Like the song from Love Actually, “Love is all around us”, the same can be said about personalization. Think about the places you shop, the streaming subscriptions you watch, and even the news you consume…all of these services have made a conscious effort to curate and promote unique products and information to your personal interests and needs.

While it may not be news to us that personalization has taken over, the art of perfecting it is still a work in progress.

So, how can personalization transform promotion success? What tools do retailers need to execute effective personalization strategies?

What is personalization?

By definition, personalization consists of tailoring a service or a product to accommodate a specific individual. This method is achieved by collecting information about the individual to better understand their purchasing habits and behaviors. With this information, retailers can curate personalized experiences for the consumer by presenting suggestions on products to purchase, or providing promotions on a specific product.

Is targeting the same as personalization?

While many believe that personalization and targeting are interchangeable, the truth is they are not the same.

In short, targeting delivers messaging to a specific audience segment. A few examples of customer segments include behavioral, demographic, geographic, psychographic, etc.

Personalization, on the other hand, delivers messaging to a specific customer within an audience segment. This requires a merchandiser to know in real time what the individual customer is likely to be interested in.

How retailers push out personalized promotions

Retailers are capitalizing on this opportunity to personalize through their websites, mobile apps, online ads, and email outreach.

For in-store, retailers can tap into geofencing where they can send real-time promotions to their customers based on where they are in the store. For online, retailers can collect information on their consumers to create personalized messaging.

Types of information they can collect include:

– Time of day
– Type of browser or device
– Site/ page visits, Active time spent on a page, Mouse movement
– Past purchases
– Email opens and clicks

Examples of exceptional personalized messaging

– When an Amazon Prime member shops at Whole Foods, Amazon is able to collect data on the items they buy routinely in the physical store. Then, they are able to suggest the same products on the Amazon website with an enticement: free two-hour delivery.

– The Starbucks app has the capability to remember customers’ frequently purchased drinks and rewards them with promotions and freebies based on their preferences and purchase history.

– Streaming services like Netflix, Hulu, and Disney+ curate recommendations of shows you may enjoy watching based on past/present watching habits. It constantly changes to fit your personal profile. Often it is even segmented into different genres you watch.

The impact of personalized promotions

Not convinced that personalized promotions can take your retail business to the next level? Check out a few stats from Forbes.

From the consumer’s perspective:

– 80% of consumers are more likely to make a purchase from a brand that provides personalized experiences. – Epsilon
– Personalized homepage promotions influenced 85% of consumers to buy. – Instapage

From the retailer’s perspective:

– 95% of companies that saw 3x ROI from their personalization efforts increased profitability in the year after their personalization efforts.
– When customers receive transparent ads based on their activity on a site, the revenue of the product grows by 38%. – Harvard Business Review

There is a debate on whether personalization can be taken too far and have a “creepiness” factor. But, according to Accenture, “73% of consumers say a business has never communicated with them online in a way that felt too personalized or invasive.”

Our suggestion to avoid your personalization strategy flopping? Make data integrity a priority and always remember, a successful personalization campaign puts customer satisfaction at the top of the list, NOT business KPIs and goals.

What retailers need to do to get started with personalized promotion

Personalization isn’t going anywhere anytime soon. In fact, it’s going to make more of an impact with each passing year. But how do retailers ensure their personalization efforts are successful?

While most retailers have already hopped on the personalization bandwagon, the reality is that they need a strategic foundation. We suggest that retailers improve their personalized promotion efforts with the following:

Have deep access to customer-level data

According to Forbes, retailers need to connect customer data and product data. This connected commerce approach allows for more personalized customer experiences, better forecasting and replenishment algorithms, and higher customer satisfaction.

This involves collecting and connecting important customer-level data. For example, retailers should have access to:

– Basic Data: Customer names, addresses, etc.
– Behavioral Data: Website views, newsletter sign-ups, social media interactions, etc.
– Transactional Data: Loyalty, Credit Cards, etc.
– Attitudinal Data: Online reviews, support tickets, etc.

Invest in advanced technology and the use of AI & ML models

Personalization should engage each customer as an individual. This will drive unique customer-level decisions that help achieve business objectives. Advanced technology and the use of AI & ML models are required to handle the massive number of variables. By combining this with an agile methodology, consisting of cross-team collaboration and iterative development, retailers are able to offer highly personalized and effective results.

The future of retail is here, and it’s not slowing down. Leading retailers are investing in effective promotional strategies such as personalization to ensure they not only meet their business goals but also keep up with customer expectations.