The new customer intimacy:Personalization dominates
as retail andeCommerce converge
An EXL whitepaper
Written by
Namit SurekaHead of Retail Analytics PracticeCo-Head Banking Analytics [email protected]
An EXL whitepaper
Written by
Asif GhatalaVice PresidentRetail Analytics Practice
An EXL whitepaper
Written by
Rahul LathEngagement ManagerEXL Analytics, New York Office
1 © 2016 ExlService Holdings, Inc.
[ The new customer intimacy ]
Most physical retailers, large and small,
now have websites, mobile apps and
multiple ways to purchase product. Some
eCommerce sellers are adding “click and
collect” options, so buyers can pick up
their online purchases at a local locker or
warehouse, instead of opting for delivery.
Others are opening showrooms, so
consumers can both see the merchandise
and, literally, try it on for size before placing
their orders online.
But, the blurred lines of physical and digital
are only part of this retail transformation.
Not only do consumers want to move
seamlessly between channels, but, they
want to make their shopping experiences
personal. Whether browsing online or
in store, today’s buyers won’t settle for
an item, or an interaction, that’s one size
fits all. No matter how they choose to
interact with a retailer, shoppers want
that experience tailored to their individual
tastes, preferences and needs. And, they’re
willing to spend money with companies
that deliver on that promise.
Digital Trends reports that 73 percent of
consumers prefer to do business with
brands that use their personal information
to make their shopping experience more
relevant.1 Forty percent of consumers
actually buy more from retailers that
personalize the shopping experience
across channels.2
For years, it’s been a battleground: brick-and-mortar retail vs. eCommerce, fighting for relevance in a world where consumer behavior changes as quickly as a Millennial swipes right. But, after all the punches and pivots, that fight for domination ended with an outcome that few saw coming. Instead of one existing player emerging victorious, physical retail and eCommerce are converging, forming a new, hybrid “unified commerce” model with customer engagement at its core.
2 © 2016 ExlService Holdings, Inc.
[ The new customer intimacy ]
single apartment dwellers got different
messages and images than 50-year-
old, married homeowners. Better than
generic marketing, yes; but reliant on
an assumptive pack mentality. Instead
of zoning in on the individual, retailers
marketed to a collective of peers who may
or may not think and behave alike.
Today, the type of personalization
customers seek extends well beyond the
offer of a similar product or a home page
festooned with banner ads. Buyers want
a seamless, custom-tailored experience
across all channels. They want to walk into
a retail store and get an offer for a product
they looked at on line; and suggestions
of other items of interest. They want
pure eCommerce companies to engage
in new ways, like one U.K.-based etailer
that shows a custom homepage for each
returning customer. In a world that is
decidedly “all about me,” retailers that use
every interaction to continuously refine the
individual customer experience will be the
ones that come out on top.
Thankfully, a number of sociological
and technological shifts make this
transformation possible for nearly every
seller, regardless of size.
Failing to provide this personalization
appears to have the opposite effect. The
CMO Council reported that more than
half of U.S. and Canadian consumers
consider ending their loyalties to retailers
who do not give tailored, relevant offers.3
Translation? In today’s environment,
customization is no longer a differentiator.
It’s critical to retail survival.
Personalization then vs. personalization nowAlthough personalization is not a new
concept, its interpretation has dramatically
changed. Not that long ago, it meant
pushing out offers based on demographics;
segmenting the buyer population by
age, community, marital status and
other factors. Twenty-five-year-old,
Buyers want a seamless, custom-tailored experience across all channels.
3 © 2016 ExlService Holdings, Inc.
[ The new customer intimacy ]
Data collection in a “to know me is to love me” worldEffective personalization efforts begin with
quality, comprehensive data, collected
across all channels: physical, virtual and
social. What did the customer look at? How
much time was spent browsing a certain
type of item? What was purchased? What
was returned? Do purchases increase
when specific motivators are in place, like
a sale, a limited-time discount offer, or free
shipping?
The more data collected, the more
potential to truly understand the individual
customer; from how he or she shops, to
favorite colors to personal style. Not only
do people know that retailers, eCommerce
sites and other vendors are tracking
their interactions, but, most customers
embrace the attention. We’ve moved
from a very private world to one in which
nearly everyone is happy to share—what
they’re eating, what they’re thinking and
what’s going on around them. By capturing
and analyzing channel interactions, sales
transactions and social posts over time,
retailers can fast-forward customer
relationships from casual acquaintance to
the commerce equivalent of BFF status
in record time, and reap the subsequent
financial benefits.
