Retailers gather data on customers across all touchpoints and use it to communicate with them, build a relationship and personalise the experience. But what is personalisation in 2015 and how is it evolving? Emma Herrod investigates.
Retailers have enough information to enable them to communicate with shoppers on a one-to-one basis. They also have systems that show them how every shopper behaves in each channel, linking their browsing and shopping patterns across online and offline channels; not just what they buy but what they look at, where, when and – just as importantly – what they haven’t bought. How many times does customer x look at something at a certain price point before deciding to buy it; what trigger(s) would ensure that they actually make a purchase. The days of retailers sending a weekly email announcing the arrival of a new range of men’s clothing because you once bought a present for your brother, or being recommended newborn baby nappies every time you visit a site for 5 years, should be over.
What does personalisation mean in 2015, though, and how is it being enabled by suppliers and used by retailers? When I interviewed people for this feature, the first thing they asked me was what I meant by personalisation. That was the first question on my list, too.
Personalisation means different things to different suppliers and retailers. To some, it’s the ability of algorithms to recommend and display products or categories on a website that a shopper has been viewing in their current browsing session, by incorporating past behaviour or by predicting what they might like.
To others, it’s a messaging system which has moved past the time when including the recipient’s name in an email was a sign of a leading retailer. Certain actions on the part of the shopper or the retailer will now trigger marketing emails, SMS or other marketing messaging, such as when certain products are viewed or the price drops.
For example, when Lovehoney introduced recommendations personalised to the individual user on the interstitial page between basket and checkout, the retailer saw a ten per cent rise in revenue overnight in what Joey Moore, Strategy Director at Peerius, refers to as “a step change in the business”.
Personalising email marketing can push up open rates and click-throughs while also increasing the value of the channel. Australian fashion retailer Speciality Fashion Group (SFG) recorded an average campaign ROI of more than 1,800% when it introduced a campaign and analytics solution from SDL to run responsive, data-driven marketing campaigns. The SDL solution also helped to streamline marketing processes, reducing the time it took to produce electronic direct marketing from 24 hours to under two hours.
Majestic Wine saw a 15 per cent increase in online sales when it personalised and automated its email newsletter and other campaigns. It was also able to analyse and build segments in minutes to run more campaigns.
THE BIGGER CONVERSATION
Personalisation is about more than smart emails though. “Personalisation is all about delivering the right offer to the right customer at the right time using the right channels,” says Tasin Reza, Head of Optimisation and Design, Red Eye International.
Search, navigation, recommendations and personalised emails are just small elements of the bigger personalisation picture. It enables retailers to merchandise their store and enables shoppers to make the purchasing decision without have to go into a physical store. “If done well, you can ensure your customers buy the product they didn’t know they wanted,” says Peggy Chen, Senior Director of Product Marketing, SDL. “It makes selling online relevant.”
Content on the site can be personalised so customers see not only products that are relevant to them but also the best imagery or rich content, messaging and placement of items. It brings together content, customer and commerce. Shop Direct, for example, can serve shoppers one of 1.2 million possible homepages personalised to what the company knows about them as an individual. The company’s Deputy CEO, Gareth Jones, explains further in an interview on page 10.
Office Depot uses Monetate’s personalisation platform to dramatically increase on-site engagement by creating tablet-specific navigation for mobile customers, which grew revenue per session by 22%, and countdown timers to promote offers and run multiple campaigns in real-time, such as one for free next-day delivery. In four months, it ran 44 campaigns which boosted online conversion rates by three per cent to increase projected annual revenue by more than £2.5m.
“For every dollar we spend with Monetate, I’m confident that we’ll see a 15x return on investment in 2015 and 2016,” says Jonathan Newman, VP eCommerce & Marketing Operations at Office Depot.
Scandinavian adventure clothing company Helly Hansen is another Monetate user. Its geo-targeting capabilities are paired with local weather forecasts to give specific onsite experiences for website visitors in different countries.
Personalisation can also extend to how the customer/retailer relationship is handled across all channels and touchpoints, with store staff having access to customer’s online purchasing history or in-store purchases being accessorised online.
VIEW OF DATA
All of this is based on one thing: data. SFG, for example, uses data that details customers’ behaviour across all of its brands, from the physical stores, to web and mobile sites, plus direct marketing and social media.
Often, this type of information is stored in different databases from multiple vendors so personalisation engines need to stitch the data together to get a single view of each customer. Only then can the experience be accurately personalised to serve a homepage based on their entry path with campaign items based on the target group into which they have been categorised. This identity stitching is something Monetate is currently working on.
By incorporating predictive analytics, retailers can tell not only what customers are likely to look at next but through which touchpoint. They can now interact with them in real-time, too, so “a single view is a must,” says Reza.
