The War for the Customer Gets Personal
A unique, personalised product or experience was once the preserve of the few, not the many. That’s changing. And fast.
Consumers in today’s digital world have never been more demanding. “The fact that we experience retail, travel and dining through the same digital interface – through websites and apps – makes it easier for us to compare these previously separate goods and services,” argues Nick Worth, author of a new book ‘Marketing to the Entitled Consumer’ and CMO of Selligent Marketing Cloud.
As a result, consumers are constantly comparing between companies and raising their expectations. “Whenever we buy clothes or book a holiday, it sets the bar higher for all our future experiences,” Worth tells Visa Navigate in an interview. This ‘transference of entitlement’, as Worth calls it, applies whether a consumer is shopping online or from a bricks and mortar store.
According to a survey of 7,000 consumers conducted by Worth, 74% of consumers “expect companies to treat me as an individual, not as a member of some segment.”*
Accenture research† shows that 91% of consumers are more likely to shop with brands that recognise, remember, and provide them with relevant offers and recommendations. We expect brands to tailor interactions to us, whether they are a Savile Row tailor or a mass market chain selling inexpensive t-shirts.
It’s only those brands able to close the ‘digital gap’ between on and off-line experiences that will achieve genuine competitive advantage.
The Data Challenge
Whether brands win or lose in this space will be largely based on how they collect and use consumer information. With data holding the key to best practice personalisation and consumers increasingly recognising the value of their data, it is critical for brands not to overstep the mark from cool to creepy, and maintain consumer trust at all costs.
They must acknowledge that consumers may want different experiences at different times from the same brand – and that consumers appreciate brands which are aware that just because they bought purple velvet trousers once, it doesn’t mean they want a new pair every week.
For brands, there is often an assumption that gathering more customer data points makes finding insights easier. In reality, this approach may just create larger haystacks in which to find the same needles.
As well as the potential problems created by the sheer volume of data it is also important to consider that in order to be helpful to merchants, data needs to be both identifiable i.e. linked to a customer, and ‘clean’ and in one place. Jeriad Zoghby, Global Lead for Personalisation, Accenture Interactive, advises that when it comes to data analytics, “it’s important to be thoughtful about the questions we as business leaders ask analytics teams.”
Thinking about how to build and maintain consumer trust while collecting data is even more important. Zoghby explains that there are three basic rules for ‘cool’ (rather than creepy) brands: first, be transparent about how customer data is collected and what it will be used for; second, give customers control over their data; and third, ensure the data is used to serve their needs.
The pillars of mass personalisation
The idea of large-scale personalisation may itself seem counterintuitive. Tailoring every single element of an experience to an individual or trying to anticipate everything a customer could want is not a viable business model if you want to have more than a handful of well-heeled customers.
However, Zoghby is adamant companies can make it work through advances in technology and a clear idea of what is scalable and achievable.
The goal of personalisation should be using data to make it easier for me as a customer to find, buy and consume what I want, on my own terms. If you do that, you win,” says Zoghby.
The first pillar of personalisation is creating a ‘digital dialogue’ which puts customers in active control of the interaction and driving the dialogue – not being passively ‘pitched to’ with offers.
Think about a local supermarket. As a customer walks in the door, they ask their phone assistant for promotions on items they care about (e.g. ingredients for a recipe or dietary regime). This is more appealing than an untailored text of offers from the store, which may only remind them that they are giving away data without getting much in return.
“Physical retail is starting to move into a world of conversational frameworks between brands and consumers, curated and controlled by the individual,” Zoghby argues. As voice and image-search technology become ubiquitous, integrating them into these frameworks is a priority.
The second pillar, also driven by emerging technology, is to enable consumers to customise, visualise and interact with merchandise. This comes through digital experiences, especially augmented reality, while embracing discovery and sharing via social media.
