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  • RETAIL MAY 2014

    Mastering the neW age of CustoMer

    Personalization

    presented by

    spOnsOred by

    RIS_RTLIQ_0514_Personalization.indd 1 5/29/14 3:54 PM

  • MATURITY LADDERRIS RETAIL

    3. AdVAnCed

    · digital customer and associate touch points are rolled out online and in stores to create unique experiences and to collect new sources of data.

    · Customer segmentation becomes more sophisticated and based on past purchases, loyalty programs, preferences, geography and demographics across sales channels.

    · Cloud-based enterprise bI tools with real-time data begin to be rolled out.

    · personalization efforts become more relevant and achieve measurably higher conversion rates.

    2. InterMedIAte

    · the CMO begins to have more influence on It investments within the marketing department.

    · executives begin to break down process silos and collaborate across lines of business, especially marketing, merchandising and It.

    · Manual reports and spread sheets give way to dedicated solutions that streamline workflows and reports.

    · data for store clustering and customer segmentation is layered on top of sales and pOs data.

    · personalization efforts become more local.

    1. bAsIC

    · Historical sales and pOs data is available for planning. · It team is required to execute queries and create reports. · Marketing departments and It departments loosely collaborate when executing marketing campaigns. · Many reports are created manually, are rigidly formatted and often distributed on spreadsheets. · personalization efforts are either too massive with low conversion or too personal so they can’t scale.

    4. stAte-OF-tHe-Art

    · the CMO takes the lead in setting technology strategy and budget for enabling technologies used in the marketing department, and closely collaborates with other line-of-business executives and the CIO on other enterprise technologies.

    · database consolidation is complete and there is one version of the truth for CrM profiles and relevant data.

    · Advanced analytic tools are deployed to make the shift to predictive analytic capabilities for conducting correlation, causal analysis and forecasting.

    · Mass personalization techniques are developed that engage customers, drive sales and nurture lifetime loyalty.

    Maturity Ladder: Customer personalization The RIS News Retail IQ Report Maturity Ladder is a diagnostic measurement tool for a retailer’s state of technology advancement in a specific category. There are four key phases: 1. Basic – minimal capabilities, 2. Intermediate – mostly basic with some advanced capabilities, 3. Advanced – mostly advanced capabili- ties with some limitations, and 4. State-of-the-Art – comprehensive capabilities are fully integrated and up to date. Note that it is possible to be on more than one step of the ladder simultaneously as spe- cific technology components and processes are up- graded in phases.

    2

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  • 3

    MASTERIng ThE nEw AgE of CUSToMER PERSonALIzATIon

    RETAIL MAY 2014

    3

    Retail competition is heating up on a daily basis, making it imperative for

    retailers to communicate directly to shoppers if they want to remain relevant.

    Realizing that mass marketing is obsolete, retailers are eager to make the shift

    to mass personalization, or campaigns that speak directly to well-defined cus-

    tomer segments. As they strive to personally connect with shoppers, retailers

    require a sophisticated analytical foundation and related solutions that can

    harness the potential in a consolidated customer database to engage shop-

    pers, drive sales and spur long-term customer relationships.

    There are clear reasons why retailers need to master the techniques for

    mass customer personalization. Among these are:

    Channel-Blurring. No longer married to the concept of buying specific

    products in dedicated retail segments, consumers now visit alternative

    channels in search of valuable shopping experiences — one that delivers

    exceptional service and price benefits.

    omnichannel options. Enabling the customer to conduct her shopping

    experience wherever, whenever and however she chooses is imperative to-

    day. Retailers only get one chance to meet the customer’s needs. She will

    quickly look for a competitor and not look back if disappointed.

    Digital Touch Points. As technology costs drop and consumer interest

    intensifies, adoption of personal digital technology by shoppers shows no

    sign of let up. This has led to the deployment of such in-store customer-

    facing solutions as web-based kiosks, digital signage, mobile POS and

    service tablets.

    Mobile/Social. Social media, mobile apps and smartphones are ubiq-

    uitous today and enable consumers to showroom, webroom, share, buy

    anywhere at any time, and influence hundreds of other shoppers.

    All of this adds up to a transformative tsunami washing over retailers that

    is altering the way they conduct business. For example, 56% of consum-

    ers say their sales channel preferences are shifting away from a traditional

    retail experience and they are demanding that retailers deliver more digi-

    tized, service-driven and price-aware experiences, according to Aberdeen

    Group’s report, “The Self-Service Hand-Book: The Empowered Consumer.”

    “Retailers only

    have one chance to meet the

    customer’s needs.

    If not, she will

    easily defect to

    a competitor.”

    Source: EKN Research, “State of the Industry Research Series 2013: Omni-Channel Merchandising”

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  • 4

    MASTERIng ThE nEw AgE of CUSToMER PERSonALIzATIon

    RETAIL MAY 2014

    retail times Are A-Changin’ What all of the current trends add up to is a new “21st Century Shop-

    per.” She is described as a channel-hopping, location-swapping, value-

    centric consumer. Her segment, or at least 85% of those like her, will

    start shopping on one device and complete an order on another channel,

    according to “Pre-Holiday Consumer Intentions,” a report compiled by

    Google. However, as this shopper puts value first, retailers are struggling

    to differentiate themselves through traditional factors such as price, lo-

    cation and assortment.

    The upside for retailers is that omnichannel shopping actually increas-

    es the consumers’ exposure to promotions. The danger is that it can

    lead to over exposure.

    As a result, retailers have been eagerly striving for the Holy Grail of mar-

    keting: creating intimate, personal communications with shoppers. While

    retailers have been working toward one-to-one relationships for many

    years, they are now making faster progress thanks to digital, online and

    analytic tools that enable them to gather and use deep insight into shop-

    pers’ needs and preferences.

    Armed with customer-specific insight gathered across multiple touch

    points, marketers are now better prepared to create customized content

    that promotes relevant products and intimate shopper interactions. Wel-

    come to the era of personalization.

    One retailer that has become a leader in personalization is Smart Furni-

    ture, which uses online personalization techniques to mimic an associate-

    guided, store-level experience while on its website. With the help of a

    style quiz that determines customer preferences, Smart Furniture matches

    customers to products that are tagged according to intelligent attributes.

    Since the products are tagged to customer preferences and then suggested

    to the shopper, the retailer is providing an intelligent and relevant shop-

    ping experience. “The analytics-based tool is converting these shoppers at

    56%

    Consumers who say their sales channel preferences are evolving beyond a traditional experience, and these shoppers are demanding their favorite retailers deliver more digitized, service- and price- driven experiences. Source: Aberdeen Group, “The Self-Service Hand-Book: The Empowered Consumer”

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  • In the end, retailers must ave the ability to select the best message for the individual customer and rise above the noise.

    Q: What are the top trends that are pushing retailers to create a new level of customer

    personalization?

    HIllaRy asHton: There are three key trends spurring personalization. First, competition is fierce. Some retailers are actively engaging in a “race to the bottom,” with a high focus on discounting, which is not a sustainable or profitable practice. However, a few retailers are forging the path with true value selling through personalization tactics. For instance, Wegman’s mobile app enables me to create a shopping list based on historical purchases and scans from my pantry. Clearly, the win- ning approach here is value selling through personalization.

    Second, the consumer is king. If a retailer fails to meet customer expectations, the ramifications are widespread, especially given the impact of word of mouth in the era of social media. Offering a discount on something