‘Personalization’ In Retail Is Overhyped; Think ‘Relevance’
Since consumers began using their smart mobile devices as an integral part of their shopping journeys a more than a decade ago, many in both the technology and retail industries have advocated for something approaching a true one-to-one level of personalization of the offer. The reason that this idea has come up so forcefully in the past decade is because of the richness of the data thrown off during consumers’ digital paths-to-purchase coupled with today’s powerful data analysis capabilities.
While the technologies that make one-to-one personalization do-able may be state-of-the-art, the concept isn’t new. As far back as April 1995, in a Harvard Business Review article entitled Do You Want to Keep Your Customers Forever?, authors B. Joseph Pine II, Don Peppers, and Martha Rogers spelled the challenge out clearly: “Customers, whether consumers or businesses, do not want more choices. They want exactly what they want—when, where, and how they want it—and technology now makes it possible for companies to give it to them.”
Industry prognosticators believe that merchants who learn how to personalize their Brand’s value to consumers will be the next Retail Winners. But the truth is that consumers don’t necessarily want personalization – they want solutions that are relevant to their lifestyles. There’s a big difference!
The last generation of Retail Winners was dominated by companies that excelled at delivering highly standardized assortments at low prices in a low touch environment. Consumers had to slog through aisles of merchandize to get to what they came to buy. In short, the experience wasn’t about what consumers wanted to buy – it was about what retailers had to sell. It was the antithesis of “personalized”.
But here’s the question: how much “personalization” do retailers really need in order to deliver the right product at the right time and in the right way? In today’s retail environment, it’s not about what retailers have to sell, it’s about what consumers want to buy. That’s relevance. Being relevant means being responsive to the current lifestyle need that a shopper is investigating. And while that’s not the same thing as getting personal, there’s very little evidence that consumers want to get truly one-to-one.
To be relevant, retailers need to understand the context of the consumer’s lifestyle need. While context can vary tremendously, it’s observable if retailers pay attention to consumers in their paths-to-purchase in this digitally enabled world. In the “old days”, the shopping journey happened within the four walls of a store (shoppers investigated potential solutions to a perceived need, selected the desired solution, paid for it, and took possession of it). All of these steps in the journey were physically observable, and good retailers were able to offer assistance at just the right moment to move the consumer towards a purchase.
In todays’ digitally enabled world, those steps along the path are still observable because they often occur in the digital domain. Retailers get the message. A recent RSR study revealed that among the top challenges that retailers seek to address through better analysis of data generated by consumer mobile devices, is that consumers want “relevant content based on their personal tastes and point of interaction”.
Observe The Journey
To be relevant to consumers in the context of the lifestyle need, retailers need answers to a few questions: Where is the shopper in the shopping journey? What does the retailer know about the shopper? How well does this particular journey match an identifiable model? How close is the shopper to making a decision? Let’s briefly examine where the answers to these questions can come from:
1.Where is the shopper in the shopping journey? Frequently, that question is answered through an examination of a consumer’s digital activity, for example, a clickstream or a search;
2.What does the retailer know about the shopper? Consumers share information via their past purchases as well as stated preferences they offer by joining a loyalty program. Retailers can also glean a lot about lifestyle preferences from consumer responses to digital marketing campaigns and social media activity;
3.How well does this particular journey match an identifiable model? As retailers’ database of shopper experiences grows, so does their ability to develop model shopping journeys using new analytical technologies. A consumer’s in-flight shopping journey can then be matched to the right model in time to tailor the digital experience to best meet the lifestyle need;
4.How close is the shopper to making a decision? As consumers narrow their search, retailers can shift the interaction from content to commerce.
Don’t Be Creepy; Be Relevant
In response to an overarching concern that digitally-enabled consumers have grown intolerant of an impersonal shopping experience in the store, retailers are placing a lot of importance on developing the ability to engage with customers in real-time. But retailers need to be concerned that they might trigger a negative reaction from consumers if the nature of their digital outreach is perceived as creepy.
The good news for retailers is that there’s no need to get too close to understand consumers’ lifestyle needs. They just need to pay attention to what each consumer is doing, and offer the right solution at just the right time in just the right way. That’s being relevant.
 Location Analytics In Retail: Turning New Data Into New Intelligence, RSR Benchmark Report, December 2017