February 02, 2015
The results of personalization are undisputed — but what’s necessary to make it work?
First impressions can provide valuable information. But anyone who’s ever been in a relationship understands that really knowing someone takes time, experience — and often, a few steps forward and a few steps back to get it right.
This year, virtually every list of leading trends touts the importance of personalization. Truly knowing your customers, anticipating their needs, strengthening your brand: It would be easy to fall head-over-heels with vendor promises. Some are in-store efforts boosted by recent technology; others are aimed at e-commerce and mobile, providing just the right experience to just the right customer at just the right moment.
After beginning personalization efforts, New York-based Sabon saw a 35 percent increase in sales on Black Friday and Cyber Monday 2014. The luxury bath and beauty products retailer credits the results to a new relationship with Dynamic Yield, a provider of real-time, automated personalization and content optimization solutions.
Inna Uretsky, Sabon’s e-commerce and marketing coordinator, believes personalization is “crucial” in today’s retail marketplace. But it’s also essential, she says, that it works in real time.
Dynamic Yield created a layer on top of Sabon’s website content management system; pages can now be broken into distinct units that Sabon can directly update with various offers, including video and promotional content.
Because numerous variations can be used simultaneously, Sabon is able to try different messages based on automated algorithms. During the Black Friday weekend, optimizations were continuously generated, leading to increased conversions and sales.
“We were a little surprised,” admits Uretsky. “We were very happy with the results. With Dynamic Yield, we could make decisions in real time, and switch up copy and images right away.” Promotions remained relatively constant during that time period, but were presented in a half dozen different ways to individual customers.
Quick changes — especially those based on algorithms and not just “hunches” — can bring quick results.
Liad Agmon, Dynamic Yield CEO, says the company’s personalization solution works not only because it puts control in the hands of the retailer rather than the retailer’s developers, but also because customers as a whole are becoming increasingly impatient. Quick changes — especially those based on algorithms and not just “hunches” — can bring quick results.
The expectations are not just related to online. Ideally, what happens in the world of e-commerce impacts the store experience in a positive way. But some personalization solutions specifically target bricks-and-mortar.
Consider beacon technology, where an in-store device emits a radio frequency that can be recognized by an app on a customer’s mobile device. When that customer is close enough to the beacon, she can receive targeted messages and promotions.
Not long ago, there was concern that some shoppers would consider beacons an infringement of their privacy.
But “Since this technology does require an app, and the users have to download that app, and they have to opt in and have their Bluetooth turned on … the only shoppers who are getting these messages are the ones who raised their hands and said, ‘Yes, I’m open to this,’” says Rebecca Schuette, director of marketing for indoor mobile marketing company Swirl.
“Because of that, shoppers have been very happy to receive the content. We counsel our retailers to only share information that would be relevant and valuable to customers on their shopping journey.”
Many retailers are aware that beacons are hot technology and want to quickly get on board, Schuette says. But in some cases, they haven’t fully considered best-use case scenarios.
“The real magic happens when someone has thought it through, and asked, ‘What problem am I trying to solve?’” she says. “Am I trying to enhance the indoor shopping experience? Then maybe I place it in a certain department and offer up relevant content.
“If my intent is to increase conversion in the store, maybe I offer up messaging about a discount or deal that’s happening, which could then be redeemed at the cash register.”
In late 2014, Swirl released the results of a study of in-store campaign performance data and surveys of shoppers that had received recent beacon-triggered messages. The study showed that 60 percent of shoppers had opened and engaged with beacon-triggered content and 30 percent had redeemed beacon-triggered offers at the point of purchase.
In addition, 60 percent said they would buy more as a result of receiving beacon-triggered marketing messages; 61 percent said they’d visit a store with beacon marketing campaigns more often; and 73 percent said the content and offers increased their likelihood to purchase during the store visit.
Even so, Schuette says, beacon marketing is “still in its infancy.” The future beacon-enabled shopping experience will be able to couple a shopper’s location with the interaction he has had with the brand leading up to that point, including in-store experiences, mobile and e-commerce.
