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Retail Personalisation: What it is and What it isn’t

Retail Personalisation: What it is and What it isn’t
Published On
July 5, 2023

Lost in the maze of personalization? Discover why retailers still struggle to hit the bullseye with targeted marketing & how you should get it right.

Redefining the meaning of personalization in retail

Ah, personalization – the holy grail of the retail world. For years, it's been hyped up as the game-changer, promising to revolutionize the way businesses engage with their customers. However, despite the hype and promises, retailers have often stumbled in their attempts to harness the true power of personalization. 

In a world where everything from our morning coffee to our streaming playlists is personalized to our preferences, it's disheartening to see how most retailers miss the mark 

A study by Forrester Research revealed that 61% of consumers prefer personalized offers and recommendations, but 74% of retailers struggle to deliver personalized content in real time.

But why do so many retailers struggle with this? Let’s decode the true meaning of personalization & its impact on the retail industry. 

What is NOT Personalisation

First things first, Is personalization really what retailers claim it is? 

While almost every retailer today claims to "personalize" their shoppers' experience, very few truly understand the depth and intricacies of genuine personalization. It has become a buzzword, tossed around casually in marketing meetings, as businesses strive to appeal to the ever-changing preferences of their customers. 

True personalization goes beyond just basic tricks. It's about really understanding you and making a genuine connection.

Let's take a closer look at what personalization is NOT

  1. Adding the first name in an email
  2. Giving out generic discounts
  3. Mass messaging without segmentation
  4. Recommending random products
  5. Relying solely on demographics such as gender or location

In summary, personalization in retail should be more than just surface-level tactics. Stop treating Personalisation as a checkbox on the marketing checklist and start focusing on driving the real value from personalization. Let’s now understand what does it truly mean. 

What does Retail Personalisation mean in Simple terms? 

We have all experienced it in various forms, and the best example would be that of your neighborhood Kirana store. Think about the last time you stepped into your neighborhood Kirana store. The shopkeeper, who has known you for years, greets you warmly as you walk through the door. He knows that every Saturday you come in to stock up on fresh vegetables, dairy products, and your favorite cereal. He also remembers that you prefer organic products and have a penchant for trying new snacks. How does he remember it all? That's the beauty of personalization.

Retail personalization takes that same principle and applies it to the digital age.

At its core, personalization refers to tailoring experiences, products, and services to meet the unique needs, preferences, and interests of individual customers. It goes beyond a one-size-fits-all approach and aims to create meaningful and relevant interactions that resonate with each customer on a personal level.

It's about understanding the preferences of your customers, anticipating their needs, and delivering tailored experiences that make them say, "Wow, this store truly gets me.

According to McKinsey & Company, personalization can lead to a 10% to 30% increase in conversion rates for retailers.

Three Key Aspects for an Effective Personalization Strategy

Now that we have understood what Personalisation means, here are 3 key aspects you need to keep in mind while you’re building your personalization strategy. By focusing on these aspects, you can ensure that your personalization efforts are effective and impactful.

1. Individualization: 

Personalization is all about treating customers as unique individuals with their own preferences, behaviors, and characteristics. It's like having a personal shopping assistant who knows exactly what you like and need. It involves using data and insights to tailor interactions, recommendations and offers to suit each customer's specific tastes and needs.

2. Contextual Relevance

Imagine this: you walk into a store, and the salesperson immediately understands your needs and preferences based on the situation you're in. That's what contextual relevance is all about. Successful personalization takes into account the context of a customer's interactions. It means understanding where they are in their journey, their current circumstances, and their immediate requirements. By providing recommendations and solutions that are relevant to their situation, businesses can show that they truly understand and care about their customers.

3. Seamless Omnichannel Experiences: 

Nowadays, we interact with businesses through various channels – physical stores, websites, mobile apps, social media, you name it! With seamless omnichannel personalization, no matter which channels a customer chooses, they should feel like the business recognizes them and their history. Personalization should extend across all touchpoints, whether it's a physical store, website, mobile app, or social media. This level of integration creates a cohesive and satisfying experience, enhancing customer loyalty and driving repeat business.

According to Accenture, 75% of consumers are more likely to make a purchase from a retailer that recognizes them by name, recommends options based on past purchases, or knows their purchase history.

Why Personalisation Outperforms Generic Communication 

Now, one may ask, what difference does personalization really make? Can’t I get the same results from the same-old generic marketing communications? 

The answer is a BIG NO! 

While generic marketing communications may have once held sway, they now struggle to keep pace with the evolving needs and expectations of consumers. Here’s how personalisation makes a difference for your business: 

Building Meaningful Connections:

One of the primary advantages of personalisation is its ability to forge meaningful connections with customers. Generic marketing messages often fail to resonate with individuals on a personal level. In contrast, personalised communications take into account a customer's preferences, behavior, and demographics, allowing businesses to create tailored experiences. By addressing customers' unique needs, desires, and pain points, companies can establish a deeper emotional connection, fostering loyalty and long-term relationships.

Enhanced Customer Experience:

Personalisation significantly enhances the overall customer experience. Generic marketing messages tend to feel impersonal and irrelevant, resulting in disengagement and a lack of interest. On the other hand, personalised communications deliver relevant content, product recommendations, and offers, leading to a more seamless and enjoyable customer journey. When customers feel understood and valued, they are more likely to engage with a brand, make repeat purchases, and become brand advocates.

