In the age of digital transformation, instant gratification, and a rapidly changing retail landscape, customers are increasingly drawn to brands with whom they have a personal and emotional connection. Advertising and merchandising have long leveraged a strategy of emotional appeal to great effect, but new technologies and strategies enable retailers to take this to an entirely new level by personalizing the customer journey.
Personalization, driven by advances in technology, increases relevance, value and trust. The retailer of the future will not survive without an effective personalization strategy that makes consumers feel that their individual needs are at the heart of every interaction.
A foundation of trust
Trust is the benchmark by which retailers will be measured, and they must consider this in every interaction. While a high level of brand loyalty is the ultimate goal, that journey starts by building trust – on the consumer’s terms, not the retailer’s. Retailers need to demonstrate reciprocity, understanding, and a commitment to providing value — as value is defined by the customer.
True personalization
Retailers must differentiate between true personalization and a simple, generic upsell.
Consumers know that all retail is, at its heart, economic, and retailers who wrap themselves in buzz words and treat all consumers as a homogeneous group stratified only by economic value will find themselves met with cynicism. Research confirms consumer purchase decisions are primarily emotional, rather than rational, and consumers are more responsive to messaging that strikes an emotional chord. Every point of engagement is a chance to build trust and make consumers feel greater kinship with a brand.
The first step in true personalization is understanding the prerequisites: complete, accurate consumer data and a two-way dialogue.
Consumer data
Consumers are flooded with standardized, homogeneous mass communications. This only fuels disdain and skepticism, while accurately targeted, personal messages can increase trust and loyalty.
Investment in a commercially available CRM system can help retailers to craft meaningful dialogue by creating a “unified view” of the consumer. By consolidating consumer data from disparate, disconnected systems (POS, loyalty, -c, etc.), these solutions create a single, functional repository.
Consumer data must be complete, accurate and up to date. “The Golden Customer Record” includes, at a minimum, all transactional history associated with a single identity of each unique consumer. This structured data is foundational to enhancing the scope and quality of the relationship. Scope determines how personally the dialogue can be conducted with the consumer. Quality dictates how connected the retailer is to the consumer’s reality.
Social interactions of shopping are increasingly found in “Communities” on a wide array of online platforms. These conversations are full of the richness of consumer interests and preferences. By using the appropriate tools to harvest, organize and utilize this new data, it can be used to prove to the consumer that they are known, understood and valued.
Two-way dialogue
Meaningful two-way dialogue is how retailers come to understand who their customer is, what is important to them, and ultimately what they can offer that is of genuine value to the consumer.
Two-way dialogue has not occurred until both parties exchange information that increases the value of subsequent interactions. The popularization of online communities demonstrates consumers’ desire for connection where information and experiences are shared. Savvy retailers have learned to engage with online communities, and some have even built their own to understand their customers.
Customers also need to be given an avenue to offer constructive feedback. Beware of surveys that lead customers to only share how “excellent” their experience was, and instead let the responses — positive or negative — shape your further interaction. When including an open field to capture consumer’s free expression, be sure that there is a mechanism to respond directly to the consumer. Without a meaningful response, the opportunity to build trust is squandered, the consumer relationship is further eroded, and the possibility of loyalty becomes even more remote.
A success story
One iconic brand that lives up to its commitment to consumers is L.L. Bean. It is difficult to find an L.L. Bean customer that does not have their own story of an interaction which fueled subsequent purchases and cemented their loyalty.
Through decades of upheaval and rapid change in the industry, L.L. Bean has resisted the temptation to sacrifice their commitment to quality and service in pursuit of better financial results. Somewhat ironically, their fierce commitment to customer loyalty has been at the heart of their ability to deliver long-term shareholder value.
The company’s dedication to quality and service has always driven an IT investment strategy that realizes these values. Their single database of all consumers is continuously cleaned and maintained. This discipline has allowed them to outperform their store-native competitors, and to expand into new channels.
3 essential constants for personalization
The need for, and benefit of, effective, personalized communication and customer experience is obvious. Its creation, however, is fraught with numerous variables and competing imperatives. There are three essential constants in realizing this goal:
• Make the necessary investment in technology to harvest, organize and utilize consumer data
• Establish an environment that promotes the behaviors to sustain a culture of service
• Develop a genuine value-based relationship with the consumer
While this challenge may appear daunting, it is encouraging to see the creative and innovative ways that modern retailers are responding with a variety of tactics and approaches to conquer these challenges.
Theo Rose is principal at Applied Retail Transformation, LLC.