Retailers Seek Innovation In Personalization

FEAT Personalization imageIt’s no secret that today’s shoppers want their favorite retailers to tailor promotions and communications to their individual purchasing habits. In fact, 86% of consumers — and 96% of retailers — said personalization has at least some impact on the purchasing decision, according to a study from Infosys. The study also found that almost one third (31%) of consumers wanted more personalization in their shopping experiences.

Retailers are acknowledging the calls for more effective personalization, and are looking for solutions geared towards optimizing the customer experience. Personalization can encompass an extensive area of online and offline media, including: web site optimization, segmentation, email marketing, merchandising and promoted messages. Whether the initial goal is to drive conversion rates or simply raise awareness of a product release, personalization efforts ultimately are designed and executed to influence individual consumers purchasing habits.

The Importance Of Data Collection

Because the retail industry is a highly competitive atmosphere dominated in some segments by a few giant name brands, merchants must find new ways to differentiate their brands among their existing and potential new customers.

In order to work along with solution providers to establish personalization strategies, retailers are focusing on collecting and analyzing customer data. According to a report from Aberdeen Group, 41% of leading retailers analyze site search data to personalize the e-Commerce experience. With the right data in hand, merchants can pinpoint problem areas that could be improved through individualized campaigns.  Then they can take a test and learn approach to implementing personalization programs.

With personalization, retailers need to take “more of a phased approach, in which you first have to do some analysis of who your customers are and what they’re doing on the site to determine what the priorities and objectives are of personalization,” said Jeff Soriano, Head of U.S. Marketing at Maxymiser. “That is probably one of the biggest missing steps right now. People say, ‘I have data about people, so let me start crafting some messages for them and deliver it. Now I’m doing personalization.’”

Successful customer analysis can be accomplished in various ways, with technology solutions at the in-store POS and throughout the online purchasing experience. Additionally, qualitative research methods, such as interviews and reviews, and quantitative research methods, such as surveys, assist in areas that technology doesn’t cover. All retailers gather data at some level, but best-in-class retailers are able to provide context beyond numbers that can establish a human connection even through a desktop or mobile screen.

“People are realizing that they have a lot of valuable data that they’re not bringing to bear right now because they don’t have a good way to do it,” said Jeremy York, Principal Data Scientist at RichRelevance. “[This trend] goes beyond just wanting to communicate with customers across multiple channels. It’s about what data I have on that customer and how I can best take advantage of that information.”

York added that merchants cannot ignore competition from the likes of Amazon. “Ultimately, everybody is competing with Amazon these days,” he explained. “Retailers have to be thinking about it in those terms: ‘What advantages do I have that I can bring to bear that will help me fight that battle?’”

Using Personalization And Targeting Successfully

Of course, competing with Amazon is no easy task, given the personalization methods the mega online organization already has implemented. However, retailers can leverage a number of different tactics in order to stand out among the competition and positively influence the customer experience.

After a shopper buys a product from Amazon, for example, she may quickly receive product recommendations based on her purchase. But often those recommendations are not identified on a personalized level, leaving many products in the retailer’s catalog unnoticed. More than 54% of products in a retailer’s online catalog do not get a single page view throughout a 24-hour span, according to RichRelevance. Often the same products are being recommended to consumers over and over again. This is where content personalization can have a significant impact, which is a hot-button issue for retailers specifically looking to provide targeted interactions to individual shoppers.

“There is just so much content out there today and people don’t have time to go through it all,” said Kelly O’Neill, Sr. Director of Commerce at Acquia. “In my mind, when people give personalization a bad rap, it’s the ‘I’m going to sell you’ attitude. On a positive side, it’s almost a guided serendipity. You’re taking what you know about a consumer and you’re guiding them down a path to not only give them exactly what they’re looking for, but also exposing them to things that they didn’t realize were available that are really relevant to that particular consumer.”

Content personalization is an integral factor in a highly relevant online shopping journey. Personalization software providers such as AgilOne, Certona, Maxymiser and Evergage all have spearheaded campaigns for retailers that help them collect information on past shopping behaviors, product views, clicks and purchases in order to recommend the ideal products and put the most relevant content front and center. In an example of the value these providers bring to the table, research from Harris Interactive indicates that 86% of U.S. adults expect brands to offer multiple options and flexible timing for customer service interactions.

“The metric that we hang on our hat is what we call recommendation demand, or total revenue generated through recommendation advice,” said Todd Scholl, Director of Marketing at Certona. Scholl noted that 13% of the company’s retail customers’ total revenue in 2013 was generated via recommendation advice.

