Appetite among consumers for shopping online has exploded in the last few years. While in most cases sales in bricks and mortar have stagnated or even declined, the rise of online retail seems inexorable. One important aspect of on online retail is personalisation – the idea that retailers can offer personalised recommendations based on user preferences and history.
However, the fact is, if you take a look under the bonnet you’ll find that most companies are using a weak substitute for real and effective personalisation. Today’s digital technologies and data sciences make it possible to go beyond the “Hi [insert name]” emails and bland product suggestions based on earlier purchases or overall shopping trends.
As a result of new techniques such as attribute analysis and event sequencing (see below), it’s now possible to create truly ‘one-one-one’ marketing strategies. It is hyper personalisation – and not personalisation — that is now the order of the day.
When it comes to personalisation, you might go online and buy a new pair of shoes to go with the gym membership you’ve just signed up for. Once the transaction is complete you will most likely be offered even more shoes. This comes as a recommendation from the seller and looks something like this, “Customers who bought this item also bought…”
But why would you want another shoe when you just bought your dream pair? Today’s consumers are constantly bombarded with messaging, with brands vying for their attention. With so much choice on offer, they don’t tolerate irrelevant messages and have heightened expectations about the experiences they are offered by these brands.
Recommendations might also be based on what customers had in their basket along with the shoes you just purchased to make their recommendations. Extra suggestions in this case might include running gear such as jackets and socks, skipping ropes, energy drinks and weather resistant waist packs. Clearly, these are sensible suggestions.
More advanced personalisation efforts might also look at customer’s purchase history, transaction records (what the customer placed in a cart or in a wish list), channel activity and clickstream data, the promotional emails opened, loyalty card records and even the customer’s CRM interactions.
However, new techniques now mean that this quasi-personalisation can be replaced by campaigns that look at dimensions that look at customers’ activity, interest and opinions as well as attitudes, values and behavior. This way campaigns can be created that are truly customer-specific, persuasive and that produce winning results.
Traits and techniques of hyper personalisation
Two computational techniques are used to achieve hyper-personalisation – attribute analysis and event sequence analysis. Both help bring the customer to the center of communications based on rich and reliable profiles.
This technique breaks down a customer into a map. The map describes every attribute of the person (example: female, between 25 and 35, educated, married, has a child, due for a promotion at work, likes using Uber, reads Daniel D’Silva, makes a point of visiting art galleries on weekend and so on).
Attribute analysis has become simpler and more reliable with the growth in social listening technologies. So for example, when a customer today says she is ‘eco-friendly’, retailers can translate that interest into energy efficient products, a bias towards stores that don’t use plastic bags or wanting to reduce their personal carbon footprint by shopping online.
Event Sequence Analysis: This technique observes the sequence of events a customer goes through during the buying process. For an e-tailer, the relevant events could be:
1. Method used for login
2. Search terms used (example: refrigerator, power bank, LED lamps)
3. Adding items to basket or the wish list
4. Liking the Facebook page of the product
5. Crowdsourcing opinion by posting on a social network (i.e. Apple vs Samsung)
6. Decision to buy
When knowledge about a customer’s preference and habits are combined with online behavior patterns, the result is a hyper-personalised experience where customers are offered relevant suggestions at appropriate times during their customer journey. Every event during the buying process offers an opportunity for hyper-personalisation based on what we know about an individual. These suggestions can be made by email, a chat bot, an immediate offer on the web page providing discount coupons for select products or displaying items of interest.
So for example, instead of being offered the option to buy more shoes at the check-out phase, a customer may be sent an offer by email for running equipment the day before they tend to go for a run. They can even be sent promotional offers for a yoga studio or a city marathon with which the etailer has partnered. In addition to this, they can also be exposed to healthy food options, suitable for a training regime, that are available with the seller. Rather than being bombarded with irrelevant and ill-timed buying suggestions, customers are offered useful suggestions at the time when they want and need them most.
For the retailer, the goal is to make the right offer at the right time to ensure three things: that the shopping cycle is made easier and faster, upsell opportunities are not lost and the customer does not leave the buying process.
Taking a balanced approach
Clearly there is a balance to be made between providing customers with an outstanding customer experience and wariness around privacy. Will the level of customer intimacy from hyper-personalisation result in customer delight or customer discomfort? It depends on how sensitive the customer is, the type of customer data being used and the source for that data. If customers prefer not to have their data shared or opt out of these types of services, then this should be easily enabled.
Hyper personalization is the future
In an age of heightened consumer expectations, what has passed for personalisation to this point will no longer suffice. Irrelevant or poorly timed messages are swiftly disregarded by the impatient consumer. In place of personalisation, hyper-personalisation provides timely and relevant suggestions, offering customers an outstanding buying experience. At the same time, for retailers it means improved sales, and better upsell conversion and customer retention.
Srinath Sridhar is lead consultant, analytics consulting group, at Wipro Ltd.