Retail Personalization

Retail Personalization – Vue.ai – Mad Street Den

It’s 2021 and the word “personalization” has been thrown around for 5 years with businesses across segments implementing it to varying degrees of effectiveness. Retail has had a complicated relationship with personalization. Some retailers have been early movers with companies like Amazon and Stitch Fix making retail personalization a part of almost every part of the shopper journey. However, many retailers have been slow to adapt, offering bad experiences to shoppers on their websites. Even those who have implemented personalization in retail haven’t done it right.

74% of customers feel frustrated when website content is not personalized -Instapage

Shoppers are moving from retailer to retailer with the knowledge that there will always be a better deal out there. But giving discounts is not the only way to make shoppers come back to the site. It is neither sustainable nor profitable. But what else are shoppers looking for? 

Shoppers are willing to pay up to 16% for personalized shopping experiences –PWC

Shoppers expect personalized experiences rather than be flooded with a slew of products. They want their favorite brands and websites to know them as well as they know the brand. Brands are now expected to tailor experiences taking into account each person’s individual style preferences. 

But do brands really understand retail personalization?

What is Retail Personalization?

Retail personalization is explained beautifully in this quote by Jeff Bezos.

“If we have 4.5 million customers, we shouldn’t have one store. We should have 4.5 million stores.” –PC World, June 28, 2000

Retail personalization is the process of providing every shopper with a unique journey across every single touchpoint and channel, based on historical data and real-time shopper intent, powered by customer and product Intelligence. The ultimate goal of personalization in retail is to make shoppers feel unique, special, and emotionally connected, to improve their shopping experience.

While almost every retailer today claims to “personalize” their shopper’s experience, very few do it right.

“63% of consumers will stop buying from brands that use poor personalization tactics.” – Smart Insights

What is NOT Personalization?

While the term ‘personalization’ is thrown loosely around, not every retailer has managed to utilize its full potential. In most instances, ‘segmentation’ and ‘personalization’ are used interchangeably, despite both being two independent techniques.

Traditional shopper segmentation treats people as a cohort – a group of people with similar tastes and interests. It focuses on categorizing, labeling, and boxing people, instead of treating them as individuals with specific style preferences and needs. It offers a rather myopic view of categorizing based on limited data points that usually are just broad fragmented categories.

When the two terms are interchanged, we hear cases like a shopper being recommended mosquito nets after purchasing one a week back. Or a person waking up to a dozen of promotional emails about baking trays after buying an oven. These examples don’t imply that they aren’t ‘personalization’. It implies that they are ‘irrelevant personalization’, which would be regarded as a failure.

For example, out of the 100% oven buyers, there might be a percentage that needs trays. However, sending all of them a prompt to buy ‘tray’ reflects that the brand has put everyone from that group under one category, instead of mapping their individual needs. This illustrates the outcome of confusing segmentation with personalization.

Retail Personalization

Brendan Witcher, VP & Principal Analyst at Forrester Research disclosed that 90% of organizations are going to invest in retail personalization but only 40% of consumers say that the information they get from a brand is relevant to them. He added that one of the reasons for this gap between the brand’s effort and actual results is ‘segmentation’ in the garb of ‘personalization’ as it creates a wrong experience for consumers

68% of shoppers are unlikely to return to a website or store that doesn’t provide a satisfactory customer experience. –Forrester

In a nutshell:
Segmentation is NOT personalization

With Forrester advocating the move to 1:1 Personalization, retailers need to start looking at new ways to connect with their shoppers, keep them engaged, and, eventually, turn them loyal. 

What is 1:1 Personalization?

Every eCommerce site has 3 components: shoppers, products, and actions the shoppers take.

Let us take the case of 10 shoppers shopping from the same eCommerce site which sells 30 dresses. For every product, there are around 10 actions each shopper can take, which are click to view (to view the product description page), buy now, add to cart, add to wishlist, change the size, change color, click on a similar item (from the items similar to this widget), click on a frequently bought with item, back (the back button on the browser), close (closing the tab), etc.

10 shoppers can each take any of 10 actions on each of the 30 items. This means 3000 possibilities can happen.

Typically, eCommerce sites attempt to bucket shoppers who take similar actions into a segment, For example, if 3 out of the 10 shoppers added dress #8 to the cart, they will be put in one segment. Further, the eCommerce retailer will retarget these shoppers with ads across all channels with images of dress #8 and dresses visually similar to it. Sounds logical, right?

But what if I told you that dress #8 was a knee-length, turquoise blue dress with a scoop neck and shopper #1 had clicked on every knee-length dress on the site, shopper #2 had clicked on dresses in different shades of blue, and shopper #3 had clicked on scoop neck dresses? This means that 3 different shoppers liked the same dress for 3 completely unrelated reasons.

If the eCommerce retailer captured the affinities of each of the shoppers, they would have sent shopper #1 knee-length dresses, shopper #2 blue dresses, and shopper #3 scoop neck dresses. This affinity could have been captured if every click of the shopper was tracked.

Every shopper is a unique individual. Every shopper is their segment.

Shoppers, products, product attributes, and actions have to be mapped at an individual level to create a unique Style Profile for every shopper. This can be used across channels to create a unique journey for every shopper. 

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