Some individual stores, as well as shopping
malls, are taking data collection to a whole
new level with proximity beacons. These
Bluetooth-enabled devices, installed at
strategic points, track customer movement
via smartphone app, and can even transmit
personalized messages to those individual
customers in real time, if they opt in for
these offers.
From a single store perspective, this
data provides a clear picture of how that
customer navigates through the various
departments, how long he or she spends
in each area; and what that shopper looks
at versus what he or she eventually buys. It
also sheds light on aspirational purchases.
4 © 2016 ExlService Holdings, Inc.
[ The new customer intimacy ]
Shopper X may always visit the handbag
department to check out the Louis Vuittons,
then continue on her way. Shopper Y may
start in the luggage department, then head
to resort wear, indicating a vacation in the
offing. Not only do beacons help retailers
understand shopping patterns, but give
them the option to push out real-time
offers to help close the sale before that
customer heads out the door.
Many malls are now installing beacons to
track how customers shop on a grander
scale. The data illustrates specific patterns;
like whether customers walk the entire
mall, or consistently visit only a handful
of stores. Do they visit the stores in any
particular order? What’s the average time
in the mall versus time in each store? Even
documenting whether or not a shopper
stops for a latte or pretzel while pondering
a purchase provides useful insight, and
could become the catalyst for cross-
promotional activities.
Beacons level the playing field because
they give retailers of all types the
same window into customer activity as
eCommerce sites have had since their
inception. When a person logs onto a
site, the etailer can track that activity. Until
recently, when a person walked into any
physical retailer, from department store to
drugstore, the only trackable transaction
was the customer purchase.
Of course, collecting customer information
is one thing. The real test comes in how
effectively sellers can use that information
to impact revenue and loyalty.
Insight for everyone: More agile, affordable data analytics optionsIn the past, sophisticated analytics
programs were cost-prohibitive to all but
the largest physical and online retailers. As
analytics matured, not only has the price
come down substantially, but the model
has become far more agile. Instead of
requiring a massive budget and a year or
more to affect outcome, now, sellers can
start small, quickly test out concepts and
track results before scaling up. These
“sprint” programs reduce risk, but also
allow retailers to test multiple ideas at one
time, without making a large financial or
time commitment.
5 © 2016 ExlService Holdings, Inc.
[ The new customer intimacy ]
For example, one large online retailer
wanted to reduce the number of abandon
carts by understanding the root cause.
Using analytics, this company was able
to test numerous solutions, ranging from
sending out multiple reminders instead
of one, to optimizing the mix of products
suggested in those abandon cart emails—
more accurately matching suggestions
to the customer’s unique browsing and
purchase history. This seller also tried
reordering the way they showcased the
abandon items in the follow-up email.
Instead of presenting the items historically,
with the oldest item appearing first, it
reversed the order. This seemingly simple
change alone made a significant impact.
Another company had invested in artificial
intelligence (AI) tools to help customers
choose the right size, but still had a high
return rate on apparel and footwear. By
analyzing return reason codes, the use of
the AI tools, as well as each customer’s
propensity to buy, this retailer had the
insight to proactively turn its returns into
sales.
If the customer returned the item because
the style was unflattering, the retailer
included other style options, based
on previous purchases, along with the
follow-up email. When the data indicated
frequent size and style returns from the
same customer, the follow-up encouraged
the buyer to leverage the AI tool for highly
personal recommendations. And, if the
customer appeared to return the item
because it was priced beyond his or her
budget, the retailer offered free shipping
on a subsequent purchase, even if that
purchase was a lower-priced item.
In addition to solving problems, companies
are employing analytics to personalize the
customer journey from the first interaction
on, to more effectively advance them to the
next step in the purchase lifecycle. These
6 © 2016 ExlService Holdings, Inc.
[ The new customer intimacy ]
techniques include everything from follow-
up emails based on gallery pages and
showcasing specific items for unregistered
visitors, to adding credit options for those
customers whose online search began with
key words linked to credit.
But, it’s not only online where analytics are
making an impact.
Some retailers are now equipping their
stores with tablets so shoppers can log in,
get a virtual tour or be guided to products
they were looking at online. They’re also
using analytics to arm their sales associates
with in-depth customer intelligence, so
they’re up-to-speed on the customer in
their area by the time they say “hello.”
