The personalized experience: Why it is a must for retailers

Business and Technology Writer

There's a consensus among retailers: the personalized experience is a must. As researchers at Brand Keys found, brands that can match consumers' emotional expectations are better able to engage customers and foster loyalty.

Armed with smartphones and Internet connections, brands and buyers are enjoying more agency in retail interactions. When looking to buy, customers can research offerings, assess a products' features, compare prices and read peer reviews. Specialized services to match personal needs are abundant, so each step in the buying process today can be uniquely tailored to the customers' needs.

Consumers with leverage

This is a power shift in consumers' favor. The techniques retailers once used to broadcast their brand to a wide audience don't always compute for individuals. When a special offer is aimed at too broad a demographic, it is likely to miss the mark.

Putting the person in personalization requires effectively analyzing data from disparate systems, whether it is sales transaction data, loyalty data or data from unstructured sources like social data, and delivering relevant information, offers and services at times when the customer wants them. It's a steep challenge for many companies. To create their own personalized experiences, they face the daunting issue of collecting and analyzing streams of data from diverse sources. Rowan Curran from Forrester Research notes that "as expectations soar, enterprises are personalizing with methods that are too unsophisticated, too opaque or too convoluted to meet the complexity and mutability needed to serve individuals."

Multiple data flows

It's not that retailers aren't trying to personalize, but as Duane Lyons notes in a Data Informed column, the proliferation of digital channels and their associated data comes with big challenges. "While most would welcome this additional insight, the reality is this data explosion is a double-edged sword," Lyons notes. "If implemented correctly, it can give consumer-focused organizations a massive competitive advantage. However, if implemented incorrectly, it can result in frustrated business users, failed projects and even worse, lost customers."

It requires synthesizing multiple data sources to predict the next best action for individual customers. On what profitable customer segment should they focus? What offer might interest them? How do they like to receive information? What are they likely to buy? McKinsey & Company's Ian MacKenzie, Chris Meyer and Steve Noble write that building analytical capabilities enables "targeted marketing, tailored assessments and effective pricing and promotions." They add that analyzing data to discern the needs of growing segments is important. But just as significant is "understanding individual consumers and customizing offers on a one-on-one basis."

That's personalization: Analyzing the signals that a consumer shares through past purchases, both online and in person. It can be the items they added to their cart, conversations held with customer service, special offers redeemed, store visits or branded app interactions. There are plenty more data signals that allow retailers to ask what a shopper wants, test personalized offers, track results, refine and repeat.

Examples of a personalized experience

While's personalized recommendations have been around for more than a decade, it's clear that retail personalization is in an early stage. Still, some companies are gaining attention for their personalization efforts. Macy's has experimented with iBeacon transmitters in select stores to offer rewards to shoppers that scan bar codes with their smartphones. It is one of several efforts Macy's is using to personalize the in-store experience, Advertising Age reports. According to Retail Week Magazine, British retailer Shop Direct is also launching personalized websites for its brand, displaying 1.2 million different versions of its home page tailored to the viewer.

In a world where the range of digital channels and smartphone apps will only grow, retailers have only begun to develop personalized experiences for shoppers. As consumers themselves, retailers should expect to see and create many more experiments as they build connections and meaning.

How do you create a personalized experience for consumers? Learn more on the IBM Retail Solutions page.