magazooms - Personalization and Segmentation: Keys to Customer-Centric Retail

- May 12, 2010

Santa Clara, CA. – May 12, 2010 –

Online Reprint from magazooms: http://www.magazooms.com/reader/index.php?mzID=100510204056

Personalization and Segmentation: Keys to Customer-Centric Retail

By Kevin Moffitt, VP of strategy and customer experience, CrossView, Inc.

According to eMarketer’s Jeffrey Grau, author of the report Multichannel Retailing: A Competitive Differentiator, “Demanding consumers expect retailers to provide more convenience, flexibility and personalization by leveraging the synergies that come from multiple sales channels.”

 

It’s a common challenge for retailers. Thousands—potentially even millions—of customers visit a retailer’s store, call its call center or click its website...and all of them are treated identically. They’re presented the same promotions, shown the same products and receive little to no personalized information. Within this homogenized marketing environment, it’s little wonder so many retailers struggle to build a loyal customer base.

 

It hasn’t always been this way. The roots of retail are in the old corner drug and hardware stores, where individual proprietors focused on building one-on-one relationships with their most frequent and valuable customers. But with the rise of big-box retailing, the quality of customer relationships began to take a back seat to the quantity of store square footage and the number of SKUs inventoried. The new slogan, “We have every product you could possibly want” replaced the older, now seemingly antiquated, “We’re happy to help you find the product best suited to your needs.” At the same time, increasing labor needs and margin pressures encouraged retailers to hire associates with less experience and expertise.

 

Interestingly, the rise of e-commerce during the past 15 years has both contributed to the impersonal feel of the modern retail experience, while simultaneously offering hope that technology can be leveraged to bring a sense of personalization back to retail. On one hand, pure-play “dot-coms” and “clicks and mortar” websites remove the customer from the physical store environment, limiting opportunities for true face-to-face interactions with store personnel and like-minded customers. But on the other hand, advanced segmentation engines and community features offer the potential for digitally enabled retailers to create a seamlessly personalized experience across all their sales channels.

 

Zooming in to the Individual

 

Two decades of rapidly advancing technology has led to major shifts in customer expectations. Amazon was an early pioneer in capturing web-based customer information and using that data to feed a powerful product recommendation engine based on an individual customer’s shopping habits. Because nearly every interaction with the Amazon brand occurs on its website, the company can capture a near-perfect record of everything its customers have searched for, looked at, or purchased over the lifetime of their relationship. Personalization capabilities are then combined with Amazon’s constantly evolving community features, including ratings and reviews, lists and tags, to give each customer both the comfort that they’re never shopping alone, and the security that rich data— personalized to the products they’re interested in—is always available.

 

Many e-commerce-focused solution companies have developed similar capabilities to offer to other online retailers. These include analytics companies such as Omniture and Coremetrics—which leverage their behavioral tracking engines to provide personalized product recommendations—as well as dedicated personalization vendors such as Kefta, MyBuys and Certona. Other vendors—such as Bazaarvoice, PowerReviews and Pluck—offer community-oriented tools like ratings and reviews, moderated discussions and shared customer lists.

 

Each of these service providers can provide case studies evidencing the financial value of creating a rich, personalized online experience, through some combination of higher conversion rates, average order values, increased customer satisfaction and higher lifetime value.

 

A Moving Target

 

Although competition has spurred technological advances in online personalization and community tools, many of the service providers in this area are focused exclusively on the online channel (usually via a combination of web and e-mail).

While a growing number of customers leverage the web to research their major purchases, the vast majority of retail purchases still occur in stores. Most customers calling into the call center have also researched products through the website, and many of those may be browsing the website while speaking with a call center associate. For this reason, customers are something of a moving target, shifting between online and offline channels—and few of the available tools empower retailers to track and respond to their customers’ cross-channel behaviors. For example, a recent article written by Forrester Research notes that “only 29 percent of retail executives surveyed believe their company presents a consistent customer experience across channels.”

 

In a truly optimized cross-channel environment, there are several steps to a customer-centric approach to retail:

• Customer data is captured in real-time across all potential touchpoints—in stores, online, over the phone and through mobile devices and kiosks;

• Customers receive personalized content and alerts via e-mail, SMS and targeted web, call center and point-of-sale promotions based on their unique shopping behaviors;

• Product and cross-merchandising recommendations are consistently personalized across channels, leveraging data generated by other customers with similar tastes, preferences and experiences; and

• Beyond the initial transaction, customers are encouraged to share the brand experience through a combination of personalized loyalty programs, engaging community features, in-store and virtual product demonstrations and recommendations for product use and accessorization.

 

Cross Over to a True Cross- Channel Retail Experience

 

As consumers adopt more complex cross-channel shopping behaviors, retailers must evolve their tactics for tracking and leveraging those behaviors. Today, many retailers’ organization structures and technological platforms remain siloed. This limits opportunities for a holistic, collaborative approach to customer marketing. However, new technologies are available now that can bridge the existing gaps and help retailers build a more loyal customer base through cross-channel personalization.

 

Kevin Moffitt is vice president of strategy and customer experience at CrossView, a retail consulting and technology company and IBM Premier Business Partner. He brings over 12 years of Internet business and creative experience to help CrossView’s clients build and optimize their cross-channel businesses.

 

May 2010 | ONLINEstrategies 23

 

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