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Balancing personalisation and security in a data-driven retail world

6th Jul 2016
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There is a fine line between gathering enough data to provide consumers with a personalised shopping experience, and gathering so much that it borders on being invasive, or it becomes dormant.  

Consumers expect a bespoke shopping experience. To deliver this, retailers need to ask themselves; what data they need to collect, how to connect this data to build a more vivid picture of the consumer, how they are going to assemble the data from different sources and how it should be presented to drive value.

Optimising the shopping and brand experience, driving loyalty and increasing sales opportunities comes down to understanding the customer. Yet despite the huge range of data sources at a brand's disposal, this remains challenging.

The customer journey is much more fragmented than it used to be. The consumer may start by browsing in-store, which can quickly move online as they price-compare on their mobile, adding items to a shopping basket on their tablet device, and then finally converting the purchase on their desktop. Retailers need to be tracking this journey to be able to understand exactly how customers are shopping. Whilst creating a 360-degree view of the consumer is near-impossible, retailers need to work hard to create a seamless shopping experience with consumers, engaging at every retail touch point, in order to turn browsing into sales.

Building this bigger picture of the consumer and unveiling what makes customers click is where data comes in. Data sits at the centre of creating this more vivid understanding of who the consumer is, what they are looking at and ultimately what they are buying.

The ‘little data’ problem

The temptation in recent years has been to try to know everything about your customers. 'Big Data' has been one of the biggest buzzwords, and the accessibility to new data has certainly been a contributing factor. In the same way that we like to complete jigsaws, retailers crave the idea of a piecing together a complete picture of their customers, but this isn't always the best approach.

With so much information readily available, it may come as a surprise that the challenge for many retailers is the 'little data' problem. Unless you operate a supermarket or marketplace, typically consumers won't interact with you every day or week. In fact, purchasing patterns, especially for fashion and apparel retailers, are much more sporadic. Many of these interactions will be the first visit to the store or site, in which case there will be no transaction or browsing history data at all on which to base a profile. This is where retailers may find themselves challenged to provide the personalised experience that consumers expect.

To address this challenge, retailers need to think carefully about what data should be collected and stored and whether it is actually being fully optimised.

Understanding what is driving customer loyalty means that retailers can tailor what data they gather. Just knowing which products are popular can influence stock and is just one benefit that gathering the right data can have on building customer satisfaction and ultimately their brand loyalty.

Processing what that data means

When it comes to understanding consumers, retailers need to remember that ‘you are what you buy’. Knowing that a person is of a certain origin and lives in a particular area is not particularly valuable. But the fact that you like a certain brand of boots – that is interesting.

Gaining value from data comes from a combination of deep sector knowledge and analysis. Sourcing and analysing web browsing history and actual buying bahaviour data means that as a brand, you can deliver a tailored experience based on who the consumer is and what they want.

Analytics should expose information that is novel, non-obvious and actionable. Most of the time the insight provided by analytics is either too obvious or too ambiguous to be able to act on or drive value from.

While consumers expect a bespoke shopping experience, they are also sensitive to handing out personal data that retailers require to be able to do this. As such, retailers need to deeply infuse true personalisation into their websites, to the point that the shopper won’t know that they’re being targeted to, whilst resulting in a significantly improved customer experience.

When it comes to deriving more strategic insight, data needs to be centralised and put to good use. Retailers need to be aware that collecting and using some data is better than endlessly striving for a perfect profile and never using what you have.

Getting the balance right

With new innovative and connected technologies making their way into the retail environment, retailers are facing new security threats across every device and every channel. Recent breaches have shown that personal data is hugely attractive to hackers. And customers have high expectations and hold a huge amount of trust with brands when it comes to keeping their data safe.

As has been highlighted by a string of cyber attacks exposing, at times highly sensitive customer data, consumer confidence is delicate and can be easily damaged. Transparency is vital in building and maintaining consumer trust. Not only must retailers communicate with their customers about what data they collect, but they need to show how this data is being used to benefit them and their own shopping experience. Consumers aren’t naïve to their data being used by retailers but they do require transparency and honest communication in exchange for their trust.

Brands must start implementing a core data strategy that drives personalisation in a way that also puts customer privacy first.

Our data-driven future

The application of data in retail is incredibly powerful, both in delivering improved every day operational performance and long-term strategic insight. But it is not without risks. As some brands have already found, storing rich customer data makes them an attractive target for hackers. The customer experience should be looked at as a service and not just marketing process.

This may be our data-driven future, but many brands have a long way to go to achieve it. And getting there may require walking a tightrope between freedom and security.

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