Multiple studies reveal two-thirds or more of customers expect elements of communications or website content to be tailored to their specific needs, yet less than 10% of organisations currently personalise content based on intent or prediction. Even amongst the retailers considered leaders in personalisation, only 16% are personalising more than 75% of the customer journey (source: Adobe).
Despite personalised experiences being a common mantra amongst retail marketers, there's a significant gap between customers' expectations and retail reality. Here we look at the opportunity for retailers to embrace personalisation and how they can close the gap and gain an edge over competitors.
The Power of Personalisation
Customers expect communications and content to be tailored to their needs. This, coupled with the rise of big data, machine learning, generative AI and automation, has increased interest in "hyper-personalisation". Hyper personalisation goes beyond broad-based personalisation triggers and rule-based segments and cohorts using simple data sets, to target customers at an individual level with highly contextualised communications through the right channel at the right time.
The rewards for retailers who get it right are enormous. McKinsey's Next in Personalisation Report 2021 estimates personalisation at scale can deliver increases of between 10% and 30% in revenue and customer retention.
Done well personalisation increases engagement, conversion, lifetime value, customer acquisition and retention, and brand perception. Conversely, failing to tailor experiences can result in poor customer experiences, less loyalty, higher churn, increased costs, and lower revenue. For example, a study by Gartner found brands risk losing 38% of their existing customer base due to poor personalisation efforts!
If customers expect tailored content and communications, and the benefits of it are so great, why aren't more retailers adopting more advanced personalisation strategies?
One of the reasons relatively few retailers provide truly personalised experiences is that it can be challenging to implement a more holistic approach; unifying the on- and offline journey together. Common challenges include:
fragmented retail systems with task-specific “point solutions”
the complexity of integrating data can mean customer data and analytics aren't unified and retailers don't have a single customer view
data privacy (from tightening regulations, deprecation of third-party cookies and consumer concerns) makes it harder for retailers to collect and use customer data.
Powering Up Personalisation
Technology and data are key to personalisation. Technology is available to personalise all aspects of the customer experience - from ads, dynamic product recommendations and virtual shopping assistants to predicting customer preferences, recommending next-best actions and tailoring products and pricing.
These technologies are only as good as the data they're fed which is why unified data lies at the heart of a successful personalisation strategy. After all, it's impossible to personalise experiences without knowing the customer.
Leveraging Technology and Data
Customer data sources need to be unified and seamlessly connected in real-time to engagement and marketing automation platforms, CRM systems, and in-store technologies.
To achieve this, many forward-thinking omnichannel retailers are adopting a more strategic approach to their data architecture in which a single data repository ingests data from all its systems - transactional channels (eCommerce, in-store, third-party marketplaces, and concessions), communications channels (email, direct mail, SMS, social, online advertising) and analytics. This type of architecture enables retailers to unify data, gain a single source of truth across the whole business, and get as close to a 360-degree view of the customer as possible.
As the managed data platform for modern commerce, Datitude's platform is underpinned by a strategic omnichannel data architecture (SODA); providing retailers everything they need to connect, integrate and unify data in a single-managed solution.
With better-connected systems and robust data models, retailers can understand the customer better. Additionally, dynamic real-time data means customer information is up-to-date, leading to improved personalisation.
Customer data can also be combined with information from external sources (for example, weather and what's trending on social media) to provide even more relevant and meaningful experiences and help predict what customers are looking for.
Machine Learning and AI
While simple personalisation is easily achieved with triggers and rule-based segments, more sophisticated data analytics unlock the potential for more advanced personalisation. Machine learning, for example, enables deeper insights to be extracted from complex data sets; learning from data to build predictive (potential future outcomes based on past behaviour) and prescriptive data models (intelligent recommended actions).
Unifying In-store Data
The more data a retailer has about a customer, the more relevant the personalisation strategy will be.
As 73% of UK retail sales happen in-store, with 27% online (source: ONS, November 2024), it's essential for omnichannel retailers to link on- and offline transactions.
Loyalty schemes can help to capture all of a customer’s transactions, although the value of that scheme will be limited by the number of customers who belong to it.
