Personalization critical to driving customer loyalty
In customer marketing, the term personalization is often used in meetings and pitches, but it’s severely under-utilized and rarely implemented effectively. Yet customer demand for personalized content and products is growing exponentially with each generation, and thus it’s critical for marketers that personalized content is integrated into loyalty programs.
According to a recent study, personalization is a high priority in driving loyalty at the following percentages by generation:
- Generation K -- 54%
- Millennials -- 52%
- Generation X -- 48%
- Baby boomers -- 40%
With each generation, personalized content and tailored products become native to those customers. Their priorities rely on mobile nativism, social influence, ratings and reviews and highly targeted and personalized content. They’re effectively indoctrinated into everything digital, with each generation growing on the previous one.
While digital nativism is a known commodity now, only a couple of years ago, digital had some trouble getting older generations to trust in the new reality of the digital age. Until recently, Generation X and baby boomers were fearful of personalized content, equating the idea to “big brother” watching over their shoulders to infiltrate their private behaviors and shopping habits. They rightfully found poor utilization of personalized data to be disturbing and unwanted.
While data security is still an issue, the conversation has moved from data collection to the ability of hackers to steal data from reputable sources. The collection of data is no longer singularly frowned upon. There’s an important distinction that has transformed the way customers look at data and personalization, and it has a direct impact on retail’s ability to dive deep into targeting and tailored experiences.
There is now a mutual understanding between retailers and customers. It’s okay to collect personal data safely, but retailers have the onus of making that data useful to each customer. In other words: if marketers collect data, they better make the customer’s experience noticeably better.
The mutually beneficial relationship between retailers and customers is amplified for loyalty programs. Loyalty requires members to actively pass along information, whereas most customers browsing sites, apps or stores are passively providing information.
Loyalty requires trust from members in order for them to be willing to give large quantities of personal information. In fact, 83% of consumers say loyalty is primarily driven by trust -- trusting that brands will be responsible with data and use that data to make their experiences more convenient and beneficial.
That’s where personalization can make massive gains for retailers. Loyalty members expect tailored content, targeted offers and co-created product. More importantly, they are highly dissatisfied in the absence of these features.
Customers prefer personalization to the point that almost half of millennials expect brands to customize offers. American Express found that millennials would go “out of their way” to use a customized offer.
Personalization is powerful in part because customers have so many bad digital experiences. They have customer journeys that don’t speak to them, don’t guide them and don’t connect with them, which leads to customers willing to go out of their way to use a personalized offer from brands. When a great experience comes along, it’s disruptive, engaging and refreshing.
As with any technology, there are some obvious challenges with personalization.
Site personalization is still a struggle given the sheer amount of data and depth. With so much data and channel integration found online, it’s difficult to know where to start. The solution is to start small and work your way into a more in-depth solution through testing and refinement.
The other main issue the industry is grappling with is similar in nature: cross-channel personalization. The number of channels creates a struggle for attribution. There isn’t yet a great solution for most customers, but the good news is cross-channel personalization is much easier for loyalty members, with its main impediment being universal identification.
How can retailers identify customers coming from a desktop, mobile and tablet device? It’s difficult unless that customer is already logged in as a loyalty member. The data is much more streamlined and usable for retailers. Loyalty essentially eliminates that problem.
Still, the largest impediment to using personalized content is access to clean data. Many retailers are capturing data with no real ability to harness it. But data hygiene is common both in-house and through agencies. It’s also not limited to top tier brands with large investments -- even mom-and-pop stores can access clean data if they have the right tools or partners.
Given the advances in accessibility and integration, data capture issues are now an excuse and not a real issue, with a lack of data placing retailers at a severe disadvantage for current and future growth.
Personalization already has tremendous benefits to customer marketing and loyalty, and that progression will increase as retailers solve ecommerce platforms and in-store experiences.
Store teams are finally taking a page out of the e-commerce playbook and starting to look to the future of the in-store experience. While in extreme cases that means the digital transformation of stores, in most cases it is not difficult to make a customer feel special with smaller, personalized attention. A host of major brands offer omnichannel support, allowing associates to help customers in stores order product on the spot.
Nordstrom is taking that idea a step further with the idea of “co-shopping,” allowing customers and associates to shop together with the help of a tablet and access to customer data and inventory.
Bonobos “stores” are all showrooms; in most cases, you can’t buy products in store, but they offer exceptional customer service, providing tips and advice to find the best products. Associates order items online during the store experience and ship directly to customers.
Retailers such as Neiman Marcus are targeting via beacons that provide special in-store offers and personalized services, including access to favorite associates.
Abercrombie & Fitch is implementing personalized dressing rooms, and its concept store features customizable lighting and music and a call button to request an associate.
What’s interesting about each of these examples is the level of creativity. While loyalty marketers tend to think personalization is cut in stone and provides only one solution based on the way the data unfolds, it clearly doesn’t have to be that way. If you have good data, the options are only limited by ingenuity, and the best solutions are usually elegantly simple. Customers want feel special – treat them like they are.