How close are retailers to personalization?

Discussion
Jun 16, 2015

Last month I was a guest of personalization vendor Monetate at their customer Summit in Philadelphia. In her CEO keynote, Lucinda Duncalfe introduced a concept she calls the "Five Stages of Personalization."

In essence it’s a maturity model for marketers and e-commerce professionals looking to develop a personalized approach to how they engage with consumers.

The five stages are:

Level 1: Test – Optimization of web/e-mail/mobile experiences based on A/B testing. This has been a pretty standard practice in digital marketing for years now. The problem is that by relying on averages to pick a single preferred execution, the traditional optimization can leave large segments of your audience unsatisfied with their experience.

Level 2: Target – Identifying target consumers via in-session or contextual data and behavior. Examples include geo-targeting based on IP or campaigns triggered by cart abandonment.

In-store personalization

Photo: Honeywell

Level 3: Segment – Leveraging first and third-party data to deliver custom experiences to different segments. Examples are serving three to five versions of a homepage experience to identify customers that fall within a persona-based segment developed by the retailer.

Level 4: Synchronize – Multi-device customer journeys integrated across channels. The best examples still come from outside retail. Think of how Google Maps on your phone is enriched by data from restaurant and hotel reservations you’ve made on your PC.

Level 5: 1:1 – Auto-optimized personalization delivered at the individual level based on intelligence derived from a single view of the customer. In the 1:1 world, consumers’ experience with a brand will be personalized based on all that the brand should know about them: prior purchase history, browsing habits, color preferences, shipping preferences, physical attributes (shoe size, skin tone).





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Maturity models can be very effective as a tool for assessing your current state and helping management make explicit choices about where to make improvements.

Ms. Duncalfe’s model has a primary focus on digital e-commerce experiences, but brands should remember that there are rich opportunities to personalize experiences in offline channels as well. Much of the same data and many of the same tools that enrich an online experience can be placed on a mobile device in a store associate’s hand to make the in-store experience more personal and relevant. With most retail still happening in brick and mortar, personalization based on purchase history will often be sub-optimal without the integration of data from all channels.

Do you see value for retailers in judging their maturity based on the “Five Stages of Personalization” model? How would you suggest retailers work personalization data into offline shopping experiences?

Braintrust
"This is a logical approach to take towards personalization, but there are two cornerstones to success or failure of any model: respecting users’ privacy/comfort level and doing more than offering discounts."
"Retailers looking to become leaders in personalization will benefit from building a customer engagement intelligence platform that can be leveraged across all interaction points at all times."
"Pretty good model, especially for online where it is easier to execute personalization electronically. For personalization in offline, there is the issue of data and the issue of delivery."

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10 Comments on "How close are retailers to personalization?"

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Ralph Jacobson
BrainTrust

Along with these aspects of personalization, I see social merchandising in conjunction with lift analytics emerging as ways to augment this process and to drive truly compelling promotional campaigns for retailers.

Max Goldberg
BrainTrust

This is a good model for retailers, both for setting goals and for comparing their personalization efforts against competitors. To master these five steps retailers need to commit the necessary resources, both mechanical and human. Many are not willing to go all-in, preferring to take small steps.

If a retailer reaches step five it will be able to personalize offers for consumers, encouraging and rewarding them for coming into stores and for shopping online.

This is not a simple process. Each step requires a management commitment and resources. But if done well, the cost of implementation can be offset by increased sales, profits and customer satisfaction.

Ken Lonyai
BrainTrust

This is a logical approach to take towards personalization, but there are two cornerstones to success or failure of any model: respecting users’ privacy/comfort level and doing more than offering discounts.

Many years back Jim McCann (CEO of 1-800-Flowers) told of how their new phone system identified callers so that customer service reps would say “Hello (first name)” and it creeped out callers, so they abandoned the idea. Fast forward to the potential intrusions that big data can bring and the lesson is go cautiously and go slowly.

Acknowledging that while personalized offers of discounts are probably more effective than generic ones and that shoppers like savings, they still expect more than overt pitches to grab at their wallets. Consumers want something meaningful and truly helpful and they’ll probably respond to that, without the need for couponing.

gordon arnold
Guest

Any effort that diverts attention from inventory turns, out-of-stocks and market awareness and acceptance need to be measurable in profit dollars as a term of return on investment. Personalization as a tool to increase sales will only increase profits when and where it is perceived as more important than price performance/quality and support. There are times that this entity is in fact a primary ingredient for the sale but this is as a percentage of sales in single digit-ville and getting lower as the economy continues to decline.

