3 Ways Retailers Can Usher in the Age of Personal Commerce
It’s been over a year since store-first brands suddenly found themselves on the same digital playing field as pure-play direct-to-consumer (D-to-C) brands for the first time in history.
One of the many things we learned from this unintentional experiment is that brands that once generated up to 85 percent of their revenue offline simply weren’t ready to compete online. Previously known for their enticing and personal in-store experiences, many of these brands suffered from underdeveloped digital channels.
When shoppers explored their websites, opened their emails or viewed their ads on social media, the experiences felt a lot more generic and transactional than the curated experiences they had become accustomed to, thanks to platforms like Doordash, Netflix and TikTok.
A lot can happen in a year though. Several of these retail brands are now firmly committed to selling and growing online. This has created a crowded shopping environment where brands are competing with each other — and every other digital experience out there, too.
The only way to compete in this new era of personal commerce is to transform shoppers’ personal preferences into a series of always-on experiences delivered to them on their terms, turf and timeline. And from there, transform transactional experiences into personalized experiences.
Here are three things all retailers must do to thrive in the world of personal commerce.
1. There’s no way around it: You’ve got to put customer and product data to work — simultaneously.
After years of obsessively acquiring and organizing customer data, retail brands’ first step to transforming their technology will be to shift their focus to accessing that data. According to Tommy Lamb, former director of retention at Sephora, “You can have the biggest data lake in the world, but if you don’t have a speedboat, you can’t go anywhere.”
Basically, it’s not just about centralizing data, it’s about accessing it. Most retailers are still amassing customer data that they haven’t been able to do much with and using legacy technology that was built for mass marketing in a store-first world.
Now, teams must have first-party customer and product data at their fingertips, and a means of activating it to deliver one-to-one curation. It’s critical to understand not only who shoppers are and how they behave, but also which products and messages every single one of them has interacted with across channels over time.
Retailers have these data points, and therefore, have what they need to be present at every touchpoint along a shopper’s journey, from discovery, evaluation and checkout to review and repeat purchase. They just need to be able to put it to work ...
2. Predict which products shoppers will buy next.
Many brands aim to put their audiences at the center of their digital operations, but what does that really mean?
It means knowing and engaging with shoppers based on their unique preferences for specific products, styles, sizes, prices and channels.
However, when it comes to thriving in the world of personal commerce, retailers have to know a lot more than that. They need to predict shoppers’ future intent, affinities and conversion history to get them to buy again and again:
- Where is a shopper in her buying cycle (exploration, evaluation, purchase, replenishment, review)?
- What products and sizes does she gravitate towards?
- Is she ready to buy or simply learning?
- Does she need a discount to buy?
- What channels are best for engaging with her?
Viewed through the lens of personal commerce, a customer is more than a female living in New York City who bought pants a few months back. She’s also currently looking for a pair of dark wash skinny jeans in a size eight. She's going to spend the next week researching her options on social media, reading online reviews, and then narrowing down her options. In the meantime, she'll begin getting retargeted by every brand she engages with, but ultimately, she’ll make her decision based on which brand can do custom tailoring since standard jean lengths never fit her.
Even with a massive team of data scientists, it’s impossible to understand this level of detail at the shopper level — and then determine what message to send to who in which channel, at what cadence. But that’s precisely the domain of artificial intelligence (AI)-driven technology.
AI not only predicts what each shopper will want to buy next, but also continuously analyzes shopper responses to improve predictions over time. This isn't some future state; this is now.
3. Prioritize long-term growth through retention, in addition to short-term revenue through acquisition.
When digital newcomers begin selling and marketing online, they often default to heavy discounts to capture as many online purchases as possible. This approach is effective for driving transactions and revenue, but not for building long-term growth and profitability. Why? It results in lower margins and trains customers to wait for promotions rather than seek out products and brands they love.
Consider, for instance, the fact that many retailers experienced more online customers than ever before at the height of the pandemic, with chain stores seeing a 119 percent increase in first-time buyers. E-commerce sales went from 15 percent to 50 percent (or more, in some cases). Yet, many traditional retailers still weren’t able to sustain their businesses with their digital sales channels alone.
That’s because they didn’t have a plan to optimize and grow from their new online sales. This is critical to offsetting the losses they experienced offline.
Retailers at every stage of their growth cycles are only engaging an average of 10 percent to 20 percent of their shopper bases. Introducing strategies that drive repeat purchases and increase the average order value (AOV) of the remaining 80 percent to 90 percent of their customer bases are necessary to driving more growth — in addition to simply generating revenue.
As retailers begin prioritizing retention-driven profitability, the most important measures become increasing customer lifetime value (CLV) — i.e., more repeat buyers and higher cart values, improving margins — i.e., more full-price buyers than promotional shoppers, and increasing the rate of profitability over time.
The world of personal commerce is complex to think about from an analog vantage point. However, viewed from a digital perspective, it simply requires putting first-party data and technology to work to automate omni-digital shopper experiences at scale.
Fayez Mohamood is the co-founder and CEO of Bluecore, a retail marketing technology that reimagines how retailers communicate with their customers through email marketing and website personalization.