But can the customer base be divided into single segments so each customer can be interacted with on an individual level? For applications such as recommendations and marketing messaging this is possible as long as the data is sufficiently granular. However, it is still questionable whether it’s worth serving customers individually where content personalisation is concerned. Generally, the effort is not worth the reward, explains Alex Henry, Client Solutions Director EMEA at Monetate.
Reza believes that retailers have a fundamental responsibility to use the data that they collect about shoppers on their website if people have agreed that their actions will be tracked via cookies. He comments: “Relevancy is key. If it’s not, what’s the point?
“There is a fine line between personalisation and being creepy,” he adds, and this is where testing is important. Before going live with changes, run A/B tests. An improvement in conversion proves that personalisation works for that particular segment.
Tim Callan, CMO at SLI Systems, a US company whose main solution is an evidence-based algorithm for site search and navigation, agrees that testing is important for personalisation. “It’s the difference between ‘I think’ and ‘I know’,” he says.
FLEXIBLE & ADAPTABLE OR RESTRICTIVE?
The general view used to be that once rules were in place – such as show only men’s clothing to men and women’s to women, give full price products priority over something that’s been marked down – the data could decide what products to show to customers. This would have led to a mum who shops for the entire family being shown kids’ trainers or dad’s socks when they were trying to find a dress for their self.
No form of personalisation can just be implemented, with rules set and left to run. It’s an ongoing process because customer behaviour changes, as do the touchpoints.
Also, these tools are there to handle the day-to-day activity and free up merchandisers’ time so they can focus on trading. They can concentrate on merchandising the items that need it; that is, the ones that are selling really well or those that due to stock issues are getting lots of views but not many sales.
However, Callan acknowledges that while SLI Systems’ solution continues to learn about each customer’s behaviour and what they actually mean by a search term such as ‘black jumper,’ a balance has to be achieved between rigid rules and being flexible. Merchandisers need to fine-tune results by promoting and demoting products, creating custom landing pages or time limits, for example, although this can be overdone.
“You have to let the retailer decide as they know their business, but they don’t have the statistical analysis that the system has,” he comments. If retailers want to “fiddle” they generally aren’t happy with the results so they should let the evidence speak for itself. If you A/B test the evidence-based version against a custom tune, the evidence-based version always wins, he explains. “That’s true for any solution that’s trying to learn.”
Systems need a certain amount of rigidity while still being flexible, explains Henry. The end result is validating what you know about the customer at any given time.
NOW & THE FUTURE
Being able to analyse past performance to predict the future and automate it, bringing together the analytics, reviews, segments and margins, is where personalisation is today. In its Technology for Ecommerce 2015 Report, Econsultancy says: “As consumers increasingly expect their interactions with brands to be personalised and tailored to their specific needs, organisations are finally starting to grasp the importance of moving from generic to personal experiences.” Separate research conducted by the firm reveals that there is also a strong commercial case for doing so, as companies who are personalising digital experiences report a 14% uplift in sales.
Of course, brands and retailers are always looking to squeeze that extra percentage point of conversion from their sites but as the growth rate of ecommerce has slowed, so the use of personalisation has increased. Retailers are turning to content personalisation as a key way of getting closer to the customer and enhancing their experience online. As SDL’s Chen points out: “We enable them to optimise both the merchandising experience with our search, navigation and personalisation capabilities and the content experience with hyper-relevancy capabilities.”
She believes the future is the single view. “What you see manifested on a website is an improvement,” she says, but the industry is on the cusp of being able to marry the entire online world with the offline physical store experience in real time. “Predictive and real-time is the way it’s going,” Chen says.
The ideal is one-to-one communications across all channels utilising all of the data that’s collected in a way that’s applicable to each channel, interaction or touchpoint. There’s still a long way to go before a shop assistant can immediately identify a high value customer when they walk into the shop, know what they were researching online before their visit and give them a truly personal experience. Likewise, while it’s straight forward to share data from online to offline, it’s harder to bring together multiple data sources from off- to online.
Callan adds another possible future, with retailers sharing information on customers’ purchases so that complementary products can be merchandised to them, such as children toys from one retailer and being shown age-appropriate clothes when they visit another, or a Harley-Davidson t-shirt bought from one retailer and the shopper being shown relevant spare parts on a dealer’s site.
With the right system and data and the successful use of insight, retailers can only get better at personalisation. However, customers have to be at the centre of everything and retailers need to think about what each one wants because soon personalisation will be the main differentiator as price and delivery give way to experience. Retail will move from seamless to connected and any retailer able to do this across all touchpoints is going to be way ahead of the game.