By T. J. Gentle, President & CEO, SmartFurniture.com
It is an exciting time to be in retail. We have more ways to attract new customers and more ways to collect customer data than ever before. Whether we are developing novel ways to drive more visitors, creating new ways to segment customers or optimizing our ROI within a specific channel, it seems that there is always a new way to collect or use the massive amounts of customer data we collect. With all these tools at our disposal, it is easy to lose sight of what our roles are in the retail industry.
So what is our role in the value chain?
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The answer is simple. Our role is to provide customers with solutions that solve their problems. Oddly enough, this is fundamentally the same role shopkeepers have been playing for hundreds of years. The key difference today is that customers have so many more choices that it seems impossible to rise above the crowd.
I think that retailers will begin to differentiate themselves by using customer data and innovative technologies to marry (on a personalized basis) products (along with the products’ underlying functions and attributes) to customers based on each customer’s specific characteristics and preferences. Very soon, companies that find a way to use this strategy of Prescriptive Personalization will have a competitive advantage over other companies.
Basically, Prescriptive Personalization requires that we as retailers have the role of intermediary or matchmaker. First, our job is to learn as much as we can about the products we sell across all of our relevant categories and uses, including their physical attributes, aesthetic features, performance and quality characteristics, etc. Second, we have to research and learn all we can or all that is relevant about our customers, including their style preferences, how they prioritize price, features and quality, their stages of life, their budgets, etc. Third, we have to develop a process for mapping these product attributes to customer characteristics in a way that is scalable and results in the best outcome for each customer. We then present the results of this process to customers in a way that is intuitive for them and minimizes distractions and noise. Finally, we have to use the information from the previous steps to improve the assumptions and recommendations for the next customer that comes along.
At SmartFurniture.com, we have been experimenting with Prescriptive Personalization for several months. In our beta tests, we found that customers who use our application are nearly 10 times more likely to convert than our typical visitors and spend, on average, about 25% more per order. These early results are encouraging and have been a real motivator for our team to find new techniques and processes to expand our program and make it available to more potential customers. What is most exciting for us has been that this program allows us to take the knowledge that our sales folks and product experts have acquired over the years and make it available and useful to potentially every customer on an individualized basis.
It is a beautiful thing when technology takes something that is good and makes it great.
T. J. Gentle is the President & CEO of SmartFurniture.com, a venture backed internet retailer and pioneer of Design on Demand®.