Increased Customer Engagement and Conversion Rates:

A tailored approach to marketing enables businesses to capture the attention and interest of their target audience more effectively. By leveraging customer data, companies can deliver personalised content through various channels, such as email, social media, and websites. This approach results in higher customer engagement, as individuals are more inclined to interact with content that aligns with their preferences and interests. Increased engagement, in turn, leads to higher conversion rates, driving business growth and profitability.

Improved Brand Perception and Differentiation:

Personalisation plays a crucial role in shaping how customers perceive a brand. When companies invest in understanding their customers and delivering personalised experiences, it demonstrates a commitment to meeting individual needs. This level of attention and care elevates a brand's image and sets it apart from competitors who rely on generic communication. By offering tailored solutions, businesses position themselves as trusted advisors and industry leaders, fostering a positive brand perception and differentiation in the market.

Data-Driven Decision-Making:

Personalisation relies on robust data collection and analysis. By gathering information about customer preferences, behaviors, and purchase history, companies gain valuable insights into their target audience. This data can inform marketing strategies, enabling businesses to make data-driven decisions and refine their messaging. Through continuous optimization, brands can tailor their communications further, ensuring that each interaction resonates with customers and drives desired outcomes.

How Hyper-Personalisation Works In Real Life - Understanding with an Example

Let's consider an example of a customer named Shalini to understand how hyper-personalization works in real life. 

Customer Persona

Name: Shalini
Discount tendency: Moderate
Favorite Products: Dresses and Accessories
Favorite Day: Sunday
Preferred Channel: In-Store
Last Visit: 2023-06-10

Based on Shalini’s persona, here are the types of communications the brand can leverage to align with her preferences and increase the likelihood of engagement: 

1. Sunday Special: Get 20% off on Your Favorite Dresses and Accessories, Shalini!

This message is specifically targeted towards Shalini's preferred day, Sunday, when she may be more inclined to browse and shop. By highlighting her favorite product categories and offering a discount, the message appeals to Shalini's interests and incentivizes her to make a purchase.

2. Exclusive In-Store VIP Access: Enjoy a Personalized Shopping Experience, Shalini!

Since Shalini prefers in-store shopping, this message aims to provide her with an exclusive offer or access to enhance her offline shopping experience. By recognizing her preferred channel and offering personalized perks, the business increases the chances of Shalini visiting their physical store.

3. Introducing the Perfect Accessories for Your Dress Collection, Shalini!

Leveraging Shalini's favorite products and past purchases, this message introduces new accessories that complement her dress collection. By suggesting items aligned with her style preferences, the business demonstrates an understanding of Shalini's fashion taste and encourages her to explore new offerings.

Why this works? 

Relevance: By presenting customers with personalized offers, messages, and recommendations, businesses increase the relevance of their communication. This relevance captures the attention of customers and encourages them to engage further.

Improved Customer Experience: Hyper-personalization enhances the overall customer experience by providing relevant and valuable content. Customers feel understood, valued, and appreciated, leading to increased satisfaction and loyalty.

Increased Conversions: When customers receive offers that align with their preferences, they are more likely to convert and make a purchase. Hyper-personalization helps businesses target their marketing efforts effectively, resulting in higher conversion rates.

Long-Term Customer Loyalty: By consistently delivering personalized experiences, businesses can build strong relationships with their customers. Personalization creates a sense of trust and loyalty, encouraging customers to continue engaging with the brand over the long term.

The Bottom Line

Personalization in the realm of retail has become a buzzword, but let's admit it, many companies are still struggling to get it right.

The reason behind their struggles often lies in their inability to gather the right data and utilize the necessary tools to make informed decisions.

To truly excel in personalization, retailers must take the time to understand the thought processes and desires of their customers. It's crucial to dig deep and gain insights into how they think, what they want, and what drives their purchasing decisions.

But let's be honest—it's not an easy task. Achieving effective personalization requires a significant investment of time and effort. However, when executed correctly, the rewards can be immense. Increased sales, improved customer satisfaction, and brand loyalty are just a few of the benefits that come with delivering personalized experiences.

Bonus Resource: Personalisation Checklist

Creating a successful personalization strategy requires careful planning and attention to detail. To help guide you through the process, we have compiled a checklist of key questions to ask yourself to gauge the success of your current personalization efforts. Take a moment to reflect on these questions and determine whether adjustments are needed.

Personalization Checklist

  1. Are you leveraging real-time data for immediate personalization?
  2. Are you using automation and AI for scalable personalization?
  3. Is personalization integrated across all touchpoints?
  4. Do you use dynamic content for tailored messages?
  5. Do you have clear goals for personalization?
  6. Do you regularly test and optimize your personalization efforts?
  7. Do you personalize communication channels based on preferences?
  8. Do you personalize pricing or offers based on segments or behavior?
  9. Are you getting the desired results from your personalization efforts? 
  10. Is personalization enabling you to enhance loyalty and retention?

If you find yourself lacking confidence in answering these questions, it may indicate that there is room for improvement in your personalization strategy. Don't worry, our experts at Xeno are here to help! Contact us today for a free consultation and leave your personalization struggles behind. Book a Demo Here.

Frequently Asked Questions

Still Got Questions?

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COO & Founder at Xeno

Ayushmaan Kapoor is the founder & COO of Xeno. Ayushmaan & Pranav started Xeno together in 2015 and together have a vision to make Xeno the #1 customer intelligence platforms for retailers all across.  Outside of work, Ayushmaan finds joy in traveling to the hills and often takes short trips to recharge & rejuvenate

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