your guide–no more guesswork!
  • “Inject personalized content into transactional messages. Transactional messages are a key component to creating a relationship with your customers–don’t overlook them. Surprisingly, in a study of the top retailers, 79% had no email personalization after an online purchase.
  • “Capture user behavior during/after the shopping process. Listen to what your customers are doing on your site to help drive recommendations or post-purchase remarketing opportunities.
  • “Make your data actionable. It’s been shown that almost half of all people will completely abandon a brand’s communications after only two un-personalized attempts.”

Segal agrees that good personalization begins with the data. She explains, “Let the data do the hard work and decide what the most relevant content and offers are to serve the customer at the detailed level.” She also agrees that content should be personalized. “Get rid of ‘spray and pray’ emails,” she writes. She also agrees that gathering and analyzing data is essential to capture and analyze the customer’s digital journey. “Identifying key points along your customer’s virtual path is important,” she writes, “as it allows you to decipher where conversion is highest.” Nevertheless, she cautions, “While per­son­al­isa­tion may often rely heav­ily on data and analytics, it is important not to completely surrender all con­trol of customer experience management to machines. There is still a role for behavioural tar­get­ing, as long as you test against it regularly. A blend of data-led and intuitive marketing often works the best.”

“‘Big data’ promises to be the solution to getting a 360 degree view of your customer and make more intelligent personalization decisions,” writes Linda Bustos. [“Using Big Data for Big Personalization,” GetElastic, 11 July 2013] Bustos’ article included the following “infographic from Monetate [that] covers the big data problem, the segmentation opportunity, and 3 keys for data and segmentation success.”

Big-data-personalization-infographic

Alicia Fiorletta concludes, “As shoppers continue to leverage digital tools and channels to research, browse and buy products, they also are beginning to demand more relevant products and offers. With these heightened expectations, personalization is becoming an integral component of retailers’ cross-channel marketing strategies.” [“Retailers Across Verticals Personalize With Digital Solutions,” Retail TouchPoints, 6 May 2013] Duperrin adds, “When business treat groups and not individuals, [i.e.,] trying to please everyone at the same time, [that strategy] often leads to pleas[ing] no one since the lowest common denominator is never satisfying for each person taken individually.” The requirement for retail channels to become even more personalized is likely to continue. I agree with Duperrin who insists that the technology used to get know customers better must be complemented by knowledgeable and caring people who can really put the finishing touches on personalization.