Using personalisation to transform customer experience in retail
Personalisation is an everyday experience for almost everyone today. Use Amazon, Netflix or Spotify and you know you'll be addressed by your name and tempted with recommendations tailored just for you.
The reason these global tech giants base their business around personalisation is simple: because it works — driving customer loyalty and repeat purchases. But not all retail brands have the right expertise or tools in-house to deliver sophisticated digital solutions. How can personalisation work for those ambitious brands looking to take their customer experience to the next level?
The good news is that customers don't expect every retailer to be like Amazon. But there's a wealth of evidence that they appreciate personal attention, enjoy an immersive, interactive experience, and respond by being better customers. Personalisation has been shown to work well for retailers of all types, increasing sales and producing an excellent return on investment.
It can be the great differentiator
Differentiation on price used to be the key weapon for retailer businesses, but it is becoming more difficult to compete that way for many. In a world of aggressive discounters and easy online price comparison, they need to focus on new ways to appeal to customers. That means offering added value rather than (or as well as) low prices. In this transformed world, personalisation is an effective and achievable way to stand out from the competition. People want it, value it and respond to it.
80% are more likely to make a purchase when the retailer offers a personalised experience.
E-commerce is changing the way we shop
The background to the evolving retail landscape is the rapid growth of e-commerce, dramatically accelerated by the COVID-19 pandemic. We have all lived through those long periods of lockdown when there was no other way to shop for non-grocery items. People had to adapt and they did — at speed. That genie will never be back in the bottle.
UK online sales rose by 347% in 2020
In the post-pandemic future, this focus on buying online will simply take its place as part of a new way of shopping. Today's customers aren't online shoppers or in-store shoppers, they're both at the same time.
They expect a seamless shopping experience across online platforms, their social media feeds and visits to physical stores in malls and high streets.
This opens up new personalisation possibilities for retailers, enabling them to build one-to-one online relationships with customers that can be extended across every platform and into physical stores.
This is also changing the dynamics of the retailer-customer relationship, making it much more of a two-way affair. UK shoppers have "become critics and creators, demanding a more personalised service and expecting to be given the opportunity to shape the products and services they consume" Welcome to the interactive future of retail.
Creating an immersive shopping experience demands an omni-channel strategy
Personalisation once meant little more than targeting different offers at different groups of customers. Now it extends to an entire multi-channel customer experience. Immersive is the key word. People expect personalisation to suffuse every aspect of their interaction with your business. They won't stand for being treated as "people like you". They insist on being "the one and only ME". That means personalisation strategies have to look far beyond saying "Hi Jane, you bought this so you may like these".
How an omnichannel personalisation approach can work
Sephora, the France-based international beauty products retailer, is a shining example of a company that has made omnichannel personalisation work superbly. The starting point was using its digital channels, particularly the popular mobile app, to get customers booking in-store makeovers.
- During the makeover, the store assistant inputs each product used into the customer's in-app personal profile.
- After the visit, the app allows the customer to virtually try on products and recommends further products based on their profile.
- Next time they visit a Sephora store, they are prompted to use the app to find the products they virtually sampled earlier.
- Every Sephora communication with the customer on any platform displays the customer’s loyalty points.
- Sales staff also see these point totals and can access a customer’s profile in-store, so their interactions with the customer are based on a full picture of each customer's in-store and online purchases, online browsing and dealings with in-store salespeople.
Sephora’s personalisation-based loyalty programme now has around 25 million members. In 2018, its members accounted for 80% of Sephora’s total transactions.
Personalisation demands data, so what about privacy?
Personalised marketing has been defined as "an approach where brands deliver tailored messages, products, experiences or services on a one-to-one basis by leveraging data and technology to meet or anticipate a customer's need."
As the Sephora example shows, it is only achievable when you are collecting and analysing customers' personal and purchasing data in ways they are happy to co-operate with.
In a recent survey, only one in five consumers said they were happy for businesses to use their personal information to offer them more personalised products and services, increasing to one in four among 16 to 24-year-olds.
However, the evidence from Sephora and elsewhere is that people don't mind divulging their data as long as they're getting something back that they value. But it's a universal truth that people don’t like to feel that they are being tracked. And they hate being pestered.
Too many emails or clumsily targeted ads can be the wrong kind of personal: making us feel stalked and inspiring distrust in the brand. User experience (UX) experts warn that any benefit gained from tricking or misleading customers is likely to be very short-lived.
When personalisation goes wrong
Like every activity, personalisation can be done superbly, averagely or badly. Because it's talking to the customer as a private individual, it elicits a very personal and subjective response. If that response is a negative one, there will be serious consequences.
Think about how we all respond to the personal recommendations we already see. Sometimes we think "Hmm, that's a good idea, I might buy that". At other times our reaction is more like "What? No! I'll make my own mind up thank you very much".
57% of online shoppers report that they’ve stopped buying from a merchant because of a bad experience.
Personalisation pays when it's done right
Personalisation, when done effectively, provides you as a retailer with more engaged customers, often prepared to pay more per item as well as buy more frequently. Some of the statistics around personalisation are pretty persuasive:
- One in five consumers who expressed an interest in personalised products and services are willing to pay a 20% premium
- Personalisation programmes can reduce marketing and sales costs by up to 20 percent
- People are 40% more likely to spend more than planned when they perceive the shopping experience as highly personalised
In general, a positive customer experience is hugely helpful to a retailer’s success. It can yield:
- 20% higher customer satisfaction rates
- 10 to 15% increase boost in sales conversion rates
- 20 to 30% improvement in employee engagement
Above all, retailers with consistently high customer satisfaction scores have provided their shareholders with returns three times higher than those generated by retailers with low customer satisfaction scores.
In short, personalisation is no longer a "nice to have" for retailers. It's becoming the most likely key component in any successful marketing strategy.
Ready to explore how personalisation can work for your brand?
The big question for any non-grocery retailer right now is how can we be successful in the changed post-pandemic world? As one expert commentator puts it, "If there’s not a seamless physical-to-digital interaction, then it won’t work for gen Z. For the next generation, physical retail spaces will be considered a place for discovery and for tapping into a community experience, while e-commerce will provide ease and efficiency for purchasing."
Personalisation can be the bridge between digital and physical in the new "phygital" retail world. Every business will need to use it differently, which is why expert marketing advice is crucial. With that in mind, we have created a programme to help brands get a head start into the future. Learn more about our Transformation Sprint or contact us for a chat about how we can help your brand grow.