October 12, 2010
There is a growing realization that the best way to know what consumers want from a retailer is to enable ways for them to speak with the company directly, rather than trying to guess based on past purchase history.
RSR Research’s “State of Retail Personalization” report focused on customer centricity. The report highlights that while insights are an important part of determining which offers generated certain behaviors, this is a precursor to developing more trigger-based offers that are dependent on behavior rather than inferences.
“This is especially important for upscale brands that deal in gifts, where making inferences is particularly risky,” said Nikki Baird, managing partner at RSR Research, Denver. “Jewelers sending communications to households where the husband had purchased jewelry for a mistress is an example.
“But upscale brands, because part of their offering is either service or some aspect of exclusivity, are particularly challenged in personalization because consumers have an expectation that higher-service brands are going to know more about them, and use that knowledge to deliver a superior experience,” she said.
Personalization
The most surprising finding of RSR’s report was that retailers are retrenching around personalization.
While the technology has progressed to more easily enable personalized communications in a sustainable way, retailers just are not ready to go there yet.
RSR saw less targeting this year than last year, primarily because retailers were refocusing on more aggregated segments.
“We saw this as retailers realizing that they needed to do more to get their house in order around relevancy and personalization than they had originally thought they needed to do,” Ms. Baird said.
Best practices
Not just from this report, but from all the research that RSR has done on loyalty and personalization, the company has consistently found that if the primary objective for customer programs is to collect data in order to drive insights, then that program will fail.
The objective should be to find ways to help customers either have a better experience, or save time or some of the burden of shopping.
Luxury brands are typically going to want to focus more on the fun part than convenience, but that does not mean that they should ignore convenience – there is a lot of convenience involved in, for example, a wardrobe service that keeps track of the pieces a customer owns and suggests new pieces that complement.
This kind of approach will lead to data collection eventually, but it shapes what is collected and what question to ask of the data that is available.
“The approach should be objective driven, rather than just ‘I want to get more money out of my customers,’” Ms. Baird said.
Pitfalls to avoid
Do not make assumptions.
If a retailer makes an offer to a customer – say, an invitation to a trunk show based on a past purchase – and the customer does not take the retailer up on that offer, what does that mean?
It is wrong to assume that it means that the customer lost interest in the brand in question. It could mean that the purchase was a gift for someone else, or that they had a conflict that day, or they do not like trunk shows.
Retailers need to start building in a feedback question to the offers they make: “Did you like this offer?” “Do you want to get more offers like this one?”
“Why spend all that brain- and computer-power trying to figure out whether a customer liked an offer whether they redeemed or accepted it or not, when you could just ask them – and odds are, they’ll be happy to tell you, especially if it means they’re going to get more relevant communications in the future,” Ms. Baird said.
Final Take
Giselle Tsirulnik, senior editor at Mobile Commerce Daily, New York
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