Shopping is about decision making and retailers are very interested in every decision being made by customers which can increase their profit margins. Technology is now enabling them to monitor the process more closely in real time with the use of embedded sensors connected to the Internet of Things.
Graduating from the age where retailers like a U.S. store “Marsh”, during the 1940s, employed UTC scanners to improve operational scanners at checkout points, the retailers are now using analytics to tab consumer behavior.
The decision making and buying behavior of the user is being tapped as a rich source of consumer research. The “third generation personalization” of online retail – or “metal” – which are all aligned to the Internet of Me drive the retail industry now.
In this new scenario, retail research has evolved as a form of entertainment where decisions are being made to engage with the customer as a human being and a brand. This is crucial to retail, because despite efforts to woo clients with various gimmicks like coupons and flavor profiling, no one really knows what makes customers say “yes, I’ll have that” as opposed to a “no thanks.”
By using enhanced technology, and linking data analytics, code, algorithms with some number crunching and monitoring of spending habit information that all goes into the cloud, retailers hope they will get a better sense of who they’re selling to.
Instead of bombarding the buyers with information about parakeets, when they own goldfish, methods of advertising are being cultivated that directly market to a customer based on their needs. Retailers are now being able to advance from mapping shopping to predicting shopping decisions by assessing Big Data.
The response of an average consumer towards a recommendation based on their browsing and past purchases on a retail site is mostly favorable. They would love to see the retailers knowing about their needs and maintaining the database on the basis of their shopping history. A shopper feels special when he or she is addressed with a personal touch in an email or message.
The Role and Impact of Personalization In 2016
So ‘Personalization of Retail’ is the buzz in 2016. It is being used to enhance customization and integration of shopping experience through marketing automation. But is it just a reinvention of the wheel? It might not even matter – a report by Econsultancy and Monetate in 2014 found that almost all companies (94%) agree that personalization is a critical area to focus on for the future success of ecommerce shops.
Some pundits in retail suggest it’s not a new shopping experience at all but a better one. It hearkens back to the Mom and Pop stores. The general store, where you could go in looking for a toothbrush and leave with a supply of gardening tools, bakery products and baby wipes. The place where you received personal attention, probably had credit, and the store owner knew your family history. Those were times several generations of families had the same GP, who probably made house calls, which is usually unheard of these days in urban areas.
That level of intimacy with the customer became impossible with chain stores because of the challenges of scale, but customers are constantly leaving their imprints behind on monitors and bill tabs. The data is all around, but hasn’t been used effectively by all.
Bruce D’Ambrosio, ‘Godfather of Personalization’ is the Chief Scientist at Peerius. He observed that online personalization was first exemplified by offerings from firms like IBM in the late 1990’s, but the results created various segments under broad classifications. This was followed by Amazon making a foray into the retail sector using algorithms, but it identified groups, not individuals. Products that were most promoted were popular ones, leaving others in the dust. Even today a majority of products in a catalogue are never seen by customers, leaving only the usual suspects to be shown over and over, instead of the vast collection of items a catalog truly has.
The reason is thus – a consumer is more likely to be interested in popular products that are useful to him instead of the thousands of others that aren’t. That’s personalization at work.
A shopper will always be compelled to see, in detail, offers and recommendations from retailers that match his interests, irrespective of his or her plans for making a purchase at that point of time. This is where the power of personalization can be best realized. (see example below how www.zappos.com is reaching out to its customers)
To find out what a customer wants, ask. Innovation strategist and marketer Devora Rogers said shoppers use “10.4 sources before making various decisions” and that “the numbers of sources are a proxy for how considered their decisions are. Whether it’s for buying medicine or a car.” Apparently fewer sources are referred to when choosing a President, when compared to buying an iPad.
How to Get Personalization Right in Your Business
Now that you understand the basic meaning and purpose of personalization, it is crucial for you to know what all is important to consider to use this strategy/technique effectively.
Customer’s Information and Expectations – People are usually happy to share information, down to their date of birth, but only at relevant times. They don’t like to be bombarded with information. This has a detrimental effect of being intrusive. Customers are also dealing with information overload in a small amount of time. Retail engagement can lessen this mental burden through language personalization, geo-personalization and offline and online immersive experience.