The first question to ask when preparing to market a value-added aspect to the mainstream of products and services is whether or not the clientele, existing or perspective, are will to pay more for it. After all, it will add to the costs of doing business and should at least pay for itself.

Vahe Katros
BrainTrust

If I were a retailer and wanted to determine my level of maturity either in people skills or systems capability, I would find this model confusing.

I would think that the capabilities would vary based on anonymous and returning customers. And that for each type of visitor, there would be an increasing level of personalization. But to confuse things more—here are some notes I made in trying to figure this out.

  • Anonymous vs. identified – multi-levels based on real time learning
  • Single channel vs. multichannel – works on multi channels
  • Integrated vs. siloed – ability to follow a shopper thru the channels
  • Learning vs. Non-learning – gets better with each visit
  • Augmented with external data – integration with relevant external data sourcesThe intent is valuable – to allow retailers to say: “Hey, we could be doing this level of personalization if we had these skills, systems and tools, and if we could do that level it would translate into $x ROI so let’s do it!”
Doug Garnett
BrainTrust

We must continue to question how critical personalization is to profits. Certainly, it’s very productive in direct marketing to target an email campaign according to the people receiving it—in broad ways.

But I find we need to keep in mind a truth about shoppers: A great many want to shop incognito. We don’t shop in order to “be known.” We shop to satisfy needs (which may include retail therapy).

As we progress to the higher levels of Ms. Duncalfe’s model, I begin to question the value. And, at lease in response to the RetailWire instapoll about “achieving these levels,” my real question is “should they try to?” I don’t think so. The best profit comes in the middle—and not by obsessing about personalization.

Graeme McVie
Guest
Graeme McVie
2 years 6 days ago

Retailers looking to become leaders in personalization will benefit from building a customer engagement intelligence platform that can be leveraged across all interaction points at all times. With a customer engagement intelligence platform, the retailer analyzes all interactions with a customer and updates each individual customer’s profile data on an ongoing basis. This approach allows a retailer to always have a relevant set of offers available for each individual customer and it can then be used to drive all interactions that align the strategic, tactical and operational objectives of the retailer with individual customer needs:

  • Monthly personalized communications that are fully optimized across content, creative, offer amounts, offer combinations and channel
  • Weekly communications that align with tactical plans
  • Hourly or daily communications either via digital channels or in-store via beacons or store personnel
  • On-the-fly interactions delivered via the ecommerce offering

This approach is already gaining traction with retailing leaders today and it will become essential for most retailers in the coming years

Shep Hyken
BrainTrust

The most important level is 3. This is where the customer gets a customized experience. Done well, it will bring the customer closer to the retailer. However, the retailer has to be cautious not to abuse their relationship with their customer. First, the customer must opt-in. Second, the retailer must meet the customer’s expectations of frequency of contact. Third, the customer must receive value as a result of this personalized marketing experience.

Kenneth Leung
BrainTrust

Pretty good model, especially for online where it is easier to execute personalization electronically. For personalization in offline, there is the issue of data and the issue of delivery. To deliver a personalized shopping experience offline, you need staff trained to deliver great customer service, personalized or not. Unless you are dealing with vending machines, there isn’t a good way to deliver personalized shopping experience in the store that isn’t forced.

Shilpa Rao
BrainTrust

This is a good approach to benchmark where a retailer stands today. Most online retailers are somewhere between 2 and 3, while a very few are experimenting with level 5 and it’s important to balance the nice to creepy scale.

With loyalty cards, retailers have been able to segment and provide offers and discounts for a long time now. However, offering a more personalized offline experience would need a technology overhaul and process re-imagining to enable it.

wpDiscuz
Braintrust
"This is a logical approach to take towards personalization, but there are two cornerstones to success or failure of any model: respecting users’ privacy/comfort level and doing more than offering discounts."
"Retailers looking to become leaders in personalization will benefit from building a customer engagement intelligence platform that can be leveraged across all interaction points at all times."
"Pretty good model, especially for online where it is easier to execute personalization electronically. For personalization in offline, there is the issue of data and the issue of delivery."

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