The world of retail is going
through a transformation. In the past, retailers would employ mass marketing
campaigns to attract customers. But in the present era, where consumer tastes
are becoming more diverse and wide-ranging by the day, mass marketing is a much
less effective tool than it once was. As a result, retailers are now focusing
less on what the masses want, and more on what the individual wants. Personalized
marketing in retail is what’s vogue nowadays, and it’s driven by the cloud and
big data science.
What’s
personalized marketing all about?
Personalized marketing
attempts to generate customer loyalty by offering customers items, deals or
promotions which correspond to their preferences. If you’re a regular user of
Amazon or Taobao, you’ll be familiar with the concept. These popular online
storefronts present you with suggestions on what items to buy via analyzing
your past behavior, such as your purchasing history or what products you’ve
tended to search for when visiting those sites. In this way, each customer has
a unique shopping experience which matches their interests.
Personalized marketing is not
just the domain of e-commerce giants. Smaller retailers are also rapidly
embracing this trend, since a failure to do so could risk losing a large
proportion of shoppers who enjoy a personalized experience. According to a survey, 73% of customers like to do
business with retailers that use personal data to make their shopping
experience more relevant.
The technology that powers
personalized marketing in retail is usually a cloud service and big data analytics.
The behavior of potentially thousands of customers is tracked and uploaded to a
cloud database in real-time as they shop or browse. The data is then analyzed
by algorithms which produce recommendations for customers, again in real-time.
In addition to behavioral data, other types of data such as demographics or
location are also used to form customer recommendations.
The
future of personalized marketing in retail – Online 2 Offline
The kind of personalized
marketing described so far is actually the tip of the iceberg. Leveraging the
capabilities of the cloud, personalized marketing is projected to develop in
very exciting ways in the future, especially in the area of Online 2 Offline
(O2O).
O2O refers to when retailers
use online channels to enhance the experience of shoppers in brick and mortar stores.
O2O used to be fairly simplistic, such as offering customers coupons on social
media platforms which could be used in physical stores. But O2O will become
more sophisticated as retailers realize they can use the cloud to transfer the
personalized shopping experience people have online to physical shops as well. For example, the online
shopping behavior of customers which is uploaded to the cloud for analysis could
be used to suggest items or deals for shoppers when they enter brick and mortar
stores. Let’s say a person searches for a particular sweater at the online
store of a retailer but ultimately chooses not to buy the sweater. At a later
date, the person enters the retailer’s physical store, which retrieves data on
how that customer behaved on the online store from the cloud. Based on this
data, the person is provided with a large discount on the same sweater which
entices them to purchase it from the physical store.
The above example could work
the other way around as well. How customers behave in brick and mortar stores could
be uploaded to the cloud and analyzed in order to shape the recommendations
they are given online. In this way, the cloud can help blur the boundaries
between online and in-store retail by enabling customers to have a personalized
shopping experience across both channels.
Transparency
is important
Personalized marketing
ensures customers have a more intimate rather than cookie-cutter experience
when going to shop, which should drive sales and profitability. However, a
marketing expert recently warned that personalized marketing
could get ‘creepy’ and backfire if companies gather and use the personal data
of customers without acquiring their consent.
Microsoft crossed the
creepiness threshold when it launched Windows 10. The Operating System
collected some personal data from users by default in order to help “improve”
the product. This triggered a huge uproar from many users who thought the data
was being collected for nefarious purposes, and forced Microsoft to be more
transparent about its data collection policies and how users could opt out.
So if your business plans to collect
personal data to provide a tailored shopping experience for your customers, it’s
better to be up front about it and obtain their permission first.