Amazon.com is the most talked about — and feared — company in retail today. You can argue that its success is simply because of low prices, but the truth is consumers also shop Amazon more frequently because of the company's consumer-centric approach.
The Power of Relevance
In the very early days of e-commerce, Amazon Chief Executive Jeff Bezos recognized the power that this channel would give to retailers. In Brad Stone's book, "The Everything Store: Jeff Bezos and the Age of Amazon," the author quotes Bezos as saying, "Great merchants have never had the opportunity to understand their customers in a truly individualized way. E-commerce is going to make that possible."
Bezos understood that he could create a more loyal customer base by being more relevant to the individual shopper than other retailers. More compelling offers, more tailored products, helpful suggestions on things they might need and coordinated across all touchpoints so the consumer always felt special and paid attention to. The more data Amazon could collect, the more relevant it could become and the more differentiated it would be from other retailers that had less data. Scale creates data, data creates relevance, relevance creates more scale, which creates more data, etc.
Today's shoppers understand this dynamic. They know that retailers have the capability to understand them based on the data they collect. Rather than fear this tracking, consumers expect that if they're giving up their data, they should get better shopping experiences in return. It's no longer about what data you're collecting about your customers; it's what you're going to do with that data. And to compete with Amazon effectively this holiday season, you need to use that data to help consumers make purchase decisions.
Here are a few recommendations for getting started:
- Think about how well you really know your customers. Without a complete understanding, you're guaranteed to waste time and money on marketing efforts that will inevitably fall on deaf ears. So make sure you're collecting and connecting data from every interaction point with customers.
- Break down internal silos. Omnichannel inherently touches a number of channels that were once managed by completely separate departments. Retailers must join these once-segregated departments to present a single face to the consumer. It's one customer, and it shouldn't matter to you in which channel they prefer to spend their money.
- Tailor marketing to individuals, not segments. Segments are just groups where you treat everyone in that group the same way. That isn't personalization, and consumers know it. Retailers that don't speak to individual customers will be left for the competition.
- Find outside help. Today's personalization is much more than a simple "Hi [first name]." It requires highly advanced predictive analytic skills and agile technology to turn insights into action. In theory, retailers can build an in-house team, but in reality these resources are very hard to find. You need to bring in a partner that specializes in next-generation personalization.
- Find partners that are channel agnostic. You don't want one technology for your website, another for email, another for direct mail and another for your point-of-sale system. The term "omnichannel" means that you recognize the consumer wherever they interact with you. And this list of channels is no longer static. New technology will pop up unexpectedly, such as in-store beacons. Retailers should work with technology providers that are forward thinking and flexible so as new shopping channels emerge, they're ready to include them in their omnichannel strategies.
Like Bezos says in Stone's book, "the real money is made not when a sale is made but when they help a customer with a purchase decision." While Amazon certainly has a scale advantage, it may not have a depth advantage in your particular market. If you can use all your data to become more relevant to consumers online and offline, then it will give you a leg up on the competition, including Amazon.