Customers in the public and private sectors are becoming much more likely to demand services and experiences tailored to their tastes or preferences. It applies to everything from local council services to iGaming, where players want games, promotions, and communications that align with their tastes.
Retail is the most hyper-personalised sector. According to Insider Intelligence, 73 percent of consumers expect brands to anticipate what they need and customize their experience based on these needs. In a world where switching brands is as easy as one click on a competitor’s website, those companies that cater to their customer’s needs and expectations stand a better chance of retaining them, even when mistakes are made. A study by Salesforce confirms that 78 percent of customers are highly likely to return to a business they’ve had a bad experience with, so long as they receive outstanding customer service.
This shift has led to fierce competition among offline and online retailers, who offer hyper-personalized experiences to differentiate themselves from competitors. But can this work, and what does it mean in practice?
What is personalization in retail?
Let me take a step back and summarise it. In the context of eCommerce, personalization refers to adapting real-time messaging, sales funnels, and customer engagement to the preferences and intent of the individual customer. It relies on data, analytics, and insights into customer behavior to serve content and products that are more likely to spark admiration and purchase.
Technological capability has become more sophisticated, mainly through advances in algorithms, machine learning, and predictive analytics, so the extent to which personalization can be targeted with precision – and precision applied at scale – has undoubtedly increased. Today, a retailer can conduct detailed, large-scale personalization to the degree that simply wouldn’t be manageable if it had to be done by hand, reaching far more people than ever before.
But it’s only as good as the data that powers it. If that data is inaccurate or, more troubling, reliable, it does not matter which tech is chosen to personalize – it will not be worthwhile.
The benefits of hyper-personalization for retailers and shoppers
Hyper-personalization is a double-edged sword in retail and, thus, one of e-commerce’s key hallmarks. It helps create engaging, enhanced, and value-added interactions for shoppers and enables retailers to drive their growth and revenues.
Benefits for Retailers
Fully Understanding Demographics
Most retailers' perception that they “know their customers well” is enough, along with any associated guesswork, imprecision, or vague understandings. Grocery chains that collect and analyze detailed customer data, including purchasing patterns and browsing history, can infer customers’ preferences and motivations and ultimately target them with the most relevant products at the right frequency.
Enabling Greater Customer Loyalty
It is especially true if the customer is considered in all their individuality rather than being treated as an amorphous mass of numerical profiles. An emotional connection with a brand makes them more likely to be loyal and bring their business back. Strategies here could include special rewards tailored to an individual’s profile or specific interventions when they abandon their shopping carts before buying.
Gaining Quicker Insights
“Shopper” analytics with the right tools and data can learn in seconds – or as close to that as you can manage – what customers are doing and why. Since you’re learning so much, so fast, you can be more nimble, figure out how to lead shoppers along a path (the “funnel” in marketing speak), and deliver the messaging at just the right time and place.
Driving Competitive Advantage
In that competitive market, any considerable differentiator tends to be influential. Although pricing is important, quality of service and customer experience may still be crucial in shifting customer preferences. Personalized offers and a convenient shopping experience improve competitiveness.
Increasing Order Value
Studies by Monetate tell us that offering personalized customer journeys can result in an up to 12 percent increase in average order value. Hyper-personalization can make cross-selling and upselling opportunities within the customer journey more effective; what’s known as “You may also be interested in…” dashed into an email topic line or shopping website at reasonable times to enhance the experience and increase sales.
Benefits for Shoppers
Higher Satisfaction
Hyper-personalization forces shopping experiences into dedicated personal walks, making shoppers feel more cherished by the retailers for whom they go – because it’s a shorter, less stressful, more guided, more intuitive, and more meaningful pathway.
Delivery Options That Appeal
Indeed, one critical factor that may detract a customer from ordering on eCommerce sites is delivery issues. It is where hyper-personalization can come to the rescue. When order delivery options align with individual customers’ preferences (same-day home delivery at an exact time of their choice, pick-up from a pre-selected delivery locker, etc.), it dramatically boosts the shopping experience.
Trust in Retailers
While customers have more choices than ever and can easily compare-shop, the relationship depends heavily on trust. Hyper-personalization builds trust because it reflects that customers feel more important and that the retailer is working for them.
Targeted Communications
Marketing messages can, therefore, be hyper-personalized without customers being overwhelmed by an avalanche of irrelevant communications, which will promptly get swiped to the ‘junk’ folder. Instead, each customer receives relevant content for products they’re genuinely interested in, thus increasing their level of engagement and their intent to purchase.
