The concept of personalisation has its roots in the local stores of old, when the shopkeeper knew each and every one of his customers intimately. It was with this knowledge that he was able to tailor his service and offerings to each of his shoppers, ensuring that their preferred products were always in stock and even recommending new goods based on their preferences.
Based on good old-fashioned etiquette, this approach was powerfully effective, such that in Dale Carnegie’s popular 1936 book ‘How to Win Friends and Influence People’, the value of remembering someone’s name, and noticing details of others was a key tenet.
But from the 60s, mass-consumer society increasingly led to a loss of this intimacy. Customers became anonymous, mainly because it was impossible for retailers to know the thousands of customers they served each day to the same personal level.
The shopkeeper’s understanding of customers sadly seems like a lost art. But this personalised service has re-emerged in recent years under a different guise.
“With the introduction of the internet, and subsequently the ability to track customers’ activity, brands now have the means to bring back this personal experience,” says Julie Hesselgrove, group president at Xerox Communication and Marketing Services. “The willingness of customers to give brand owners information about themselves (much like the gossipy chats they’d have with their local shopkeeper) means personalisation is, again, high on the agenda.
“In the direct marketing age, personalisation moved from names and addresses in direct mail, to more detailed print communication – bringing in data and images that would resonate with the customer. In the early internet age, personalisation meant profiling customers and presenting some variable content based on previous buying behaviour. Whilst good, this is still a relatively unrefined level of personalisation.”
Personalisation is key
Indeed, we are now witnessing increasingly sophisticated levels of personalisation, something that is the result of the convergence of three factors: increasingly cost-effective technology, troves of customer data that can be used to tailor the online experience – and growing desire of fast-moving retailers to stand out amongst fierce competition.
“The way we shop and make decisions has changed. Brands can either engage in a price war to win customers, or they can deploy intelligent marketing and services – and this is where personalisation comes in,” suggests Graeme Collins, head of marketing, EMEA at RichRelevance. “Personalisation empowers consumers with more choices and flexibility in their shopping experiences. Depending on the individual’s preference and lifestyle, marketers can employ a range of tactics - from personalised product recommendations and targeted promotions to optimised email and personalised content solutions.”
Hari Shetty, vice president and global head of retail, Wipro Limited, adds: “With the intense competition for mind share of customer, retailers are faced with the problem of being relevant. Mass communication and traditional methods of marketing are becoming less relevant in today’s market place with the shifting demographics and technology invasion. Customer intimacy will be the building block of the retail industry. Capturing and using consumer data effectively provides the opportunity to reconnect with the customer on his or her terms to deliver an optimum retail experience based on their desires and needs.”
But there is also a growing desire for personalisation from the consumer. Now, in the age of the ‘always-on’ customer, the expectation is that every web page, mobile or tablet interaction, piece of printed communication will acknowledge the customers preferences and treat them as an individual.
“Consumers want personalised services and are surprisingly willing to share their personal data in order to get them,” says Samson David, chief operating officer at Infosys EdgeVerve. “An Infosys study of 5,000 consumers worldwide (including 1,000 in the UK) found that 78% of British respondents would be more likely to buy from retailers if they were served with targeted, relevant offers.”
He continues: “Brands are waking up to the fact that they can longer simply take a scattergun, one-size-fits-all approach to marketing and services – personalisation is key. Consumers want to be addressed by name and they expect brands to understand what they are looking for, often before they know themselves.”
However, all too often, people are still bombarded with ad hoc marketing messages and in Infosys research, respondents said the online promotions and emails they currently receive are not compelling enough.
The problem is that even though customers are increasingly intolerant of retailers who do not provide the services and level of experience they seek, and even though the technology has become cheaper and the volumes of available customer data so much deeper, personalisation still remains a challenging feat to pull off – even if some leading-edge retailers make it seem simple.
