Creating a Customer Value Exchange to Drive Better Personalization
May 20, 2022
This byline was originally posted on Forbes.com
Some of the polish on retailers’ personalization strategies is starting to fade. While many retailers were focused on survival for the past few years, consumers became even more digitally savvy, even more discerning about their brand choices, and even more interested in meaningful shopping experiences. This has created a measurable gap between retailer and consumer — one that only retailers have the power to close.
In a recent study from Coresight Research and Sailthru, “Retail Personalization Index 2022: Balancing Trust, Data Collection and Privacy” — which analyzed data from three surveys with over 6,000 total respondents — 71% of retailers responded that they excel in personalization in marketing, while only 34% of consumers agreed. This is not a small gap. While the vast majority of retailers are satisfied with their efforts, McKinsey notes in a 2021 article that 76% of consumers are frustrated when they don’t experience personalized interactions.
Why Personalization is a Game Changer
People often point to customer experience, or as Forrester calls it, “customer obsession,” as the key to retail success. As the CMO of a company whose solution offers cross-channel personalization capabilities, I believe it’s a worthy investment. Forrester notes that a focus on customer obsession can increase ROI exponentially. One place to start is by creating higher-value interactions with customers.
With so much choice, customers don’t need to be loyal. Only differentiated value will keep them interested. Retailers should start with defining their own customer value exchange. It’s important to understand what individuals value most about a particular brand. It could be access to products that aren’t available around the corner, incredible product curation that drives discovery and some other unique element of the brand experience.
The report from Coresight and Sailthru found that 71% of consumers will shop more often with brands and retailers with personalized communication. The good news for brands is that people are often willing to exchange data for value — which can drive better personalization. However, many brands have a way to go before they are where they need to be in creating that value exchange. In our research with Coresight, we found that Sephora and Thrive Market (a Sailthru customer) prioritized personalized experience well across customer touchpoints large and small. Personalization should be driven by that give and take: The consumer gets better experiences and the retailer gets data and insights.
Getting the Data Needed for Great Personalization
To achieve truly amazing personalized experiences, brands need better data. A name, address and recent search activity are yesterday’s personalization foundation. Today, personalization should become a constant value exchange in which insights are collected continuously.
Great personalization focuses on two types of data: zero-party and first-party data.
• Go on and ask for zero-party data: This data includes insights that come from direct communication with consumers. For example, a grocery retailer could ask new site visitors for food shopping and lifestyle preferences at the very first interaction. Retailers don’t have to craft complicated questionnaires. Gamifying interactions, such as by providing a coupon in exchange for a reply to a quick question via SMS, is a perfect way to keep it easy and mutually beneficial.
• Never stop learning with first-party data: The beauty of first-party data is that you can glean it from consumer behavior across every single channel to create a fuller picture of their overall preferences. Brands should be thinking about first-party data as the foundational information that shows patterns like preferred time of day, channel and location for communications; reveals shopping behavior; and more.
What to Give in Exchange for Data
In our study, 71% of customers said they would shop more with brands that personalized offers. As long as brands are following privacy best practices, the vast majority of consumers responded that they will share data with brands in exchange for value like loyalty rewards (70%) and promotions (80%).
The most effective loyalty programs are geared toward perks that the specific target audience values. For example, The Home Depot’s military program supports military customers with 10% off eligible purchases, job and skills training, and $400 million dedicated to date to helping support causes that benefit veterans, such as building houses for military veterans.
Start with Key Channels for Immediate Impact
The next phase of advancement in personalization represents a major turning point in marketing. Brands should use first- and zero-party data collection to create a 360-degree view of the customer, which can help inform advertising and marketing programs.
To make the most of new data and insights, brands should revisit key channels like email for new personalization opportunities that create a value exchange. Loyalty programs are cornerstones of the value exchange for many brands and can be used to inform larger efforts. For example, in exchange for filling out a quiz about shopping preferences, brands can share access to exclusive content or a promo code for an early sale. Even small value exchanges, such as personalizing the content of the next newsletter based on a question the brand asks about where someone wants to travel or what they like to cook, are subtle improvements that can help brands earn customer engagement. Retailers should also test new methods like SMS to add to the value exchange with tactics like timely offers based on past behavior on other channels.
Now is the time for more brands to step up and stand out.
The Consumer Trends Index 2023: U.S. Version
Data & AI
How Interactive Experiences Can Upgrade Your Data Collection Strategy
With the sun setting on third party cookies, businesses are recognizing the need to revamp their data acquisition strategies. Customer relationships need to be...
Sailthru’s 2022 Year in Review
2022 has been another year for the books – especially for cross-channel marketers. Marketing trends continue to keep us on our toes, ensuring we...
Data & AI
Thanksgiving Week Shows Retailers Collecting Zero-Party Data While Loyalty Programs Continue To Provide Solid Revenue Streams
The 2022 holiday shopping season has begun and forward-thinking brands are seizing the opportunity to collect zero-party data via interactive experiences in the busiest...