Benefits of hyper-personalization
Benefits for retailers |
Benefits for shoppers |
|
Fully understanding demographics |
Higher satisfaction |
|
Enabling greater customer loyalty |
Delivery options that appeal |
|
Gaining quicker insights |
Trust in retailers |
|
Driving competitive advantage |
Targeted communications |
|
Increasing order value |
Closing the divide between eCommerce and stores
Most eCommerce occurs alongside brick-and-mortar stores. However, even retailers using just one sales channel can learn from those companies seeking to overcome a vertically integrated organizational structure and the melding of technologies. At its best, multichannel retailing blends the strengths of online and offline retail. At its worst, it causes headaches for retailers as it involves grappling with technological hurdles in merging the two platforms and, in some instances, figuring out how each channel complements the other while not undermining sales volumes.
Hyper-personalization, which combines online buying with offline shopping, is a significant factor here. For example, when customers are in the store, staff can learn about their preferences, make suggestions, and interact with them. Analytics and AI could then use The data this creates to create a personalized email offer. It would resonate with the customer and create an avenue for future online purchases.
This synergy can work the other way, with in-store purchases informing online recommendations and vice versa, enhancing the customer experience and deepening the intensity of engagement through both channels.
Examples of eCommerce Hyper-Personalization
How are big retailers getting more personal? Here are a handful of areas where hyper-personalization is already making a big difference for innovative eCommerce companies.
Faster and Easier Transaction Options
Today’s customers are accustomed to having multiple payment options, whether Apple Pay, Google Pay, or buy-now-pay-later (BNPL) schemes. If brands provide these options, they must be seamlessly integrated into the online shopping journey to avoid any stress or delay. Giving choices for quick and easy transactions is essential to building a relevant and responsive experience for the modern consumer.
Understanding Actual Customer Demographics
The increased power of advanced analytics and related AI technologies is helping retailers recognize and accurately capture new and returning customers in previously unimaginable ways and, for example, continuously evaluating how people interact with and shop in the store (e.g., how fast they move across the floor, how long they spend, whether they exit), combined with a host of other measurements, can provide an unprecedented opportunity to make more informed strategic decisions, while simultaneously improving the individualized customer path to purchase through a deeper understanding of customer demographics.
Customer Insights for Retargeting
It’s also important to learn from what customers have already done – in particular, why customers never bought in the first place (e.g., abandoned a shopping cart or have not interacted with you for a long time) and how to best use this information to deliver more relevant retargeting offers and messaging.
Aligning Search Results with Recommendations
Super-personalization can be a priceless benefit if you use search history to recommend products that reflect what the user has looked at in the past and what is likely to move them. Recent trace data can be enormously valuable. Amazon’s algorithms trawl through purchase histories and browsing data to suggest products that correlate with the user’s behavior – the things that might interest them. This strategy works as long as data flows smoothly, that is, within good data governance and sophisticated integration processes.
Loyalty Rewards
When every customer base member receives something virtually identical under an old-fashioned, points-based loyalty program, the scheme quickly loses its charm. Hyper-personalization can take the loyalty program to a whole new level by making the reward relevant, such as an invitation to an in-store shopping experience or a discount offered on a specific product the customer is more likely to need.
When Does Personalization Become a Privacy Breach?
Hyper-personalization relies on the extensive collection, sorting, and analysis of customer data. In an age of heightened awareness of personal information's worth, sensitivities, and security, this can create a complicated problem for retailers. The potential to draw meaningful conclusions from data and to pivot from those insights to some form of hyper-personalized messaging creates opportunities for retailers to offer consumers enhanced service, selection, and convenience. However, it also involves something retailers would prefer to avoid. Mining massive swaths of data to form predictive models of customer behavior threatens to look to customers and the rest of the world like Big Brother surveillance.
Mixed public opinion favoring data sharing for personalization further complicates this balance. Though 58 percent of consumers say they believe it’s necessary to share data, 42 percent don’t, according to Digital Commerce 360. Of the 58 percent of consumers who think data sharing is needed, 87 percent say explicit permission must be sought before collecting the data.
Likewise, retailers can face these challenges by employing creative ways to qualify their customers and grant exceptions to their anonymity – for example, if customers volunteer and provide a fundamental description of who they are, such as their gender or age, then customers could be rewarded. Not only would such mechanisms protect the customer by getting their upfront consent to process the data, but they would also comply with the most onerous data privacy laws, such as those outlined in the GDPR or CCPA, which involve not engaging in surreptitious data harvesting.
Mastering the Art of Personal Touch in the Digital Age
Lastly, the role of hyper-personalizing user experience is essential for eCommerce businesses. Given that nowadays, people want better user experiences from their services, not only better and faster but also tailored specially for them, eCommerce cannot sit still in front of much change happening. Using hyper-personalization well can increase customer satisfaction and loyalty, leading to more sales and high competitiveness, but always not crossing the line to privacy. Customers need to know what kind of data to use; consent is fundamental. Be open. That is the key to eCommerce in the future, where hyper-personalization and data privacy are the same things.