Download - RETAIL - Manthan systems€¦ · 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

RETAILMAY 2014

Mastering the neW age of CustoMer

Personalization

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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 personalizationThe 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

RETAILMAY 2014

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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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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”


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 someone just purchased, giving a BBQ recipe to a vegetarian, or sending a customer multiple emails in a day can earn the retailer a #fail on Twitter, Facebook, and Instagram, followed by multiple retweets and “likes.”

Finally, as technology becomes more accessible, advanced solutions such as mobile geo-target-ing and big data solutions will become the norm. Robust analytical capabilities now exist to enable retailers to find meaning in massive amounts of data and execute on the right personalization ap-proach for a specific customer. Retail marketers must become curators. In the end, retailers must have the ability to select the best message for the individual customer and rise above the noise.

Q: What is the foundation necessary to set the stage for personalization?

asHton: A single view of the customer is considered a best practice for personalization. Clean data, without duplication, should be maintained in a single database. The retailer must balance current and future business objectives with speed to implementation because putting marketing efforts on hold for two years to achieve “data collection perfection” doesn’t make sense.

For many retailers, transaction-level data is a good place to start. Over time, the retailer should plan to add demographic information, call center data, ecommerce data, and of course, unstructured data. Marketers need to balance the time-to-value versus boiling the ocean, and identify specific business needs to determine data requirements. Specifically, how will this new data source positively impact your personalization or more broadly your marketing capabilities? How can you measure that impact?

Q: What solutions need to be in place to create a more personalized customer experience?

asHton: Five key building blocks exist for a successful personalized customer experience: a single cus-tomer view; a measurement plan with a test and learn strategy; a control group and closed loop response tracking; an enforced contact policy, and fantastic content that delights and is relevant to your customers.

A measurement plan is not new, however, even the largest retailers rarely or poorly do it. Companies should identify how success will be defined and measured, then apply appropriate mechanisms to cap-ture feedback. After launching, they must review results and identify areas for improvement.

Contact policies are key for customer happiness. Just because a retailer can message someone doesn’t mean they should. Test and control is a critical way to measure success. Finally, relevant timely content is essential for customer affinity and ultimately, lift.

Q: What steps would you give to retailers just starting out in this endeavor, and how can

they achieve true customer personalization?

asHton: The first step is evaluating the organization’s maturity. Determine the obstacles, such as a lack of available meaningful data or measurement and planning limitations. Then, the retailer should identify objectives, and create a plan with short-term deliverables and quick wins. I always recom-mend that clients should target three-month deliverables with measurable successes defined with each milestone. Things are moving so quickly that being agile and responsive to consumer needs and market shifts is key.

Streamlining the Road to PersonalizationHIllaRy asHton

Vice President, Customer analytics, Manthan systems

InSIghTS

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Manthan serves as the Chief Analytics officer for global consumer industries. Man-than’s comprehensive port-folio of analytics products and services enable retailers and their supplier partners to understand and activate the customer’s path-to-pur-chase journey. Architected with deep industry expertise, Manthan’s solutions com-bine advanced predictive analytics, actionable insights and unmatched customer knowledge to help retailers identify and drive incremen-tal growth opportunities. Manthan has provided its business-building analytics solutions to over 120 leading retail and CPG organizations across 19 countries. Visit Manthan at http://www.man-thansystems.com.



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10 times the rate of customers who are not using the tool, and their orders

are 27% higher,” says T.J. Gentle, Smart Furniture’s CEO and president.

setting the tone Smart Furniture exemplifies how blending the science of personalization

with the art of marketing can lead to great success in the omnichannel

world. However, with so many touch points collecting customer informa-

tion one problem retailers are coping with is how to use it effectively. A

majority of retailers (53%) say they struggle with how to best mine and an-

alyze all of their information, according to “Big Data: Impacts on Market-

ing Organizations,” a report from the Direct Marketing Association (DMA).

One way to achieve benefits from their data mining and analytical ef-

forts is through carefully examining customer profiles and CRM data-

bases, but this can’t be done effectively because 54% of companies

say they do not have a single view of the customer across all channels,

according to the report “Omni-Channel 2013: The Long Road To Adop-

tion” by RSR Research.

To solve these problems, retailers continue to work hard toward moving up

the ladder of analytics maturity. One of the major steps is to consolidate

and centralize customer data and make it available to the marketing de-

partment in their workflows and BI dashboards.

As recently as 24 months ago, most marketing departments were not us-

ing social media analytics nor combining data from all channels into a

holistic, 360-view to understand consumer behavior, according to the

EKN Research report, “Industry Point of View: Customer Analytics: The

Bedrock of the Retail ‘Singularity.”

As retailers strive to make the move to develop personalized marketing ex-

pertise, they need to identify highly targeted customer segments based on

the widest amount of data sources available and then find a way to com-

municate to the segments — sometimes to individual consumers —through

in-store touch points, e-commerce channels, mobile apps and social media.