“When you can gather all of that together, then you can really drive personalized communication,” Schuette says.
Retailers should focus on gaining a clear and transparent view of inventory that’s as near real time as possible.
Visibility and technology
Future applications aside, some retailers are still challenged by what’s already available. Schuette’s advice? “Don’t wait. Consumers are ready for it. They’ve shown us that. But start small. And then be ready to scale quickly.”
Others take a more cautious view.
Kevin Sterneckert, chief marketing officer for OrderDynamics, is a former Gartner research vice president and lead retail analyst, past senior director of global product strategy at Oracle Retail and vice president of retail for DemandTec, and has held numerous retail management positions.
His perspective is that personalization can be “an incredibly expensive investment.” Retailers who jump on the bandwagon without having the correct infrastructure in place will only end up “advertising to their customers how messed up they are.”
If a customer is targeted with a specific product, loves it, wants to buy it and then discovers that there is no inventory or that it’s the wrong size or color, trust in the retailer quickly fades.
“Just like retail has always been, it’s all about the details,” he says. Rather than highlight the rising trend of personalization, he’s keeping a different list. First and foremost, Sterneckert says, retailers should focus on gaining a clear and transparent view of inventory that’s as near real-time as possible, have a true understanding of the return process and how it is impacting the business, reconcile their pricing strategies, and better grasp what their true costs are.
OrderDynamics works with retailers to create “seamless commerce.”
“We help retailers understand what to do given the conditions that exist,” Sterneckert says. “Instead of saying, ‘Here’s what’s happened,’ which most analytics companies can tell you, or ‘Here’s what might happen,’ something more predictive, we offer prescriptive analytics … . ‘Given what has happened, here’s what you need to do.’”
What retailers need to do, he believes, is get their houses in order.
Meanwhile, Oliver Jaeger, vice president of global marketing and communications for e-Spirit, isn’t advising retailers to wait when it comes to personalization. But he is suggesting they choose carefully.
“In order for retailers to delivery personalized content you have to have the right technology,” says Jaeger, whose company offers FirstSpirit, a web content management system that integrates with leading e-commerce systems as well as customer relationship management, search engine optimization tools and the like.
The biggest challenge in the area of personalization, he believes, is the ability to turn customer touchpoints into customer trust points.
“Make sure you are not stalking your customers,” he says. “Personalization is great if your customers accept it, and they will only accept it if they see value in it. If they feel you are invading their privacy with unwanted offers, you will turn them off to your products or services. Make sure you are providing them with valuable information at each touchpoint they have with you along their customer journey.”
As we all know, trust is a necessary component of any relationship — be it customer and retailer or retailer and solution provider. So is planning for the future.
Robin Copland, vice president of retail for the Americas for software development pioneer ThoughtWorks, believes personalization efforts will only take a retailer so far; his company already is looking beyond it toward authenticity.
Efforts at personalization can still feel too broad; even beacons, he says, “are still mass market, to a certain extent.” With one client, the approach was to take what it already was known for — legendary customer service — and extend that experience online to create consistency and authenticity. Luxury apparel company Mitchells worked with ThoughtWorks to create a website that offers the ability to work directly with its style advisors just as if you were in a store.
Within the first two months, there were more than 1,000 back-and-forth communications with customers, creating a different kind of personalized service. Those communications move beyond product recommendations to help establish loyalty and brand ambassadors.
For anyone who’s been paying attention, however, the signs of current and future definitions of personalization have been there all along.
In 2007, PricewaterhouseCoopers and TNS Retail Forward envisioned the retail landscape of 2015. They forecast changing demographics, strategic outsourcing, targeted collaboration, retail outlets, a rising importance of technology and the critical need to keep customer purchase data safe and secure.
But “Retailing 2015: New Frontiers” also imagined a “new consumer,” one who would “not be easy for retailers to understand or master.”
“The value proposition guiding their product purchases is changing; consumers will put heightened emphasis on personalization, look for opportunities where their input matters, and value product and service solutions,” the report states. “Consumers are increasingly proactive in their purchase decisions and selective about with whom they want to do business.”
And, apparently, how they want to do it.
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