Why Your Personalization Strategy Might Not Be Personal At All

Personalization is all around us — in our emails, our social media feeds and even in our shopping carts. In fact, Merkle found that nearly 90 percent of consumers enjoy receiving personalized offers, and those same shoppers were willing to provide more information to retailers in order to achieve a positive, personalized experience.

Similarly, an Epsilon study found that 80 percent of shoppers are more likely to do business with a company that utilizes personalization. With statistics like these, most retailers have implemented some level of personalization, whether that’s online or in-store.

As consumers grow more accustomed to a curated shopping experience, retailers will need to ensure their personalization strategy is truly personal and stands out amongst the crowd.

However, when retailers think of personalization many of them are actually envisioning segmentation. In reality, the two marketing strategies are quite different. To achieve an exceptional, personalized customer experience, retailers need to understand the differences between segmentation and personalization.

How Segmentation and Personalization Differ

Many marketers use traditional segmentation to determine offers and outreach for a group of shoppers connected to one another by past purchase behavior and demographics. In these scenarios, a recommendation to a customer might be effective only some of the time, as every shopper is different.

In contrast, true personalization would link an individual shopper with customer communication tactics created specifically for them. True personalization can be used across the entire retail business, wherever customers interact with the company. This could include marketing initiatives, operations and even product assortment decisions. Personalization improves the value and the quality of individual shopper relationships.

How True Personalization Benefits Retailers

With true personalization, retailers can build closer, more beneficial relationships with customers. By understanding them on an individual level, rather than in a grouping, the experience can be geared towards all of their preferences. For example, a promotion can go beyond just finding a good deal for the shopper’s typical price range, it can include personalized messaging, font, design choices and more — created specifically to catch their attention and strengthen their customer journey.

In addition, recommendations for upsells and cross-sells can be more effective. For example, if a shopper typically buys medium-sized T-shirts within a specific price range and color scheme, segmentation might group this shopper with others who have exhibited a similar pattern. As a result, that shopper might see “personalized” recommendations for medium-sized long-sleeve T-shirts in the winter that fit that price point and color scheme. This might seem logical, but what if that shopper is willing to buy a more expensive long-sleeve shirt in the winter that uses a warmer, more durable fabric. Now, by recommending the cheaper shirt, the retailer might be losing out on an upsell opportunity that true personalization could have predicted.

How to Implement True Personalization

To expand segmentation into true personalization, retailers must view their customers as dynamic and ever-changing. Many retailers will coordinate segmentation based on a snapshot of a customer’s history, when they should be paying attention to patterns, irregularities and growth over the duration of a customer’s time with the brand.

Instead, retailers must create unique strategies to grow the value of each customer. This approach relies on artificial intelligence to review changes in individual customer behavior and recommend a new action to connect with them. AI can identify patterns that go beyond traditional segmentation to better understand the behavior of each individual shopper. As a result, retailers can create a customer journey that inspires larger basket sizes, more frequent visits and stronger loyalty

The Future of Personalization

With AI, retailers must make personalization truly personal. As a customer grows and changes, the retailer’s strategy for reaching them should too. By taking a data-driven approach to true personalization, retailers can create thriving, individualized customer relationships that last for years.

Shekar Raman is CEO and co-founder of Birdzi, a grocery retail AI solutions company that was inspired by an idea his 11-year-old daughter had about locating products in the supermarket.