Can Personalization Save Retail?
It’s been called an apocalypse. Each time a company announces a new wave of brick-and-mortar closures, headlines predict the end of retail as we know it. However, savvy retailers aren’t going down without a fight. As the industry gears up for the year’s next major shopping events — Back to School, Black Friday and the winter holiday season — retailers are innovating new ways to not only survive these uncertain times, but thrive. For many, that means focusing on personalization as a major strategic initiative.
Delivering exceptional personal service has always been a hallmark of successful retailers. So why all the recent hype about personalization? Because digital transformation has put customers in the driver’s seat.
According to Ming Zeng, chief of staff and strategy advisor to Alibaba Group, digital technologies have transformed the customer relationship from the conventional business-to- consumer (B-to-C) model to consumer-to-business (C-to-B). This distinction is significant. More than ever, the customer now drives many decisions made by retailers, from product availability to design and development.
Arm Treasure Data recently partnered with Forbes Insights to survey marketing executives from 200 global firms and find out the truth about personalization. The report, The Path to Personalization, looks at how enterprise businesses in retail and other sectors — consumer packaged goods, consumer electronics, and media — prioritize, budget, implement and measure their personalization efforts.
Many organizations still struggle to achieve the one-to-one personalization they seek, the report found. However, retailers are in the lead in terms of embracing personalization. More than half of the retailers surveyed (56 percent) consider their organizations to be competitive or highly successful at personalization.
In the study, personalization is defined as an organization’s ability to make customer experiences as relevant to the individual as possible, regardless of channel. Through this lens, it’s not surprising retailers would rush to implement technology that can deliver effective real-time personalization at scale. Traditional brick-and-mortar retailers have been trying to counter the wildly successful marketing strategies of e-tailers for some time.
Marketing technology, such as customer data platforms (CDPs), combine data from diverse sources, like in-store purchases, website visits, social media, loyalty programs, mobile app usage, and geolocation. All this information, when properly harnessed, helps retailers build a 360-degree profile for each customer. Add the benefits of advanced artificial intelligence and machine learning technology, and now retailers can identify new segments of potential customers that would have been invisible to them before. The result? Data-empowered marketers who can deliver promotions and communications at the right time and with the right message to millions of individual customers.
Those blazing a trail in customer personalization say they’re already reaping the rewards, including increased sales, basket size and profits. In fact, of those claiming that their organization is aggressively pursuing personalization, 54 percent report they exceeded their revenue targets over the past year. Only 15 percent of those not committed to personalization could say the same.
Is there a downside to personalization? Of course. It’s the “creepy factor.” Yes, consumers crave personalized experiences, but they also demand — and deserve — that companies exercise discretion. Retailers that cross the line and make consumers feel as if their personal space has been intruded run the risk of losing not only today’s sale, but potentially that customer’s future business. And, of course, failed attempts at personalization can turn into a social media nightmare.
Where’s the line? It’s hard to say and it can differ from company to company (and is also influenced by the expectations of your customers). The best litmus test is a bit of honest personal reflection. As a consumer, how would you react to the personalization techniques employed by your organization. Delighted or violated? We’ve seen companies pushing the envelope, rationalizing their actions as in the best interest of the customer, but really motivated to crush internal business metrics. Tread carefully.
Brands are seeking strategies to help them anticipate the future and avoid being a casualty of industry disruption. The retailers with accurate and actionable data — and the sense to behave responsibly — are the ones in position to succeed. This survey makes it clear that smart marketers understand the promise of personalization.
To see how omnichannel personalization is helping enterprises like yours win, download the complete report, The Path to Personalization.
Tom Treanor is the global head of marketing at Arm Treasure Data, an enterprise customer data platform.