More data doesn’t necessarily mean more retailer power, or success, if not used smartly and sustainably. We look at how and why the data deluge should be used to serve intelligent personalisation – the kind that the customer actually likes.
The golden age of data and analytics is upon us. Retail data has been getting, inarguably, bigger over the last decade; in terms of volume (the sheer amount of it), variety (the different types of data, from multiple sources, much of this essentially unstructured) and velocity (it comes fast, and it keeps on coming – so the ability to handle it in as near a real-time way as possible is critical).
But it’s not a case of “more is more” if you don’t know what to do with it. Retailers have made up good ground in recent years in the face of the imperative to get a “single version of the truth” about customers. Silos were rife, inconsistencies everywhere, and the importance of having a unified customer picture not understood across the business. In the main, retailers are better now than they ever were, and getting customer information wrong is not acceptable.
Nevertheless, the question remains … what do you do with the single accurate view, what do you do with all that data? As well as being able to follow consumer trends with granularity and confidence, making use of this data should all be about personalisation.
Right now there’s an increased sense of urgency and expectation: as lockdown has driven more shoppers online – many of whom, it looks increasingly likely, will choose to stay online, whatever the future may look like, regardless of global pandemics – it’s an unprecedented opportunity to harvest much more data, and to drive the personalisation which makes a difference.
In their groundbreaking book ‘Experiences: The 7th Era of Marketing’, about rethinking marketing in the digital age, Robert Rose and Carla Johnson state:
“In this new era of marketing, unique, impactful, differentiating content-driven experiences will become as important as product development. Successful marketers will adapt and change in a constantly evolving media operation that focuses on creating delightful experiences to inform, entertain, engage and evolve the customer.”
But is it enough to do something just because we can do it? Why should we be so obsessed with personalisation in the first place? We could answer this by saying it is in order to differentiate, or to drive loyalty, or the bottom line … all of these are true and valid. But the short answer? Because the winners are.
Amazon has made personalised recommendations a large part of its success. Netflix is fighting an increasingly heated war at the moment essentially on two fronts: content, and recommendations. Few Netflix subscribers would say it’d doing anything but excelling when it comes to offering personalised recommendations. Nike has differentiated in the personalisation space: innovations include allowing customers to personalise and configure their own clothes and shoes; individual stores having locally tailored assortments (for example of “NYC favourites”); and the Nike Shop the Look app becoming a renowned success story.
But it’s not just the retail giants with their huge resources and global brand awareness who can afford to focus on personalisation. You have to start somewhere, and a critically important point to make is that what I might term a ‘virtuous circle’ comes in to play here: the more you delight customers, the more data they are willing to share with you, and the more options you have for deepened personalisation (or, dare I use the term, hyper-personalisation) which in turn deliver higher response rates, and so on.
A McKinsey survey of retailers attending World Retail Congress identified that 95% of retail CEOs see personalizing the customer experience as a strategic priority. With so many retailers bought in (in theory), what’s stopping them (in practice)?
Retailers face some common tactical challenges, both in getting personalization off the ground and in keeping it flying. These include, but are by no means limited to:
There is of course much more we could mention – building ‘next-level’ connections, customizing Loyalty and Rewards programs, running tests on A/B variations of personalisation – all of which relies on the right conjunction of big data, advanced analytics, AI, machine learning and smart design. In such an environment the real-time, agile, scalable power of Cloud is no longer optional.
Once again though, it’s not about size: retailers across the spectrum have managed to create freshly differentiated and genuinely personalised experiences both online and in-store. In part, it’s about coming up with things that customers really want. This may look very different depending on the customer in question: for some, it may be the ability to turn their rewards directly into cash, for others offers that are specifically tailored to their personal spending patterns.
And for those who feel they are doing personalisation pretty well, you can always raise your game. Hyper personalisation is about leveraging customer data and wider behavioural insights to nurture much deeper, more meaningful relationships: ones in which the personalisation is so seamless that the retailer tactics and channels just fall away, and all that’s left is a great customer experience.
At heart, it's all about making sense of data insight and developing meaningful customer analytics to help drive personalisation and growth.
No-one said personalisation was easy: delivering it seamlessly and sustainably can be tricky. Some retailers go for a ‘personal enough’ approach and therefore miss out on the central point of personalisation. Others go aggressively all-in and risk alienating the more casual consumer, one whose brand loyalty may be more fluid.
The point is, there’s a balance – a sweet spot, if you will, where what you know of your customer and what your customer expects of you meet. This is where companies like Hitachi can help you identify what’s unsettling your customers, and double-down on the success factors that set you apart.
The retail economy, post-pandemic, is going to have been reshaped to take into account the greatly increased appetite for online commerce and digital touchless methods. It’s the ideal time for retailers to up their game when it comes to gathering insight and applying analytics.
If you want to discover how Hitachi Solutions is helping retailers deliver outstanding personalisation today, please do get in touch. We’ll also be exploring personalisation in Hitachi’s upcoming LinkedIn Live event taking place on Wednesday 4th November at 11:00. It’s designed to help retailers understand the events of 2020 and focus on the way ahead.