By Retail News Insider
If the importance of personalization hasn’t hit you yet, consider this your wake up call.
“Not only do I like getting offers that are personalized just for me, I expect it. I don’t want to be bothered with ads from retailers who don’t know my preferences. If you’re sending me offers for things that have no relevance in my life, that scream you don’t know me, you are wasting my time.” This quote from a recent conversation with U-T San Diego Retail Reporter Katherine Poythress reflects what many millennials and other shoppers across generations are craving. They want you to get personal.
While you may think it is not possible or practical to personally know each shopper who enters a store or each individual who approaches an event, the technology that is available now is quickly making this a reality. These technologies, and the topics that have been covered in issues of Retail News Insider throughout this year, are the conduits to the next evolution of personalized marketing. They will give retailers the advantage that is essential to meeting customers’ needs for a personalized experience while also aiming to positively affect sales.
“Personalized marketing seeks to meet consumers’ demands to be separated from the masses and recognized for their unique needs and wants,” says Giovanni DeMeo, Interactions’ Vice President of Global Marketing and Analytics. “With the help of Big Data and cutting-edge technologies like real-time and predictive analytics, retailers can now deliver on these expectations—and in the process, further transform the in-store experience.”
Personalization forces retailers to progress beyond the shotgun approach of the past, where every consumer received the same coupon, flyer and email regardless of his or her unique characteristics or buying habits.
Personalization is a key element of an omnichannel approach, where retailers are able to capture information, including browsing and purchase habits, from all channels. They can then use this information to provide targeted communications and customized offers for individual consumers via multiple channels (such as email, social media and in stores) that recognize and build upon each consumer’s interaction with the retailer or brand at all levels.
Whether integrated into an omnichannel strategy or used on their own, mobile apps are another powerful platform for personalized marketing. Retailers have already responded to the growing number of shoppers using smartphones and other digital devices in-store by designing apps to push ads, item location within stores and special offers to customers via these devices. Typically, these are based on previous purchase or basic demographic information. But the real leaders in the industry are pulling to the front of the pack by integrating predictive analytics and modeling with their mobile offers.
Today’s predictive tools enable retailers and advertisers to go beyond backward-looking analyses and send customized marketing communications based on individual behavioral patterns that indicate what a consumer’s future purchases will likely be, even if those items appear to be completely unrelated. For example, data mining may reveal that shoppers who buy a certain brand of pet food are also more likely to purchase paper towels during the same shopping trip. Discovering this connection would then allow retailers to cross-promote the two seemingly unrelated items or advertisers to target a previously untapped audience.
Layering in additional data and applying carefully crafted predictive models may further reveal when a targeted offer is most likely to push a consumer to buy and what type of promotion he or she will best respond to. For example, some shoppers may be more likely to act on—and therefore receive—buy-one-get-one offers on weekends, while others receive cents-off coupons on weekdays.
Some retailers are taking things one step further by incorporating in-store tracking into their mobile apps. When a shopper launches the retailer’s app, the app can then tap into the GPS and/or WiFi sensors in the shopper’s mobile device and follow his or her movements inside the store. As real-time data is collected about shoppers’ movements, retailers can push timely and relevant offers for nearby items that might be of interest based on the individual user’s typical shopping behavior and/or predicted buying habits—or to help recapture a potential lost sale (for example, if a shopper spends more time in a certain area, indicating some hesitation on whether to buy).
Not all personalized marketing methods rely on consumers to provide part of the technology being used. Some cosmetics companies have started using interactive displays that allow shoppers to “try on” makeup virtually. Facial recognition software determines how a particular product and shade will look on an individual shopper based on her skin tone, eye and hair color and other factors. These displays then deliver targeted advertisements and special offers based on a user’s customized results.
“In the near future, these displays might integrate voice recognition and talk directly with the consumer, further personalizing the message and even helping the consumer locate and pick out the product in-store,” says DeMeo. With greater advancements in technology, experts also believe such platforms could be expanded to link to other databases detailing Internet browsing history, social media presence and other elements of big data—and potentially even pinpoint individual identities. This would allow for even greater personalization in marketing messages.
As much as this last example highlights the power of data and the incredible potential of personalized marketing, it also exposes one of its biggest challenges: avoiding the “creep” factor that can result when personalization crosses too close to privacy invasion. However, this challenge can be overcome.
For starters, retailers have to build a basic level of trust by making it clear to consumers exactly what information they are collecting and why. They also need to give consumers the choice of whether to participate—for example, by only offering the service to shoppers who deliberately opt-in (such as by downloading an app). “To convince customers to opt-in, retailers and brands have to build loyalty with them and offer a clear value,” says Abhi Beniwal, Interactions’ Senior Vice President of Global IT.
The customized service itself may be enough to incentivize some shoppers. Others, however, may be swayed by targeted discounts, perks that make shopping easier like enhanced store navigation or features that save time, like the ability to instantly order an out of stock item for home delivery the next day at the same price.
“Although we’re not at the point where every single message is personalized, we’re moving in that direction,” says DeMeo. As such, personalized marketing is quickly becoming a must-have instead of a nice-to-have. By evolving to deliver a more customized and individualized marketing, retailers stand not only to meet the demands of an ever more powerful customer base—but also to revolutionize the in-store experience as a whole.