Others are applying analytics to improve
internal functions, from optimizing store
layout and merchandising to combatting
fraud.
Although cyber attacks are on the rise,
employee theft still accounts for a
significant percentage of loss throughout
the retail industry. Although more concrete
conclusions typically require a few months
of refinement, expert analytics can identify
patterns in a matter of weeks—specifically,
which employees and managers are
repeatedly on duty during periods in which
fraud occurs.
That’s the real beauty of analytics programs
today. Whether the company is trying to
increase sales, reduce abandonments
or improve engagement, they can get
actionable insight within the first 90 days.
7 © 2016 ExlService Holdings, Inc.
[ The new customer intimacy ]
Getting started: Moving from the present state to your personal bestIf you’re part of the retail commerce
ecosystem, you’ve seen the trend yourself.
The days of generic marketing and your-
name-here interactions are as out of date
as the cash register. But, how do you move
your organization from where it is today
to an analytics-driven enterprise with the
customer journey at its core?
Begin with the basics:
Start with what’s NOT working
In a perfect world, a retail analytics
program would start with A, B, C and D
goals, clearly laid out based on company
objectives. In the real world, these
programs typically begin because the
retailer wants to fix a problem:
• We’re spending more on blanket marketing campaigns and aren’t seeing a lift.
• We have data but we can’t put it together for meaningful output.
• Our last five marketing campaigns have failed.
• We’re losing market share and want to stop the bleeding.
• Our abandon cart rates are escalating and we don’t know why.
• We’re discounting our way to margin erosion.
• Our customers look here and buy somewhere else.
• Our customer satisfaction ratings are lower than ever.
• We’re not effectively competing and we
don’t know why.
Using analytics to solve a problem first is
an excellent proof of concept.
Develop a strategy
Where are you today with your customer
journey and where do you want to go? Start
with seamless channel integration and then
create your vision for the ultimate customer
journey. Design your analytics program
around that vision, with the flexibility to
change and refocus that vision, based on
customer response, as you go.
Where are you today with your customer journey and where do you want to go?
8 © 2016 ExlService Holdings, Inc.
[ The new customer intimacy ]
Refine your data collection methodology
Effective analytics programs depend on
good, comprehensive data. Examine your
current data collection process. Are you
collecting customer interactions from
every channel and funneling this into one
database? When was the last time that data
was scrubbed to ensure you’re working with
accurate information? If you can’t answer
these questions, engage with a qualified
third-party provider to set up a database
and data collection process for you.
Create structure
Analytics is a science, requiring a well-
defined structure for acquiring and
analyzing information, and an environment
that tracks customer feedback, documents
improvements and identifies needs. Putting
that structure in place from day one is
critical to success.
Test multiple options
Although offering a personal customer
experience is now table stakes, companies
can differentiate themselves by getting
creative, and testing out new ideas. With
the agility and affordability of today’s
analytic programs, many retailers pilot
10, 20, or more offers and options
simultaneously and track response. When
they execute a full roll-out, they know they
have something that really resonates with
their customers.
Keep a close eye on social media
In the pre-mobile world, the contact center
was the barometer of customer satisfaction.
Today, it’s social media. If something goes
wrong, or goes right, chances are, it will
be shared, and re-shared before anyone
at your organization knows what’s going
on. Carefully tracking customer sentiment
on social media, and responding quickly
9 © 2016 ExlService Holdings, Inc.
[ The new customer intimacy ]
to issues, is critical to maintaining brand
integrity. The most engaging website
or optimized in-store experience mean
nothing if the retailer reacts poorly, or not
at all, to negative posts. Make sure you
not only make following social media a
priority, but integrate this information into
your database, as well, to round out your
customer personas.
Perhaps more than any other time in its
history, the retail industry is undergoing
a radical change. The convergence
of physical and digital channels, in
combination with consumer demand
for personalization, shift the retail focus
from “product, price and promotion,” to
optimizing the customer experience.
Through skillful application of analytics, and
go-forward strategies that put customers at
the core, retailers can build loyalty, improve
sales and connect with their buyers in a
new, very profitable way.
References1. Digital Trends
http://www.gigya.com/blog/5-
stats-that-prove-businesses-must-
personalize-to-win-customers/
2. Monetate
http://www.gigya.com/blog/5-
stats-that-prove-businesses-must-
personalize-to-win-customers/
3. http://www.datamentors.com/blog/
how-personalize-retail-experience-data
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