Some retailers encourage customers to share their email addresses in-store so the in-store transaction can be added to their account or an e-receipt can be sent. Known issues are the time it can take to key in the customer’s email address, the high (input) error rate, and the reluctance of some customers to provide this data.
Some retailers also use their payment gateway to create a token tied to the payment card, so the card (and customer) can be tracked across sales channels. However, this means the same payment gateway must be used across sales channels, which might not be commercially advantageous, and of course, many customers use different payment types. In addition, the purchaser may not be the actual customer as they could be paying for an item on behalf of someone else.
Spotlight on Sephora: Using Data to Personalise Experiences |
Sephora, a leading beauty retailer owned by LMVH, is often highlighted to show how its use of customer data and technology enhances the customer experience, boosting engagement and spending. Integrating in-store activities with its digital platforms and a strong loyalty programme has enabled it to take a more end-to-end, omnichannel approach to personalisation. Its app offers customers a range of features through its app and self-service tools enabling them to discover and purchase products and interact with beauty advisors and customer service teams. Customers benefit from rich in-app messaging, personalised push notifications, and the convenience of booking in-person beauty consultations. They also receive customised recommendations and offers based on their profile. In-store, a clienteling app enables store teams, known as "cast members," to access customers' profiles and omnichannel history, make product recommendations and capture the in-store interaction. Additionally, customers can use scanners to find products perfectly tailored to their skin type and hair colour.  Sephora's success in personalisation is fuelled by its unified customer data and Beauty Insider loyalty program which offers a range of perks and discounts across three tiers. By linking offers across email, web, and mobile platforms they make it easy for customers to discover new products and shop the way they want; driving both online and in-store purchases. Its loyalty programme, with 150 million members (source: 2024 RetailX Global Beauty Sector Report), is responsible for the majority of sales with some sources citing it's as high as 80% of all sales. Investment in the end-to-end customer experience online and in-store is yielding results. Sephora is enjoying huge success, not least in the UK where it continues to expand its physical presence having opened seven stores since re-entering the UK market in 2022. |
More sophisticated personalisation relies on advanced data management capabilities and seamless systems integration to enable an omnichannel view of the customer.
Data Management: Quality Over Quantity
Having the right data trumps data quantity. Clean, accurate and up-to-date data enables relevant and timely personalised experiences. Poor data quality leads to inaccurate recommendations, irrelevant promotions, and frustrating experiences.
A good data strategy is important for personalisation and should include data collection, management, storage, transformation, consent, preference management, and identity resolution.
Preference centres can play a powerful role in personalisation by allowing consumers to control and manage their interests and preferences. And responsible data usage policies, including transparent data capture and opt-in/out options, are essential for trust.
On the point of trust, it's important to recognise there is a fine line between a personalised experience and one that feels intrusive. Some consumers are uncomfortable with how much retailers know about them, and how their data is used. This can erode trust and alienate some consumers, rather than enhancing their experience.
Making Personalisation at Scale a Reality
Personalisation is much more than a marketing activity. Doing it well requires a business-wide, cross-functional approach. By understanding the customer journey and identifying where and how personalisation can add value, retailers can power up their efforts to meet consumer expectations and enhance the overall experience.
The future of one-to-one personalisation is exciting. Customised messages, dynamic product recommendations, dynamic pricing and personalised in-store experiences are already happening. With the right technology and a data-driven, customer-centric mindset, retailers can deliver better personalised experiences.
In a world where consumers have an abundance of choice, personalisation is one way to cut through a crowded and competitive marketplace. In return, retailers can expect more valuable relationships with existing customers, while attracting new customers.
If you want to get more personal and need help connecting, integrating and unifying your data, talk to us!
About Datitude
We do data! Whatever your data needs, you can trust us to deliver.
Datitude is transforming how businesses connect, integrate, and unify their data. Our award-winning data platform and service provide the unifying framework to enable retailers and brands to get what they need from their data, in the format needed, when they want it. A true single source of truth. No silos.
It's the managed data platform for modern commerce - proven to deliver and trusted equally by mighty retailers and fast-scaling brands who need better access to their data, and valuable intelligence and actionable insights they can rely on.