John Pincott, managing director of Shopatron, warns: “Amazon and eBay have long convinced consumers that there is a benefit to signing in prior to starting their shopping experience, as it allows for a highly personalised experience. This includes using your name, showing results based on your past searches and purchases and other personal information (such as birthday, gender). But most retailers don’t have that luxury, and certainly not your average mid-sized retailer. These have to rely on implied preference, or even selections the consumers make on their website. For example, many retailers offer a product filter for size and colour preference, or make inferences based on geographic location.”
Paul Phillips, technical director at Information Builders, adds: “True personalisation is an incredibly data intensive task; both combining detailed, historical data and adding future, predictive insight. You need to be combining real-time data from a number of sources (such as GPS location, pages visited, products viewed, etc.) and combining this with an immense amount of background and historic data (such as previous transaction records or demographic detail) that provides additional context. Businesses need to be able to master the balance of live and contextual data to begin to make the most of personalisation.”
He continues: “Organisations are also facing a challenge in making sure that they’re adhering to increasing consumer and regulatory demands when it comes to use of personal data for smarter sites and services. The EU’s commitment to making data protection reforms will have a real impact on any businesses using customer data for personalisation.”
To further complicate matters, personalisation isn’t universally embraced – meaning that businesses need a deeper level of insight, to be absolutely clear about which customers desire it.
“A key obstacle is the imbalance between what customers say they want and what they’re willing to do to get it,” explains David. “They will chastise companies for offering irrelevant recommendations yet, when that same company asks for access to social media data in order to track their behaviour, they will often opt out. In many cases, the cause of this disconnect is a lack of understanding and awareness on the consumer’s part. Recent media coverage of data leaks and hacks at some of the world’s biggest retailers has skewed public perception, with people now fearing the consequences of sharing any personal data at all. In reality there are strict laws governing data, and the high-profile prosecution of Google and others means companies are doing all they can to keep customer information safe. However, it is now up to those companies to convince consumers that their data is in good hands.”
Clearly, while the tools and technologies are now affordable and powerful enough to support personalisation at scale, businesses are still getting to grips with the unique challenges presented by this field. Giles Pavey, chief data scientist at customer science leaders dunnhumby, believes that it is now up to marketing to mature in line with the technology.
“Great people, who are empowered to act, have always been able to enable personalisation, albeit on a small scale - a classic example of this would be the corner store owner who knows all their customers by name and understands their requirements and stocks the store accordingly,” he notes.
“Digital technology is a necessary, but by no means sufficient, requirement for personalisation at scale. However, technology has progressed far faster than business and marketing’s ability to redefine itself around a personalised delivery. Hence we find today a situation where personalisation at scale is for the first time theoretically possible but few have mastered it.”
Fortunately, there are signs that the field continues to mature and evolve, and businesses are becoming more sophisticated in their mindset and efforts.
“Personalisation is expanding from online to in-store,” suggests Collins. “More than this, it's now bridging the two, as omnichannel is an undeniable reality for today’s retailers. An effective personalisation strategy must target consumers shopping across channels in a multitude of ways.
“We’re all familiar with tailored search results and product recommendations. But there’s more to personalisation than this. Imagine that you’re walking into a pharmacy to collect your regular prescription. A top class store will be able to detect that and save you time by bumping your order to the front of the queue.
“Retailers are recognising that personalisation doesn’t centre on discount vouchers. The benefit for the consumer must equal or surpass the cost of sharing their data. True personalisation is about providing value and convenience to the consumer.”
So how can your organisation ensure that your approach to service and marketing personalisation is not only in sync with your technology, but – most importantly – it is in sync with your customers?
In the coming weeks, MyCustomer will be looking at ways that organisations can step up their personalisation efforts, and deliver additional value and convenient to your customers. In the next article in this series, we’ll be examining how to build a personalisation strategy.
About Neil Davey
Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 15 years, including Internet Works, CXO magazine and Business Management. He joined Sift Media in 2007.