Retail Relevance in the Age of ‘Amazonification’

For customer-centric companies, the death of retail has been greatly exaggerated. While many retail brands are underperforming and facing consistent declines in sales, others are doing well enough to drive an overall increase in store openings.

Winners and Losers

In reality, we're continuing to see a bifurcation within the retail industry between the haves and have-nots. The former are those putting the customer at the top of their business strategy, or at least in the top three priorities within their business plans.

While it sounds obvious, if more retailers had the customer as a top priority, Amazon.com would likely not have a $1 trillion market capitalization. After all, its CEO has been unwaveringly customer obsessed for more than two decades.

The Amazon Effect

Research reveals Amazon’s influence on consumer expectations, including significant differences between its 100 million Prime members and non-Prime consumers. Prime members have higher expectations of relevance, convenience and recognition, and in turn they're more likely to engage with a brand that meets such expectations.

This is all deliberate and has been part of Amazon’s DNA since the 1990s. Read Jeff Bezos’ most recent and first letter to shareholders if you have any doubts. You’ll find that this unwavering commitment is only increasing.

Paying Attention + Acting Accordingly = Personalization

Personalization, a finalist for the marketing buzzword of 2018, is not a new idea, even if it's not fully understood or appreciated.

rDialogue’s Contextual Data Model for Personalization

Personalization isn't the same as addressing someone by name, as that can be done with a stranger wearing a name tag. Rather, personalization comes from knowing someone, from paying attention to them, and using that knowledge and insight to be relevant to them.

In our opinion, it’s the foundation of loyalty: brands that pay attention to customers, and then act accordingly. Successful loyalty strategies foster an emotional commitment, whereby the customer feels that commitment from the brand.

Loyalty 3.0: Going Beyond Transactional Loyalty

Our Loyalty 3.0 model, backed by both our own research and secondary sources, consists of five drivers, which are used to deliver a more personalized, relevant and ultimately better customer experience. The drivers can be used structurally to design a program proposition and they can be used to drive relevant relationship marketing and a more personalized customer experience.

Let’s look at each driver along with an example of how it manifests in personalization:

As you can see, the examples above are both ongoing and episodic. Within retail, other than Amazon, there are very few brands that can be used as examples across all drivers.

Conclusion

Relevance through personalization is a strategy, a commitment and a journey, and its context is a function of brand, customer and competition. It takes research and analytics to understand not only how customers prioritize and respond to each driver, but also when and in what context. As data is increasingly not the excuse for being less than relevant, it's essential to recognize that as a retailer, loyalty starts with you, not with your customers. Embrace it and win, ignore it and the consequences are obvious.

Phil Rubin is the CEO at rDialogue, an independent customer marketing firm.