One firm held offline sales of jackets, despite being summer, because they knew their target market. Sometimes when offline sales don’t translate into profit, they can be followed up with emails 21 days later, featuring fresh offers or new supplies of the same product so customers stay interested in the deal. In this manner the retailer adds value to specific products over a period of time and continues the engagement.
Customers don’t expect incredible innovation from stores overnight. What is expected are better basic sales and a more refined shopping experience that ensures both speed and security – and this means consistency, consistency and consistency. This is still the most preferred reason that customers return to a retailer in a physical store. Combine that with a well-organized strategy that mixes online activity with technology and you have a great business plan for personalization in retail, which has morphed to emerge as a vital marketing tool of the future.
Identifying Shoppers and Engaging with Them Effectively – There are various beacons for identifying digital and in-store shoppers, like online data profile, mobile ID, etc. A Burberry store uses facial recognition, though some of the customers find this too invasive. The optimists believe more transparency can lead to “‘open value exchange.” Various electronic touch points can be used to provide the staff with better information to upscale loyalty.
Converting clicks to actual sales is not an impossible task, nor is increasing sales for brick and mortar stores with personalization. However research shows many retail in-stores have still not bought into the idea, and it’s ironic that considering the hum around personalization this year.
Amazon rules the roost through automated personalization rather than a human element. Here’s a customer based company that has never met a client, yet it has stolen the thunder from other firms like Nordstrom who are noted for just that.
Context is also important in retail personalization to make the messages sticky, by leveraging various data sources. This can be done through geo-facing and subtly selling lifestyles over coupons. The bottom-line is still customer satisfaction.
The customer is still king. Some brands have built in loyalty programmers, offering free gifts on birthdays for frequent shoppers. Like the beauty line, Sephora.
Mark Hunter, the sales hunter and keynote sales speaker explains five kinds of shoppers:
- Loyal Customers: They represent no more than 20% of the customer base but make up more than 50% of the sales.
- Discount Customers: They shop the store frequently but make their decisions based on the size of the markdowns.
- Impulse Customers: They do not have buying jewelry at the top of their “To Do” list but come into the store on a whim. They will purchase what seems good at the time.
- Need-Based Customers: They have a specific intention to buy a particular type of jewelry.
- Wandering Customers: They have no specific need or desire in mind when they come into the store. Rather, they want a sense of experience and/or community.
When companies identify these types of shoppers and tailor marketing strategies to their individual needs, they will succeed. After all, shopping and marketing aren’t “one size fits all” sciences.
Some Best Examples of Personalization in Retail
The prevailing trend retail is listening to what the customer is about, rather than manipulating. In fact, retail marketers now have designations like Chief Listener, or Generational Expert. Customer customization is the key to personalization. The following are some best examples of personalization in retail adopted by leading retail giants:
- Customizable Promotion Schemes – These schemes allowed loyalty card holders to select the products on which they wanted highest discounts. See the example below how Waitrose banked on the scheme.
- Personalized Homepage – The page had customized features for different age groups. Those aged early 20s were shown fashion picks on top of page while others aged in early 30s were shown home décor items on first login. A fully personalised homepage was created recently by co.uk for its loyalty customers.
- Personalised Bill Boards – This technology was adopted by many popular stores where they matched the faces of shoppers, visiting the physical stores, with their browsing history to churn out a display of products of their choice and send push notifications on their smart phones. Offermoments came with such technology illustrated in the image below:
Personalization has always been more effective at online stores than in-stores, using mobile apps, personalized emails and to some extent wearables, which are still a new market, to their advantage. Across different platforms where there is no break in information.
It cannot be used effectively across all platforms. The impact of personalization cannot be seen as effectively in a physical store as is evident on online shopping sites. The online sites also use wishlists and recommendations to their advantage, because it has been studied that Facebook and an online retail site are usually the two most popular haunts of online users.
The next crucial step in personalization is innovation. While ample amount of technology is utilized in making a personalization strategy a reality, a retailer has to keep investing more in the strategies. Innovation is the key in personalization and analytics. The tools are also developed on the basis of strategy. The only source for such inspiration is the customer’s buying behavior and browsing journey.
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