One way to think about online personalization is to “turn your e-Commerce site into your very best salesperson,” noted Karl Wirth, CEO of Evergage. Because a shopper isn’t capable of asking questions online like they would if they were browsing a physical store, there is a potential for the customer to leave the site before making a decision, which is called a “bounce.”

Web site personalization tactics that can help prevent a high bounce rate include:

  • Welcoming site visitors based on their geographical location;
  • Sending special offers based on the sources that link visitors to the site; and
  • Engaging consumers who haven’t clicked any link on a landing page.

Using External Factors To Drive Personalization Strategies

As opposed to personalizing based on prior behaviors and expected shopping habits, targeting campaigns can sometimes be based on external factors. Timely events and seasonal conditions that affect specific geographic areas can provide fuel for personalized campaigns and messages.

For example, “We’re noticing a lot more weather-related campaigns in retail,” said Kim Ann King, CMO at SiteSpect. “It’s very interesting that you can target with geo-targeting, so if you know that [site] traffic is coming from areas affected by the polar vortex, then you can advertise warm jackets.”

Other strategies such as loyalty programs and personalized messaging also are helping retailers improve brand awareness. Loyalty programs are the most well-known of the customer strategies, usually used as a tactic to motivate repeat purchases. Regarding personalized messaging, Andrew Robbins, President of Paytronix, a loyalty and reward solutions provider, cited two factors driving the need for relevant messaging: “One, customers are beginning to expect the messages. If you don’t speak to them in a relevant fashion, they can tell and they start to ignore you. The other driving trend is that establishments are worried about the discount expense line growing, and they have to figure out a way to make it go down. That discount expense line can drop by using one-to-one marketing effectively.”

For retailers selling globally, language personalization can help bridge the customer service gap. The introduction of native language support provides personalized communication for international shoppers, according to Kathleen Bostick, VP of Language Solutions of SDL.  “It may not be a perfect translation, but it’s instant, it’s very inexpensive and there’s a lot of call deflection. Multilingual chat is really an area that’s starting to grow as companies try to figure out customer support globally.”

One Size Does Not Fit All

When it comes to planning for personalization, retailers must coordinate programs with overall business goals, including specific channel strategies. While the term “personalization” often is closely associated with e-Commerce, this experience varies depending on the access channel. 

For example, for merchants that send out a lot of emails to customers, personalization can have a significant impact. According to the 2013 Email Marketing Study released by Experian Marketing Services, personalized emails generated transaction rates and revenue six times higher per email than non-personalized emails, yet 70% of brands still don’t make the effort to personalize these messages.

“Personalization means something different to every company,” added Scholl, in an interview with Retail TouchPoints. “All of our clients use it for recommendations on the web; probably 40% [use it] for email and 20% [use it] for mobile. This is all growing, and [retailers are] tapping into different channels. For brands such as Adidas that have multiple countries, language, currencies, devices and channels, [personalization] is a playbook compared to a high end luxury retailer that’s just doing web data.”

The Future Of Personalization

Over the past decade, particularly with the diversification of shopping channels, consumers have had their pick of where, when and what to buy. In this scenario, the importance of personalization campaigns cannot be understated: they are filling a void that had largely been missing in the industry since mega-retailers began to overtake mom-and-pop stores. This newfound freedom of choice has enabled consumers to take a position of control they didn’t have before the e-Commerce revolution began in the late 1990s.

“The shopper drives the business now and retailers have to respond appropriately or the shopper will go elsewhere,” said Marti Tedesco, Director of Corporate Marketing at Baynote. “Customers can easily bounce to another vendor — price and availability are 100% transparent on the web.  This free movement leaves retailers with one primary way to differentiate themselves: Through the customer experience.”

To keep pace with customer demands, retailers need to ramp up their personalization efforts to be more tailored to individuals and their unique experiences and preferences, according to Forrester Research. The January 2013 report, titled: Advance To Next-Generation Personalization, suggested that specifically, businesses need to evolve from personalization to contextualization.

Forrester Research defines contextualization as a “tailored, adaptive and sometimes predictive digital customer experience” that expands on personalization techniques by automating decision-making and adding in-the-moment details. Contextualization is driven by a combination of historical, behavioral and profile data inputs and can be used to build location-targeted content, adjacent content and adaptive designs. The report authors specifically recommend that professionals should understand their contextualization goals before making any technology decisions, as well as prioritize customer data management strategies.

Part 2 of the Personalization special report, featuring retail case studies, will appear in the April 29 newsletter.

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