During sales-packed November, headlines declared a new record in retail when commerce giant Alibaba reached $31 billion in sales during the 24 hours of Singles’ Day 2018. But what’s more interesting than the money Alibaba received is the information it managed to gather. As exciting as spending rates are, these and other shopping festivals bring retailers a less-discussed, yet very important win by enabling the collection of user data. The wishlists and purchases of November will provide retailers with enough information to boost sales for months to come, thanks in large part to data-driven personalization.
User-behavior data enables companies to predict customers’ next move in sophisticated ways. To know what they normally purchase, what was missing from their latest shopping cart, what the people they share their lives with buy, how to optimize text notifications, recommendations, coupons, and so much more. When used correctly, personalization can increase sales and improve retention. But when poorly used – it might backfire.
Users will feel stalked, taken advantage of, and in some cases even suffer real damage. With about two-thirds of retailers using some form of personalization, it seems that the industry has embraced this technology, but not always in the best manner. Many retailers still lack the tools and experience to execute personalization in a meaningful way. To help businesses overcome these challenges, here are a few tips that’ll improve their personal touch.
The wrong side of history
Personalization is like makeup; if you know what you’re doing, it should feel so natural that no one would even notice it’s there. While basing your recommendations and special offers on customers’ previous purchases is a great idea in general, it should be subtle.
Sadly, 75% of consumers describe their encounter with marketing personalization as “creepy”. It would be better if instead of sharing the information they’ve gathered on customers, companies will simply provide better service by relying on data. And, when it comes to more sensitive purchases, take into account that confronting consumers with how intimate your brand’s knowledge of them is might feel awkward. Consider excluding certain products from your recommendations list altogether.
All in the family
Families share bank accounts, credit cards, computers, and dreams. Therefore, when shopping is done as a family unit, retailers are able to paint a more complete picture of customers’ needs. The problem is that personalized recommendations might include private information that belongs to other household members, thus revealing surprises and secrets. Funny examples include targeted ads that spoiled marriage proposals and holiday gifts. More serious catastrophes involve revealing a teen pregnancy to parents. Indeed, personalization is serious business.
Retailers with access to data that refers to more than one person should think twice before including sensitive details. Just because you can, doesn’t mean you should. Just because you can, doesn’t mean you should. After all, the purpose of personalization is to create a better experience for customers, and risking the opposite might not be worth it.
Know your audience
No one approach works for all businesses, and personalization strategies should be personalized to fit specific brands and target audiences. To avoid overstepping boundaries, retailers must combine what the data tells them about their crowd with what they learned through additional market research, community outreach, and years of experience.
Retailers should opt for technology that knows how to put algorithms in context, and insist that their brand’s unique characteristics are taken into account. More traditional retailers who are making their first moves in the data game shouldn’t lose sight of what their deep relationships with customers have taught them about privacy expectations. This valuable experience is key in the personalization process.
Normally, when we want to promote a certain technology or service, we encourage businesses to use it more often. In a sense, this article asks retailers to do the exact opposite. That’s because just like in business, after massive growth, comes the focus and precision stage.
Now is the time for the retail industry to learn how to make better, smarter use of this newfound power. I invite retailers to reexamine their personalization strategy with the above sensitivities in mind, and make any necessary changes to help customers feel both important and comfortable.