As the lines between digital and physical retail continue to blur, businesses have to adapt their strategies to keep up.
Despite the struggles of longtime retail stalwarts, consumers haven't abandoned brick-and-mortar stores. In fact, customers are seeking out retailers that provide an engaging in-store experience.
When walking into most stores, people are looking for something they don't always get when shopping online: the experience. However, building a compelling in-store experience has been a difficult challenge for many retailers. With rich customer insights and advanced data analytics, though, retailers are now equipped to offer en masse what has long been a hallmark of high-end stores and boutique shops: personalization.
When you know what people want, you can keep customers coming back and leverage your physical stores to deliver a powerful, personalized experience.
Customers Want Personalized Offers
In a recent Mastercard-sponsored Harvard Business Review survey of more than 600 business executives, eight in ten respondents said personalization is important to their organizations' strategies, and more than half said it's a critical driver of revenue and profits.
While the digital age makes personalization possible, it doesn't necessarily restrict it to an online endeavor; the data insights that help to explain the habits and preferences of different consumer segments can be used across all channels. In fact, 56% of the HBR survey respondents said their organizations are already using personalization as a way to unify the customer experience across all functional areas — including the sales floor.
Many retailers, such as Nike, arm their sales associates with tablets or point-of-sale devices to make tailored recommendations and connect better with the customer. That's a good start, but with access to broader customer insights and a view outside their four walls, retailers can paint a more vivid picture of their customer segments. Using information that reveals the preferences of similar groups of consumers, sales associates can better highlight merchandise that fits more precisely with individual tastes and budgets.
With 90% of HBR survey respondents saying that customers expect organizations to know their interests and anticipate their needs, building a compelling and personalized customer experience is more important than ever.
Win Over Digital-First Customers
Data insights can even help to identify and reach consumers segments that place less value on face-to-face interactions, but still want a personalized touch. Some retailers are connecting with customers on their mobile devices as they roam a store's aisles. This strategy, known as geofencing, uses location-based software to trigger an alert on a customer's mobile device when they enter the store or approach a certain aisle. This enables the retailer to highlight specific products and even offer personalized promotions and recommendations.
For example, a select group of loyal customers can choose to receive personalized digital coupons upon entering the store. Alternatively, the shopper who's been "geofenced" in the winter coat section can be offered a price that aligns with the cost of the last coat she purchased, or a price that reflects the deals she's explored on the store's mobile app. Personalization lets customers enjoy a hybrid electronic-physical shopping experience in which their digital curiosities are satisfied by actual goods.
At the heart of any personalization initiative is a robust, advanced data analytics practice. Effectively unpacking data insights for different customer segments can, in turn, empower retailers to offer tailor-made in-store deals that will win customers' hearts and their business.
Use Data Insights to Fine-tune Personalization Efforts
While digital technology makes it possible to offer more nuanced personalization initiatives, retailers should still test each effort to understand the incremental impact of different personalization efforts.
Moreover, as retailers focus more on offering end-to-end omnichannel experiences, it will become easier for them to aggregate richer information on customer preferences across a variety of touchpoints. In fact, the HBR survey found that nearly 90% of surveyed business leaders believe that the more they shift to digital models, the greater opportunities are to implement personalization.
The decline of some known brick-and-mortar brands should serve as a cautionary tale, but it's by no means a bad omen for physical stores. By doubling down on the customer experience, retailers can thrive in the digital era.
Subscribe to the Compendium
Thought leadership and insights on today’s industry trends and innovations.