85%Omnichannel customers

will start shopping on one device and

complete an order on another channel.

Source: Google, “Pre-HolidayConsumer Intentions”



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Layering on IntelligenceAfter creating a centralized CRM database that aggregates real-time data,

the next layer to add on is an analytic framework that supports data mod-

eling, what-if analysis, A/B testing and predictive analysis. These are so-

phisticated tools that are the foundation blocks for creating a successful

competency in personalized marketing. However, today 62% of retailers

are only capable of basic analytic functions and BI reporting, according to

EKN’s “Industry Point of View: Customer Analytics” report.

The good news is retailers understand they will need to increase technol-

ogy spending on analytics to get to the point where they can do effective

personalized marketing campaigns. Allocations for analytic technologies

are rising from 13.7% of IT budgets in 2013 to 17.7% in 2016, according

to the EKN report, and almost 70% of companies plan to invest in big data

solutions and predictive analytics capabilities within the next two years.

Some companies are already off to a good start. For example, when Ma-

cys.com wanted to optimize e-mail and website marketing campaigns, it

needed a better way to understand customer buying behavior. A tradition-

al predictive analytics approach required multiple Macy’s data scientists

to run manual predictive models for each product category — a process

that was repetitive and prone to human error. By transitioning to a cloud-

based automated foundation supporting accurate and robust predictive

models, Macy’s extended the power of predictive analytics down to line-

of-business users.

Following a three-month deployment, Macy’s built 20 predictive models in

a few weeks, a 15 times increase in rollout productivity compared to the

previous solution. The department store chain has since seen an 8% to

12% increase in online sales through more targeted e-mails to registered

users, as well as visitors to Macys.com.

Analytics will play an even bigger role as retailers begin integrating data

from social media into omnichannel marketing efforts. Currently, 85% of

best-in-class retailers use social media as one of their interactive touch

RetAIleRs reporting they struggle with how to mine and analyze personalized

marketing information.

53%

Source: Direct Marketing Association (DMA), “Big Data: Impacts on

Marketing Organizations”


the new view of personalization is a customer-centric approach, one that is based specifically on the shopper, their needs, and shopping.

Q: Can you describe what the “new age of Personalization” means to you? How is this different from traditional personalization?JaCk MCCusH: For a long time, many technology companies viewed personalization merely as synchronized product recommendations, but this had little to do with customer-specific interests and behavior, and more to do with product-to-product relationships. The new view of personalization is a customercentric approach, one that is based specifically on the shopper, their needs, and shopping patterns. Marketing teams are driving this new change, and are central in retailers creating more one-to-one relationships, and content that promotes product and interactions best suited for their shoppers’ behavior.

Q: When preparing for this new level of personalization, where do we stand in terms of maturity, from operational and technological standpoints?MCCusH: There is still work to be done, mainly due to three challenges that are facing retailers. The first hurdle is big data. Big data is evolving fast, due to incoming information from new channels includ-ing social media, e-commerce and mobile, and many struggle to keep up. While these are critical inputs for personalization, some companies hesitate to invest in the proper technology foundation and solu-tions required to make those big data insights actionable.

The next challenge is retailers are still learning how to build real-time customer interactions – but thisis not just a technology issue. Besides having the proper technology systems in place, retailers also need in-house associates with big data expertise. This background morphs to analytics expertise. Peo-ple who can find those insights in the analytics are valuable. The third issue is companies need to inte-grate the best processes. If you are developing a big data technology platform and giving this customer-specific information to your analytical team, companies must ensure that all groups are looking at the right customer records and a single source of data. One group cannot make a decision if information is not coordinated with another group.

Q: When evaluating hardware and software to support this new level of personal-ization, what criteria do retailers require from these new solutions?MCCusH: There are several considerations. Technology needs to be flexible so systems can connect to other systems and seamlessly extract data.

Another consideration is scalability. You need an infrastructure that can grow with your data and ana-lytic needs, and won’t require down time disruptions during upgrades. Ease of use is also a priority. The good news on this front is that technologies like MapReduce (a programming model that uses algorithms to supports large data sets),is easier for analyst to make queries against for unstructured big data sources without requiring sophisticated programming language skills. Lastly, Cloud remains an attractive option as it allows companies to remain agile as they strive to perfect their customer experiences and support personalization. The key is to use an integrated suite that can consolidate cloud operations, a move that allows users to make better decisions based on information available within their e-commerce platform.

Q: If you had to give tips to a retailer jumping into this new era ofpersonalization, what would they be?MCCusH: They should start by bolstering their customer experience, understanding how the cus-tomer is interacting with them across different channels, and then gain insight into how these inter-actions are impacting their overall shopping experience. They also need to understand how to gain value across the customer experience. All of these inputs feed into your business use case which then feeds the technology requirements.

