Paul Skeldon, Mobile Editor, InternetRetailing investigates how mobile is bringing retailers and customers closer together.
Consumers are not making it easy for retailers. They have an appetite to engage across various touchpoints, yet they still want to be treated like an individual. At the same time, personalised marketing campaigns have been an important influence on online purchases, but increasingly consumers are shutting down to them – citing information overload and lack of relevant offers as their chief gripes.
So, what do they want: what do consumers consider to be a personalised and scintillating experience in 2018? According to ‘Me, Myself & I: The Individualisation Imperative’, a study by Cloud IQ, consumers define being treated as an individual as: being rewarded with highly relevant offers (77%), being remembered (60%), being listened to and understood (59%) and feeling in control (57%).
The phrase ‘moon on a stick’ may well be dancing across the page in front of you reading that, but this is the demanding world into which retailers are pitching themselves. But, while it does seem to be a ‘tough crowd’, retailers and brands do have a secret weapon: the mobile phone.
The mobile is a personal device, clutched to the bosom of most people most of the time, responded to with lightning fast reflexes that would shame a panther and trusted to do almost anything and everything. This has not only made consumers demand some sort of personalisation in their interactions with retailers, but it also gives retailers the way to get up close and personal with shoppers.
The question is how?
Increasingly the answer lies in technologies such as artificial intelligence (AI) that can ‘learn’ what the masses are doing, quantify each user and apply personalisation not on a one-to-one basis, but at scale so it looks like personalisation on a one-to-one basis.
AI can swallow the vast amount of data thrown up by thousands of customers doing things with you and your site and find the patterns and behaviours and categorise them. These categories of behaviour types can then be treated effectively as groups of individuals all doing the same thing.
It isn’t just pie-in-the-sky techno-babble: it actually works. Shop Direct, the home shopping group behind brands including Very, a Top50 retailer in IRUK Top500 research, Littlewoods.com, a Top100 retailer and VeryExclusive.co.uk, saw group turnover hit £1.93bn in the year to 1 July 2017, up by 3.7% in total, or 5.6% on a like-for-like basis, while pre-tax profits of £160.4m were up by 10.2%. In all, 69% of these sales were on a mobile device.
The reason? Shop Direct said at the time that its investment in mobile personalisation before, during and after customer journeys drove these impressive smartphone sales.
Measures included working with Google and Facebook to identify users who look like Shop Direct’s most valuable customers and serving them relevant and timely ads and recommendations. It also applied machine learning to identify customers who are showing signs of lapsing. Those customers were then contacted with an incentive to buy.
Machine learning also helped it to predict when a customer would run out of a product by sending a reminder for them to stock up. That approach, it said, had generated “strong results” across beauty products and scented candles.
This year the retail group will also launch an AI-powered natural language version of its customer service chatbot in the MyVery app. It promises to answer 32 different types of questions, and to recognise and respond appropriately to 4,000 written phrases. Eventually it plans to give customers a personal shopper type experience through the chatbot.
Shop Direct’s Group Chief Executive at the time, Alex Baldock, says this was its fifth consecutive year of record sales and profits, with Very and m-commerce big growth drivers.
“Our long-term investments in digital, data, personalisation and Very are coming good,” he says. “And our obsession with winning the ‘three-second audition’ on smartphones also continues to pay off. We’re delivering one of the most relevant shopping experiences on a 4.7-inch screen, with our five-star apps, digital marketing expertise and leadership in personalisation.”
He continues: “Our customer already loves the upgrade she gets from our famous brands plus credit, but this business is still nowhere near its full potential. Using personalisation, we’re striving to be the easiest and most inspiring place to shop. Artificial intelligence is already driving results for us and we’ll soon launch one of UK retail’s first AI-powered chatbots for customer service. Longer term, we believe AI will bring scale to personalisation so digital retailers like us can be every bit as personal as stores. Very Assistant 2.0 will be another step closer to us democratising the personal shopper.”
It all sounds great, doesn’t it – so, what is the trade off? It needs a lot of data and that is a sticky problem.
While two-thirds of shoppers in Cloud IQ’s study recognise the value of their own personal data as currency in exchange for a more individualised experience, not everyone is comfortable with the idea of this exchange, with 26% being “reluctant” and only a fifth being “enthusiastic” about brands using information they hold on them to create the best possible online experience.
The implementation later this year of GDPR – the EU’s new General Data Protection Regulations – also shows off this unwillingness by many to share the data that retailers need to produce the kind of personalisation they claim they want.
According to a poll of 2,000 people by OnePoll, almost half are planning to exercise their ‘right to be forgotten’ by brands and retailers and social media companies. A third (33%) said they would exercise the right to have their data removed by retailers, while 33% would ask retailers to stop using their data for marketing purposes. Almost one in five (17%) said they would challenge automated decisions made by retailers and 24% said they would access the data that retail companies hold about them.
The good news is that 41% said they would be willing to share some basic demographic information, while 19% said they would share lifestyle and hobbies information in return for a preferential service or discounts. All is not lost.
Cloud IQ’s research sort of backs this up. It identified more than a quarter (28%) as “brand selective” – allowing a few brands to use their information – and 26% as “data selective”, whereby they would like to control the amount of data that brands use.
“What this research has revealed is a personalisation paradox – brands thinking they are exceeding consumer expectations by offering curated content across multiple channels but this having the opposite effect and consumers switching off from the white noise,” Nick Peart, Chief Marketing Officer at Cloud IQ, explains. “Marketers now need to go beyond personalisation and make a shift to individualisation – putting customers front and centre of their own experience. Individualisation may be the new frontier in marketing, but this will only be open to those brands that are highly focused on becoming trusted, transparent and expert in using personal data to deliver superior customer value.”
So, there you have it: personalisation needs to be individual here in the mobile age, but consumers don’t want to share with you more than they can get away with. This makes the marketers job – for it is on their shoulders that this falls – even harder. AI can help leverage what data you have to grant that individual wish, but it’s not going to be easy.