RSR Research: Personalization vs. Relevancy
a special arrangement, presented here for discussion is a summary of an article
from Retail Paradox, Retail Systems Research’s weekly analysis
on emerging issues facing retailers.
I have been sorely tempted to declare this
year the "Year of Retail Relevancy." Retailers
are getting a better picture of customer behavior in their stores, thanks to
more technology touchpoints that can capture what consumers are up to (including
consumers’ personal devices). Retailers have more data about consumers
than ever before, and are (theoretically) getting smarter about using it well.
Retailers also understand that while consumers have concerns about privacy and
how their data is getting used, they also desire for their favorite retailers
to demonstrate that they "know" them.
This last concept, at the surface
level, seems contradictory. Actually, I’ve
had a lot of complaints from retailers about this contradiction. The conversation
goes something like this:
Me: All of our research shows that retail winners are working hard
to provide more relevant experiences to individual customers.
Retailer: Yeah, but all our customers tell us that they don’t
want us to violate their privacy. So how do we create personalized experiences
without getting personal?
Well, that hits on exactly the problem. Personalization
does not equate to relevancy. However, done well, relevancy can feel like a
personalized experience to a shopper.
Let me give you a classic example. My
household is a die-hard Coca-Cola household. We have never once, in the 15
years that I have been married, purchased anything other than Coke. So as a
retailer, you might have Pepsi breathing down your neck (and paying you fistfuls
of cash) to give me an offer that might tempt me to switch from Coke to Pepsi
— to try a new Pepsi line or flavor, something, anything to try to win me
away from Coke.
If you approach me through the lens of personalization based on purchase
history, but no context to that purchase history, you might be tempted to take
the money and deliver me the offer. I may not redeem it, but it doesn’t
hurt, right? And if I do redeem it, it’s no skin off the retailer’s
back because you sell a product either way. Wrong. And that’s why this
is the year of relevancy in retail.
If I have been your customer for, let’s
say, six years, and in that time I have never once purchased a Pepsi product,
what is my perception of you when you hand me that offer for Pepsi? Increasingly
it is, "I have given you
six years of my grocery business, week in and week out, and you have just given
me an offer you know I will never use. Don’t you know anything about
That’s the difference between personalization and relevancy.
approach your customers with only the idea of selling them more stuff, then
you’ve already lost the battle. That’s the narrow
vision of personalization: how can I use their purchase history to sell them
more stuff? If instead you approach your customers with the intention of helping
them out, whether that yields an immediate sale or not, then you are approaching
them through the much broader vision of relevancy. And customers will notice.
And keep coming back for more.
Discussion Questions: How can retailers create more personalized experiences without getting too personal? What do you think of the overall goal of ’relevancy’