Retail’s Perfect Storm
For decades, personalized customer experience has been retail’s elusive Holy Grail. But for the first time in history, the convergence of powerful, ubiquitous technologies, digitally mature customers, and an ever-expanding customer data pool has created retail’s “Perfect Storm,” making hyper-personalized engagement with customers at scale a reality for retailers.
Driven primarily by a consumer that adopts and assimilates emerging technologies at the speed of innovation, these winds of change have caught the sails of digitally native retailers such as Amazon, who are harnessing the potential of these new tech-savvy consumers. The “Amazon Effect” shatters brand loyalty and spikes expectations through an irresistible magnetic ecosystem of near-frictionless shopping experiences, endless aisles, easy returns, invaluable customer reviews, and rapid delivery. While these forces were already driving an upward shift in online shopping, the COVID-19 pandemic catapulted digital shopping to penetration levels not expected for another five years. While a boon for many retailers, this online spike exposed every nook and cranny of the digital channel and forced every retailer to rethink their digital destiny while pondering how such rapid change would impact their best customer relationships.
Further compounding this change is the consumer shift from buying products to buying experiences, led by the Millennial and Gen-Z generations. Shoppers today want retailers to know them personally. For that reason, they’ll gravitate toward retailers that provide personalized experiences and targeted promotions catering to their desires and preferences. They’ll share priceless information and create intimate relationships with retailers based on a foundation of trust. But they’ll demand to be in control and want value in return.
For the first time in history, the convergence of powerful, ubiquitous technologies, digitally mature customers, and an ever-expanding customer data pool has created retail’s “Perfect Storm,” making hyper-personalized engagement with customers at scale a reality for retailers.
Powerful, Ubiquitous Technology is the Conduit to Customers
As an illustration of the explosion of enabling technologies that have sprung from R&D to you and me, here are some examples of the core technologies creating the conduit for hyper-personalized customer experiences:
- Beacons, Proximity Sensors, Edge Computing and IoT to name a few will provide the real-time infrastructure that grease the skids of Immersive Adaptive Experiences & Contextual Personal Promotions
- 5G is the conduit. But it’s more than just a better connection. It’s a better, smarter connector. 5G technology will enable the intelligent contextual connection between a customer & retailer and give rise to entirely new customer experience interactions and business models
- Cognitive Computing and the ability to harness artificial intelligence (AI) and machine learning (ML) will play an excellent role in intelligent assistants and virtual advisers. Siri, Google Assistant, and Alexa are great early examples. Intelligent Agents will be utilized across the entire customer shopping journey and will be able to sense and adapt to real-time needs.
- Machine Vision along with Face & Voice Recognition blessed with customer-sanctioned profiles and Opt-in Data Tracking will be used to provide not only automatic inspection, process control, and robot guidance but the ability to identify individual customers and sense their mood, predicting their needs contextually
- Blended Reality enhances experiences not just with new viewing methods, but new input methods as well
- Sensor Fusion and Customer Data Platforms will aid retailers in aggregating customer data from disparate sources such that its whole is greater than the sum of the parts, enhancing a retailer’s ability to generate and harness a 360-customer view to create personalized customer experiences
- Real-time Edge Analytics, Camera & Video Analytics, and AI Algorithms will be commonplace throughout every retail business process, and when combined with user contexts such as the current shopping journey, previous purchase history, and user-generated preferences will generate the Predictive Analysis retailers need to create hyper-personalized experiences & offers which are aware of the consumer buying context.
Digitally Mature Customers Want Personalized Customer Experiences
Unsurprisingly, the Millennial and Gen-Z generations are leading the charge for retail personalization. The Millennial generation has surpassed the Baby Boomers as the economic force driving our global economy, with the digitally native Gen-Zers hot on their trail. They buy experiences over products and influence the retail landscape by pushing brands to reflect their values. They view their powerful smart devices as critical life essentials, chewing up and spitting out mobile apps and web services at break-neck speed. But they’re not the only generations jumping on the digital shopping bullet train. Shoppers that might never have considered digital shopping in the 55+ age demographic became digital converts during the pandemic, which expanded their shopping options and expectations, thus challenging their brand loyalty. The customer journey for shoppers of all ages has irreparably changed, and retailers that intend to survive must abandon their legacy view of “shopping channels” and get on the only channel that matters now – The Customer Channel.
If CUSTOMER EXPERIENCE is Retail’s New Success Battlefield
PERSONALIZATION is the Engine that Drives that Success
And CUSTOMER DATA is the Fuel that Runs that Engine
Digitally Aware Retailers Create Personalized Relationships at Scale
Because of this explosion in digital maturity, retailers must re-examine every facet of their digital strategies. It was easy for many, especially grocers, to dodge their digital destiny as pre-pandemic digital shopper penetration was well below twenty percent. At that level, online transactions were barely profitable as retailers had to assume the labor previously borne by customers in a physical store. The pandemic changed the game, pushing the percentage of digital shoppers well past the profitability threshold but significantly exposing every wart and blemish in their digital channel strategy. While many retailers avoided digital transformation discussions before COVID-19, the pandemic caused a massive retail digital epiphany. Digital maturity is now a key linchpin for retailers as they strive to protect their most loyal customers in their expanding sea of options. Shoppers now expect hyper-personalized, value add shopping experiences catered to their growing list of evolving expectations. Value-add customer experience is now the engine for retail success, and customer data is the engine’s fuel.pre-pandemic
Retailers will be transformed into information businesses, where the collection, analysis, and use of data underpin competitive advantage. Retailers need to get ahead of the trend, or else they will lose out to rivals and new, disruptive competitors
Customer “Data Diamonds” Strewn Across the Internet Floor
The proliferation of digitally verbose customers creates an unprecedented opportunity for retailers. As shoppers traverse the edgeless internet, they strew personal data diamonds across its floor, creating a rich customer data seedbed. Accessing and mining this vast data pool, however, is a daunting challenge. Where is it? When can I use it? And how do I aggregate it to make the whole greater than the sum of the parts? Retail’s future success will be built on harnessing this expanding data pool, transforming retailers into information businesses, where the collection, analysis, and use of data underpin competitive advantage:
- Point of Sale
- Pages Views
- Web Searches
- Browsing History
- Orders and Purchases
- Service Tickets
- Email Opens
- Text Messages
- Social Networking Likes, Views, and Comments
- Store Associate Engagement
- Loyalty Status
- App Interactions
- Chat Bot Engagements
- Blogging and Vlogging
- Surveys
- Wish Lists
- 2ndand 3rd Party Data
360° Customer View: Understanding What Inspires Your Customers
In conclusion, this Retail Perfect Storm is a boon for retailers brave enough to chase the storm. But they’re clearly going to need some help. An effective Customer Data Platform, the crucial blend of CDP and CRM, is the panacea that orchestrates this powerful pool of priceless people data into a structured sea of sense. It provides a retailer with that non-negotiable 360-degree view of the customer without which there is no “PERSONAL. Seeing the customer as they really are will require insight into all the facets they choose to make available in the public domain. The ability to enhance 1st party data with 2nd and 3rd party customer data immersed in powerful retail AI algorithms empowers retailers to round out the bigger customer picture – and will be absolutely crucial in nurturing trusted relationships, providing hyper-personalized experiences and promotions, and staying relevant whenever and wherever the customer chooses to engage.
There is now only ONE retail channel – the CUSTOMER CHANNEL – and the retailers that thrive going forward will be those that lap their competition on the super-channel buy-way of personalized customer experience.
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