The Evolution of Personalization in Retail

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The concept of Retail personalization harks back to a time before digital, when sales clerks in local shops knew customers by name, knew their regular orders, and could enhance customer experience by genuinely understanding their customers’ needs and wants.

Then came the rise in digital. Online shopping hit mainstream culture in 2008 and changed personalization from human-to-human interaction, to computerized stereotyping.

The Three Generations of Personalization

Bruce D’Ambrosio, chief scientist at Peerius, describes the stages of e-commerce personalization in three generations. The first generation was marketing segmentation. Retailers would broadly segment their customers into groups such as new or returning, male or female, and try to communicate accordingly. This computerized approach took the personal out of personalization and instead judged customers on a few general details.

D’Ambrosio’s second generation covers the emergence of the ‘you bought this so you will like this’ culture of online shopping. Suggesting items based on a customer’s previous purchases and viewed items attempts to replicate the relationship previously seen on the high street. Again, these algorithms can only collate results based on very limited information. For example, an uncle buys a gift for his niece, and the next time he logs on is bombarded by suggestions of other similar toys. If we look back to the golden age of the high street, the shopkeeper would know that the customer’s niece had just been born, so the uncle won’t be looking for another gift quite so soon.

Personalization today

Today we have moved into D’Ambrosio’s third generation, in which segmentation is no longer a satisfactory method of personalization for the modern day consumer. The requirements of the individual have come to the fore and segmentation has transformed into detailed data-based personalization.

Retailers are no longer putting customers into groups or buckets, they are looking at specific preferences that differ individuals from the group. For example, using previous purchases to suggest items could be based on the color or style that the customer usually purchases.

Through the adoption of omnichannel customer journeys, retailers can track digital and in-store touch points from individual customers and tailor communications accordingly. This means that no matter which channel customers choose to use – mobile, desktop or in-store – the experience should be seamless.

As retailers continue to evolve 94% of businesses are realizing that personalization is critical to current and future success, what are you waiting for? Download the The Personalized Retailer to find out more about implementing a personalization strategy.

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