16 Aug Key Tips for Leveraging Personalization in the Retail Industry
Any business that caters to a consumer marketplace deals with 2 common challenges.
- Delivering an experience that feels personalized to shoppers, while also…
- Creating a consistent experience across retail locations and channels so that customer can enjoy the comfortable familiarity of your brand
This balance act can prove to be very tricky. The growth of online and mobile shopping spheres has created more opportunities to connect with shoppers, but introduced new challenges where personalization and consistency are concerned.
Although your company may now access a wealth of data, distilling it into a usable and relevant format can be challenging in and of itself.
Not only do you have to decide which metrics are most likely to provide high-value consumer data, but then you must have the resources on hand to analyze it in search of trends that help you to hone your brand strategies and better personalize the retail customer experience.
It’s a balancing act that grows more challenging as the retail industry continues to evolve, increasing consumers options and placing pressure on retailers to accommodate them.
So, how can you juggle concerns like forecasting, inventory management, distribution, fulfillment, and more against the growing demand for personalization, all while continuing to create the consistent experience customers expect?
It’s a tall order, but when you understand the benefits and challenges of personalization, you focus on creating a consistent cross-channel customer experience, and you utilize world-class Retail AI and predictive analytics, you have the best opportunity to minimize waste, maximize profit, and ensure satisfied customers.
Benefits and Challenges of Personalization
Personalizing the customer experience is beneficial for the customer in several ways.
From a retailer’s perspective individual stores can carry localized assortment that fits the geo-demographic, and demand-based profile of the location, and helps to create a more meaningful brand-customer relationship.
From a Customer side, nobody likes being bombarded by ads & products they don’t want or need. When you approach consumers with a personalized experience, through discovery, research, purchase, and fulfillment there is a significantly higher chance they will shop with you again.
Naturally, there are benefits to be gained on your end, as well.
When you properly personalize the customer retail experience, you not only have the opportunity to connect with consumers on a deeper level and increase sales, but you can also use related shopper data to optimize your product pipeline. You can better plan for stocking of inventory at warehouses and retail locations and optimize the fulfillment process for online and mobile orders. Many retailers already localize their inventory and assortment strategy, and tracking personalization data can only help on this score, as well.
There are, of course, challenges to overcome with real-world and e-commerce personalization. While it’s easy to spot larger consumer trends across demographics and regions and plan for them, you have a lot less wiggle room for failure when you start narrowing your focus to smaller groups and individual shoppers.
Even personalizing the customer experience regionally can be challenging. Whether you sell items that suit the climate or you personalize them with place names, you won’t be able to sell them outside the area if they don’t do as well as you expect. This could impact forecasting accuracy and relative profitability.
Then there’s consistency to consider.
If you personalize the consumer experience too much you risk undermining efforts to create a consistent experience across stores and platforms. Nobody wants to discover they’re paying more for products in one area than another. For example, Apple customers were surprised & upset to learn that they pay more for services on the travel site Orbitz than those who visit the site from a PC. It’s important to strike a balance between personalization and consistency that’s most likely to result in happy customers and increased profit. So how do you find the middle ground?
Personalization Strategies for Your Organization
How much personalization is right for your business and your customers?
The first thing you need to consider is whether your customers actually want you to personalize their experience and if they will value your efforts. Unless you truly believe you’ll add value and create more incentive for consumers to shop, your time and money could be better spent elsewhere.
Next, you need to consider your brand and your products, and whether or not they lend themselves to personalization. A luxury brand, for example, may offer a higher level of service to individual customers, but avoid things like items or prices particular to a region, so as not to dilute the brand value.
Consider high-end fashion labels like Louis Vuitton that simply refuse to undercut premium pricing or even offer any markdowns. This is the level of exclusivity their customers expect and prefer. The upside is, loyal customers may be more favorable toward product recommendations that take their personal preferences into account.
Also, you really can’t avoid the question of competition.
It’s one thing to base decisions about customer-centric retailing on the relationship you hope to build with consumers, but you can’t get so focused on this avenue that you forget to keep tabs on competitors. Do you need to price competitively relative to other brands? How will your decisions affect your bottom line?
Ultimately, you need to make choices about personalization that are most likely to appeal to your core consumers and the avenues of fulfillment they prefer. However, you can’t afford to ignore other contributing factors when determining the best approach to personalization.
Introducing Predictive Analytics for Customer-Centric Retailing
At the end of the day, depending on the product or brand, there will be a different level of “personalization”, the key is to understand the customer journey, align planning, supply chain, and merchandising and optimize these processes though Retalon AI and Predictive Analytics.
The right predictive analytics and AI can make a world of difference when it comes to forecasting and planning, and that includes retail marketing across channels, inventory and distribution, personalization, fulfillment, and more.
When you have software that helps you track and analyze relevant data in order to more accurately predict future trends and prescribe recommendations proactively, you increase your gross margin, improve revenue, and optimally distribute merchandise for anticipated fulfillment to create the best possible cross-channel customer experience.
You’ll also improve planning for personalization efforts, not only in terms of inventory and fulfillment, but promotions and pricing strategies. With Retalon’s Predictive Analytics and AI on your side, you have the best opportunity to create intelligent and successful strategies, streamline operations, reduce waste, and maximize profit margins.
- 30 August, 2019