RETAIL - Manthan systems MASTERIng ThE nEw AgE of CUSToMER PERSonALIzATIon RETAIL MAY 2014 retail...
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RETAIL MAY 2014
Mastering the neW age of CustoMer
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MATURITY LADDERRIS RETAIL
· 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.
· 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.
· 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.
· 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.
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MASTERIng ThE nEw AgE of CUSToMER PERSonALIzATIon
RETAIL MAY 2014
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
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.”
have one chance to meet the
If not, she will
easily defect to
Source: EKN Research, “State of the Industry Research Series 2013: Omni-Channel Merchandising”
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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
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
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