by Allyson Tremblay
Interest in online personalisation has been steadily increasing over the past few years, with more and more retailers realising the value it can bring to an ecommerce business. But although it was around a decade ago that Amazon first pioneered the technology, it was only last year that the personalisation industry truly began to flourish.
Recent Gartner research shows that retailers using content driven by customer behaviour see a 600% higher response rate compared with traditional campaigns. This is evidenced by the success of retailers like ASOS, Amazon and eBay, which have all made personalisation an integral part of their business models and continue to lead the market in terms of sales and customer retention.
The benefits of personalisation are clear: showing customers tailored, relevant content as they shop has a unique ability to increase conversion and generate loyalty. However, despite the growing popularity of this technology, it is still in its relative infancy, and will undoubtedly evolve to become a key factor in shaping the future of ecommerce.
One marked change we are likely to see in coming months is an increase in the number of ‘man-hours’ retailers dedicate to working with personalisation software. This is a trend we can already see developing among several prominent brands, which are assigning more internal resource to creating a truly personal customer experience by appointing teams of ‘personalisation experts’. Retailers are now starting to place greater emphasis on using real insight to make customers feel like valued individuals as they spend time on ecommerce sites, instead of using ‘plug and play’ software solutions, which took precedence in the past. This shift in priority is primarily due to the recognition that, although software can lay the foundations, in order to achieve a nuanced and differentiated experience it is essential to have human ownership of a retailer’s personalisation strategy. Only with this addition can it reflect true human nature.
This brings us to the next development – as personalisation becomes more prevalent, retailers will become increasingly sensitive to the fact that customers’ needs are constantly shifting based on countless factors throughout their life-cycles. It is no longer enough to make product recommendations based on crowd-sourced data alone, as this approach fails to acknowledge personal autonomy – put simply, although offerings like ‘other people who bought this also bought…’ may be useful, they do not cater to individual tastes.
The complexity of customers’ shopping habits can sometimes be invisible to the eyes of a piece of software – if a man purchases a pair of shoes for his daughter, the software could reasonably surmise that the man should be shown girls’ shoes on his next visit to the site. However, this is obviously an incorrect decision, which fails to understand the subtleties of our online behaviours – this purchase was most likely a one-off, and by analysing a more sophisticated set of data points, retailers will develop a better understanding of their customers as individuals. The factors that must be taken into consideration are widely varied, and include age, life-stage, marital status, location and job, as well as the other usual suspects like purchase history, buying affinities and ratings and reviews. If these are all accounted for, then small fluctuations in customers’ shopping behaviour like the example described above will not impact on their overall profiles, and will not affect the recommendations they are shown.
Although it may be a crude example, the film Minority Report, released over ten years ago, had a surprisingly sophisticated vision of a personalised retail utopia. Today’s retailers haven’t yet achieved the film’s level of flawless omnichannel personalisation, but are gradually moving towards it luxury fashion retailer Burberry is merging customer data harvested online with its in-store offering to create an individual experience for each shopper, with a 2012 collection containing microchips embedded with personalised digital content. Mobile and tablet are increasingly being harnessed in-store to deliver timely, personalised promotions through QR codes, and self-service kiosks are progressively utilising more customer data to provide the same bespoke experience that shoppers can find online.
It is apparent that personalisation is already beginning to shape the retail landscape, but there are still some stumbling blocks to overcome – eCircle research from February 2013 reveals that 77% of the top 50 retailers in the UK are failing to personalise their email marketing to existing and potential clients – as email is such a fundamental component of the existing personalisation catalogue, this is a surprising statistic.
There are also significant barriers to reaching a Minority Report-style ‘personalisation utopia’ due to the current data-collection methods available to retailers – a major shift in the way we share our information with retailers is needed in order to allow such a retail environment to develop. Changes to the cookie law brought into effect in May 2012, and the subsequent ‘opt-in’ regulation have had serious implications for online personalisation, with one consequence being an increase in privacy concerns among consumers.
However, the sharing of personal data has always been a sensitive topic, and many consumers simply do not feel secure giving out personal information online. This can be an issue of brand perception, as customers who ‘trust’ a brand are more likely to be forthcoming with their information when it is requested. It is very possible that our attitudes to privacy with regard to personal data will change in the future, as personalisation becomes standard practise, and consumers recognise the value of sharing more about themselves with retailers.
Retailers are continuing to evolve their strategies, and these obstacles will, eventually, be negotiated to allow more sophisticated solutions to develop. Adoption of these technologies is steadily becoming the norm for retailers, and as they recognise that dedicating a little extra time and resource is well worth the effort, they will usher in the next phase of personalisation.
Allyson Tremblay is UK sales director at SDL Fredhopper.