Winning Customers’ Hearts and Minds With Personalization: 5 Best Practices
Personalization is a buzzword in retail right now. With 83 percent of consumers demanding it — and 23 percent saying their personalization expectations aren’t being met — the battle is on to offer an increased level of personalization to customers.
Indeed, according to research we conducted among retailers at World Retail Congress 2017 (Retail Gets Personal: Accelerating the Journey to Personalization), 95 percent say personalization is now a strategic priority. Yet only 15 percent have successfully implemented new automation technologies and ways of working that make personalization at scale possible. Perhaps most worrying of all is that despite consumer demand, 43 percent have yet to begin with their personalization initiatives at all.
For those already on the journey, personalization is generating measurable value, including revenue uplift plus increased customer acquisition and engagement. However, as retailers have found, executing context-relevant personalization at scale and across multiple channels depends on rewiring how their organization works in key areas. To be successful and add value to the business, as well as to the customer experience, retailers should consider the following best practices:
1. Democratize data.
It all begins with gaining a real-time, 360 degree view of the customer — what they want, what they’ve bought in the past, their preferred engagement channels, what they’re trying to do right now. Collecting all this data is just the start, however. The real value is generated when you get it into the hands of decision makers in a timely manner and make it easy to use.
2. Engage vendors, secure funding.
Get partners and manufacturers involved in the offer generation process early on, highlighting the anticipated benefits to generate funding/buy in that builds the offer bank. Leverage existing investments — e.g., moving from a print circular to personalized emails — to generate quick wins for all.
3. Think in journeys.
Understanding the micro journeys that matter to customers is crucial for knowing how and when to communicate the most appropriate offers for different triggers — e.g., replenishment shop, fill-in trip, in-store deal seeker — delivering offers at interaction moments that influence customer behaviors. Building a brand relationship depends upon being able to execute with customers across multiple channels in an integrated manner.
4. Be customer-specific and context relevant.
Understanding what individual customers like, where and how they shop, and when they’re next likely to buy makes it easier to undertake a variety of hyperpersonalized marketing initiatives. From telling them when something they want to buy is back in stock to targeting end-of-life or slow-moving products to customers most likely to buy them, you avoid blanket discounting. While many retailers have been able to personalize with a few product lines or segments, many still struggle to scale how they engage with customers.
5. Scale what works.
Having identified which offers generate the best returns, distribution needs to be automated to execute at scale. As capabilities grow, move from personalized weekly emails with high ROI offers or back-in-store or pre-markdown notifications to more advanced offer models that are time- and/or location-dependent. Shifting to an agile marketing model is an essential part of this strategy.
Many of the retailers surveyed said implementing personalization increased their opportunities to generate additional revenue. Forty-one percent stated that they experienced a 50 percent to 100 percent positive impact on their revenue streams, especially in cross-sell conversions. Fifteen percent reported even higher impact with 100 percent to 300 percent improvement in revenue, especially in new customer conversions. Whatever your growth targets are for the coming years, you cannot afford to ignore consumer demand for greater personalization — and the benefits it delivers.
Brian Elliott is the managing partner of Periscope By McKinsey, a company that combines proprietary knowledge and expertise with enterprise-class IT capabilities.