Finding the Right Connectivity

JaCk MCCusH

Director of Ecommerce analytics, teradata

InSIghTSRETAIL

teradata is a global leader in analytic data platforms, market-ing and analytic applications, and consulting services. tera-data helps organizations collect, integrate, and analyze all of their data so they can know more about their customers and busi-ness and do more of what’s re-ally important. With more than 10,000 professionals in 43 coun-tries, teradata serves more than 2,500 customers, including the top companies across all ma-jor industries: consumer goods, financial services, healthcare, automotive, communications, travel, hospitality, and more. An ethical and future-focused com-pany, teradata is recognized by business media and industry analysts for technological excel-lence, sustainability, and busi-ness value. Visit teradata.com.

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points, according to the Aberdeen report, “Understanding Social Media in

Consumer Markets through Advanced Monitoring Tools.” However, 56%

of companies say they are unable to measure the effect. Even worse, only

29% personalize communications on their social media channels.

Shoe retailer DSW has successfully adopted social media as a key com-

ponent in its personalized marketing strategy. “By listening to our shop-

pers and analyzing their sentiments about a situation, we are able to react

quickly,” Kelly Cook, DSW’s vice president of customer strategy and en-

gagement, explains. “We are gaining insights from social media that we

never had before.”

With shoppers increasingly accessing DSW’s Facebook page from personal

mobile devices, for example, conversion on the retailer’s mobile commerce

site is growing. “Our social media discussions and social media-specific

promotions account for 8% of our online sales,” Cook reports.

the Cloud rolls in to Clear the FogAs more retailers evaluate their needs to support their personalized mar-

keting efforts, one of the top priorities is scalability, and cloud technology

is often a key solution. Smart Furniture’s personalized marketing solution,

for example, is built on a .NET programming platform and all data resides

in a centralized data warehouse in the cloud. The data is fed into Smart-

Furniture’s enterprise resource planning (ERP) system and a script that

automates the reporting process is built on top of the solution.

Similarly, Macys.com’s personalized marketing platform is heavily de-

pendent on cloud technology, according to Kerem Tomak, vice-president,

marketing analytics and CRM, who describes the advanced cloud-based

solution as a “scalable, concise efficient choice for predictive modeling.”

Another factor that makes modern cloud CRM solutions appealing is the

ability to develop a closed-loop process that not only identifies the key

customer segments being marketed to based on customer history, behav-

iors and preferences from all channels but also enables it to be seamlessly

54%RetAIleRs Who

fAIl to suPPoRt A sInGle VIeW of the CustoMeR ACRoss

ChAnnels.

Source: RSR Research, “Omni-Channel 2013: The Long Road to Adoption”


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integrated into marketing workflows and campaign tools. Closed-loop plat-

forms also support post-campaign analysis of spending and performance

so that personalized marketing efforts get better over time and become

more effective.

ConclusionRetailer relevancy has never been more important. As shoppers fragment

across a proliferating number of channels, retailers are learning that mass

marketing is no longer effective at achieving relevancy, engagement and

nurturing loyalty.

Sophisticated analytic tools can help retailers zero in on specific customer

segments based on well-understood preferences and buying patterns and

then use these insights to improve outcomes of marketing campaigns.

Armed with an analytic competency built on top of a cloud-based plat-

form and operating with a closed-loop framework, personalized market-

ing efforts will reverse the decline in campaign effectiveness by deliver-

ing the right promotional messages to the right customer segments at the

right time.

tAkeAwAy:“As recently as 24 months ago, marketing’s adoption of web and social media analytics was initially driven from a channel performance measurement and improvement perspective, rather than a need to understand consumer behavior and preferences better.”

Source: EKN Research, “Industry Point of View: Customer Analytics: The Bedrock of the Retail ‘Singularity’”


RIS InfogRAPhICMASTERIng ThE nEw AgE of CUSToMER PERSonALIzATIonMAY 2014

“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”

56%Consumers who say their sales channel preferences are evolving beyond a traditional experience, and these shoppers are demand-ing their favorite retailers deliver more digitized, service- and price-driven experiences.

Source: Aberdeen Group, “The Self-Service Hand-Book: The Empowered Consumer.”

85%Omnichannel customers who will start shopping

on one device and complete an order on

another channel.

Source: Google, “Pre-HolidayConsumer Intentions”

RetAIleRs reporting they struggle with how to mine and analyze personalized

marketing information.

53%

Source: Direct Marketing Association (DMA), “Big Data: Impacts on

Marketing Organizations”

54%RetAIleRs Who

fAIl to suPPoRt A sInGle VIeW of the CustoMeR ACRoss

ChAnnels.

Source: RSR Research, “Omni-Channel 2013: The Long Road to Adoption”

tAkeAwAy:“As recently as 24 months ago, marketing’s adoption of web and social media analytics was initially driven from a channel performance measurement and improvement perspective, rather than a need to understand consumer behavior and preferences better.”

Source: EKN Research, “Industry Point of View: Customer Analytics: The Bedrock of the Retail ‘Singularity’”
