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Hyper-personalization in retail: The key to building brand loyalty with shoppers

Blog

Feb 20 2020

It’s official: segmentation is out, personalization is in. When it comes to retail, personalization is no longer an option – it’s an imperative. Consumers’ benchmarks for great retail experiences are now higher than ever, with 70% of shoppers claiming that they would go elsewhere if a retailer failed to provide an exciting and engaging environment.

It seems that hyper-personalization is the inevitable future of retail, enabling businesses to stand out in an increasingly cluttered market. For retailers, hyper-personalization involves understanding the true needs and wants of your consumer, using real-time data from a variety of sources including purchase history, browsing data and social media insights. In today’s increasingly digitized world, personalization driven by data and technological advances can facilitate an emotional connection between retailers and customers, increasing customer stickiness and brand loyalty.

Emotionally connect with shoppers

Hyper-personalization is about more than just addressing your customer by name when they log on to your website or walk into your store. It involves a deep understanding of each and every customer, informed by the multitude of data points retailers now have available to them, and using this to customize product offerings, content and experiences in real time. The psychology behind personalization is simple – consumers want to be recognised as individuals. They want brands and retailers to be able to understand who they are and what they want – and they will form deeper affinities with brands who successfully do this.

The ultimate goal of retailers should be to make the path to purchase for shoppers as effortless and seamless as possible. Retailers who do this are seeing the benefits of increased customer loyalty, increased basket size and repeat purchases. Amazon, who are arguably the market leaders in customer experience and personalization, first launched their recommendation tool in 2010. Since then, Amazon have reported that 35% of their total sales have resulted from their personalized recommendations. Clothing retailer Icebreaker has tested the impact of personalized vs. generic recommendations on their website, finding that personalized recommendations were clicked on 40% more often. Creating a positive and functional consumer experience also drives brand loyalty. It stands to reason that if a customer enjoys their experience with a retailer or brand they will be more likely to return, and more willing to recommend the business to their friends and family.

Technological advances have made personalization scalable

Personalization – such as a recommendation from a shop assistant – has been around for about as long as bricks and mortar stores. However, hyper-personalization has started to come to the forefront of marketer’s minds due to recent technological advances such as AI (artificial intelligence) that have made scalable personalization possible at. Where in the past a shop assistant would manually recommend a product from their own knowledge of products or from a brochure, AI has enabled retailers to be able to scan millions of individual products to provide relevant recommendations tailored specifically to their customers’ needs. Machine learning and AI technologies are the driving force behind Amazon’s personalized recommendations, their ‘Frequently Bought With’ feature and their fully personalized homepages for each customer – and the recommendations get more relevant and specific the more a consumer uses the service.

As AI technologies continue to evolve and develop, so do their capabilities. While historically only quantitative data could inform AI tools, increasingly sophisticated technologies are allowing machine learning programs to interpret visual or auditory data and discern emotions from this data. Amazon have patented new features that will enable their Echo smart speakers to detect changes in a user’s voice indicating the user is sick, allowing Amazon to recommend relevant cold and flu remedies at the right time. In the future, a deeper understanding of emotive cues may allow AI to infinitely personalize the retail space, even understanding whether a consumer likes or dislikes a product going off nothing more than a facial expression.

Omnichannel personalization connects the online and offline experience

While retail personalization has primarily been the domain of online businesses, creating a seamless omnichannel experience will benefit retailers and customers alike. A study by McKinsey has shown that companies who are able to personalize the experience across both physical and digital channels can achieve a revenue increase of 5 to 15% across their entire customer base. In-store personalization requires making use of digital in the physical space, increasing the presence of digital touchpoints in physical stores, for example, tablets for sales assistants or customer-facing digital screens.

Effective omnichannel personalization requires the thoughtful planning and consideration of the entire end-to-end customer journey. This involves not only a customer’s experience on a retailer’s website or in-store, but also pre- and post-visit communications. Pre-visit personalization may be based on location-based notifications or context-specific ads to drive awareness and consideration, while post-visit communications such as follow-up content about their purchase or prompting a product review may deepen engagement and encourage repeat purchase. Cosmetics retailer Sephora does this by sending out location-based notifications to users of their mobile app when they enter the radius around a physical store, as well as following up post-purchase with product recommendations based on what the customer has purchased.

Customer data is key to facilitating personalization

Collecting customer data is integral to being able to provide a hyper-personalized retail experience for shoppers. Business are often reluctant to collect consumer data with growing public concern surrounding data privacy – and rightly so, as a Salesforce study has shown that 72% of consumers would stop buying from a company or using a service due to privacy concerns.

However, consumers are more willing to share their data if they know it will be stored securely and if it will improve their consumer experience. Salesforce research indicates that 58% of consumers agree with businesses using relevant personal information in a transparent and beneficial manner. Collection of data is a challenge that businesses must be able to overcome, as the expectation for personalization is high, with 76% of consumers expecting companies to understand their needs and expectations.

At Tag, we work with brands and agencies to improve marketing processes. Our retail marketing expertise allows us to provide end-to-end solutions that enable our clients to provide best-in-class retail experiences for their customers, backed by our capabilities in creative production, content creation, localization and transcreation, marketing production, strategic sourcing and delivery.

Schedule a call today to find out how Tag can support your brand’s creative production and sourcing needs.

Related reads:

On the cutting edge: The evolving retail landscape in China

Key insights for retail marketers and what they mean for the shopper experience

Retail marketing 2020: A reminder of what good looks like

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