Deploying a personalized retail customer experience is a daunting endeavor no matter how big or small the retailer and the challenges are likely a prime reason research firm Gartner predicts that by 2025, just five years up the road, 80% of retailers investing in personalization will abandon the effort.
Why? Well, according to Gartner, hurdles include attaining return on investment and wrestling with data management.
But Garin Hobbs, a director at Iterable, which has helped top name brands including DoorDash, AT&T and Zillow, believes abandoning the personalization strategy is a poor decision.
Hobbs advises chief marketing officers to view personalization as a “table-stakes requirement” when it comes to customer retention and that any improvement to the customer experience will bring a lift in performance. And then there’s one other fact: today’s customers expect personalization.
Retail Customer Experience reached out to Hobbs to gain more insight on what retailers should and shouldn’t be doing when it comes to personalization, advice on how to attain ROI and why it should be all about innovation.
Q. Let’s start by talking about your background and your work with Iterable – can you provide insight on your expertise and how Iterable is helping brands with marketing?
A. I’ve been in the digital marketing industry since 1999, working in various roles for ESPs, value-add solution providers and agencies. I started in sales but quickly found myself more interested in how my clients were using these solutions to drive their strategies. Most recently, I was working in solutions and strategy at agencies. I loved the daily challenge and learning, but often felt the value I could deliver was limited by the customer’s marketing technology. It’s rather like being a contestant on one of those cooking shows, where you have to make the most amazing meal out of five unusual ingredients. I joined Iterable to put better ingredients in the hands of marketers. Once I saw how Iterable’s non-structured data architecture allows marketers to better ingest and access broad and disparate data sets, allowing brands to better understand and communicate with their customers as valued individuals, I knew I had to be a part of it.
Q. You believe personalization is a “table stakes requirement” when it comes to keeping customers. Can you expand on your view and why it’s the key to customer experience?
A. Look at any B2C commerce vertical, from autos to yoga pants, and you’ll find a crowded marketplace with dozens to hundreds of competing retailers, many of whom offer exact or similar products at exact or similar prices. I can buy size 12 Adidas Ultraboost pretty much anywhere. If I want a monthly subscription for “personalized skincare,” I have no shortage of choice. In today’s market, experience is the new differentiating value, and it’s personalization that defines the experience. The brands that rise to the top are the ones that leverage data to understand their contextual value to me as an individual (what do their products mean to me as a person, how do they help my routine, empower my lifestyle, or allow me to live my values?) and then deliver highly personalized content that puts me as the backdrop for the product or service.
Q. How do you define personalization — is it just knowing the customer’s name and putting it on an email or is knowing who the customer is or is it knowing what the customer needs?
A. Personalization goes far deeper than first names and product recommendations. True personalization is about contextualizing your brand, product or service, around the individual customer—putting the person in the center of the story. It’s not just about what I need, but understanding why I need it, when I need it, how I’ll use it, and why it matters to me. For example, three different people in the same city might purchase the exact same Patagonia jacket from the same retailer on the same day but for very different reasons. One might go rock climbing and care about performance and endurance. Another might buy it strictly for fashion appeal and subject it to conditions no harsher than standing in line at Starbucks, and so cares more about fit and appearance. The third person bought it because they travel frequently, and it fits easily into an already over packed suitcase. A marketer can’t merchandise the jacket the same way to those three different people and expect it to resonate with everyone. We invite brands into our lives, not the other way around. The brands with the highest loyalty understand and acknowledge this concept of customer-centricity and reflect that in the experiences they deliver.
Q. How should retailers approach personalization as a CX strategy? Any tips, recommendations on how to start off on the right track?
A. Initially, retailers can use profile and event/interaction data to make some safe assumptions on preferences. Over time, marketers should seek to understand more of the context around customer interactions, and politely ask clarifying questions. For example, if my entire purchase history reflects only men’s apparel and I suddenly buy a dress, it might make sense to trigger a web push or email (gently) asking if the item is for myself or a gift. It takes a lot of data to drive this. Brand-consumer relationships are becoming increasingly complex: Marketers need real-time access to increasingly broad and disparate data sets to drive cross-channel messaging experiences that keep pace with the customer in the moment. When choosing technology platforms to power the strategy, modern marketers are best advised to prioritize data ingestion (flexible, real-time APIs), open data architectures (non-structured, NoSQL, tableless), and natively-included messaging channels (email, mobile, web push, social, direct mail, etc.) synchronized with single-view workflows.
Q. What are some of the biggest mistakes and stumbles retailers make with integrating personalization into the marketing strategy?
A. The three most common mistakes retailers make when incorporating personalization into their marketing strategy are:
Not going far enough — stopping at basics, such as first name, or making it just about the brand by simply inserting dynamic product recommendations, for example. These are acceptable practices when introducing personalization, but marketers need to quickly move on to more complex elements such as personalizing by time, location, device, individual context, etc.
Going too far — conversely, marketers can also go too far in personalizing content experiences and marketers need to be cautious about overstepping. For example, many customers often fill out profile forms and preference centers from an aspirational viewpoint (who they wish they were, or how they see themselves), and their click behavior can deviate wildly from stated preferences. Ignoring these preferences and displaying content based only upon click behavior can make a consumer feel both watched, unheard, and disrespected. It is often a fine line that separates custom from creepy. To find what works best, marketers should test a mix of content based upon stated and displayed preferences, and also test how that content is presented (“products you may like” vs. “products liked by others similar to you”). Personalization is personal and must be done with respect and empathy.
Being inconsistent — leveraging personalization just a handful of times or saving the effort for the standout promotion or seasonal spike sets the wrong level of expectation with consumers. Brand-consumer relationships are based upon an ongoing dialogue, a singular continuum, and marketers need to consistently hold up their end. Consumers open this email or tap on the next push notification because of the value they perceived in the previous message.
Q. Where do you see personalization in five or 10 years? How evolved will it be then?
A. In my 20-plus years of experience in digital marketing, I’ve learned that innovation often happens quickly, but adoption always moves slowly. Personalization is still in the early stages of its evolution. Without the latest technology, delivering individualized content and experiences at scale is often difficult, time consuming, and/or costly. Five to ten years from now, I expect that the level of personalization I’ve described above will be fairly standard among retailers, though the art-of-the-possible will be far in advance of what we typically experience today. I see the growth of AI and the increasing integration of the connected-car, smart-home, virtual assistant, and IoT, with settings, actions, content, purchases, and experiences programmatically made and almost unconsciously delivered, based upon the context of everything going on around us. Already today, Alexa is an active participant in many people’s lives and families; it’s an intimate level of access. Such concepts will likely only grow and become more ubiquitous as the evolution of technology continues to shape our lives and our world.