Sephora, the France-based multinational chain of beauty stores, is widely acknowledged as a winner in this area of personalisation. The brand has ranked top in Sailthru’s personalisation index two years in a row (at the time of production) in part because of its innovative app, Visual Artist, which combines augmented reality and facial recognition to allow customers to virtually “try on” a vast cornucopia of products.
The third pillar is curating an experience to a consumer’s taste - offering them products and services they actually want and need.
Today, most online recommendations are based around the idea that ‘people who bought this item, also bought…’. While effective, if not done carefully can lead to incorrect recommendations. Worth articulates this as the ‘white socks’ problem.
“Most people buy white socks so unsophisticated algorithms continue to recommend them…that doesn’t enhance customer experience, it is just a frequently sold product,” he points out. Successful curation requires more detailed analysis of data.
JBC, one of the biggest clothes retailers in Belgium, is cited by Worth as making more tailored recommendations – and applying those recommendations in both physical and online formats. By analysing data intelligently JBC makes more effective product recommendations. “They can look at a customer’s history and say, we saw that you bought children’s clothes in a certain size last fall. Now that it is August, here are some options for summer clothes that would fit a child nine-months older,” explains Worth.
JBC’s real edge is how it closes the ‘digital gap’ by providing this information to its in-store sales assistants. By scanning a loyalty card at the point of sale, store assistants can make product recommendations and extend individual offers, typically reserved for the digital realm, in a physical store.
The next level of understanding for retailers is to know their customers and understand what they are doing outside of ‘their walls’, making recommendations on intelligence that goes beyond shopping habits in a single store. Major grocers already use aggregated industry data to learn what their customers spend at competitors and build a fuller picture to inform product targeting. New online data sources are accelerating and deepening the opportunities for retailers to learn even more.
The fourth element - advice - may be the key to the future of personalisation, but right now it is the least developed of these four pillars. Giving advice requires brands to understand the context involved in a consumer decision. This means asking consumers questions in an intelligent way will be heavily reliant on AI.
“In the best case scenario you would be getting advice that is not just intelligent, but also from a unique personality - most likely an avatar. For instance, the idea that advice from the founder of a luxury fashion brand could be scaled digitally to help you in unique situations could be a critical brand differentiator and used to deliver new revenue streams. Especially if access to elite advice is unlocked by minimum spend,” Zoghby says.
With a little imagination, the power of this idea really hits home. If you were considering which stocks to buy for your pension pot, why not get advice from Warren Buffett? Can’t decide which movie to watch, why not check with Martin Scorsese’s AI avatar for a recommendation?
“Having your own personal concierge is normally an exclusive service, and the idea that you can create that personal experience at scale – with digital – is a key differentiator we call ‘the flattening of privileges,” says Zoghby.
Control and choice are key
At the heart of personalisation is granting consumers the power to control their own experiences. The same consumer that wants a “personal concierge” and luxury shopping experience one day, might the next day just want to make a quick and easy purchase. Perhaps the secret to successful personalisation is using data and technology to create experiences, and then letting the consumer decide whether or not to engage.
Of course, perhaps there is no one right answer at all. Together with vision, consumer insight and innovative technology, brands have to be prepared for a certain amount of trial and error in the war for the customer.
As Nick Worth says: “Continually trying to meet the expectations (of consumers) and the level of knowledge required can seem very challenging. Retailers should continue to seek competitive advantage through personalisation - not perfection.”
Thinking about the best way to create value for your customers? Find out more about Visa’s Commerce Network: https://www.youtube.com/watch?v=-LLANxqan84
* https://www.selligent.com/press/selligent-marketing-cloud-study-finds-consumer-expectations-and-marketer-challenges-are-rising-in-tandem
† “Pulse Check 2018 - Why brands must move from communication to conversation for greater personalization”: https://www.accenture.com/t20161011T222718__w__/us-en/_acnmedia/PDF-34/Accenture-Pulse-Check-Dive-Key-Findings-Personalized-Experiences.pdf
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