Personalisation: how 1:1 communications help retailers meet emerging customer needs
In the first article of our 3 part series, we looked at the increased need for transformation in eCommerce grocery in the wake of the Covid-19 pandemic. In this second edition, we’ll investigate how a targeted, personal dialogue with your customers will help reinforce your understanding of their changing needs, and your ability to respond effectively.
Consumers have changed how they shop across the board
As we discussed in the last article, it’s clear that retailers need to quickly adapt to new customer behaviours and preferences that have shifted to online. It’s equally true though that those behavioural changes aren’t only limited to the digital world – every facet of shopping behaviour is suddenly under question.
Comparisons have been drawn with the 2008 financial crisis but this is only part of the picture; the fundamentals of how people live their daily lives have changed, at least temporarily. A reticence to return to bars and restaurants means more meals at home, likewise a greater degree of remote working. Frequency of shopping has changed – baskets are bigger and trips less frequent than pre-COVID to a still-startling degree. According to a recent study from the US, baskets are still some 20% larger than before the outbreak, with trip frequency down over 10%. Shifts of this magnitude have gigantic ramifications for retailers and brands.
Perhaps as illuminating has been the data coming from the major multinational CPGs showing a marked shakeup in category behaviour and demand. The pick of the bunch here is Unilever’s report of a 26% jump in ice cream sales coupled with a fall in shampoo and deodorant showing a tiny glimpse into how we like to live when nobody is watching. As an aside, it’s also a good illustration of the value of sales data over claimed behaviour; the same basket size study from above, among many others, has survey data showing a vast swathe of consumers (myself included) claiming to eat healthier, while the sales data reveals us to be on the sofa, in yesterday’s T-shirt with Ben and Jerry’s and a spoon.
All of this amounts to a head-spinning degree of change. Customer economics have changed. Customer needs have changed. Occasions have changed. And they’ve changed differently for each customer and for each category.
Retailers and brands need to go through a complete re-understanding of macro customer needs through rigorous insights work, but they also need to communicate with customers in a way which reflects their individual preferences - in short, it’s time for retail personalisation.
Personalisation: why, how and where
Personalisation has immediate benefits. While it will take a long time to build new macro models of behaviour, customers are already telling retailers exactly what they want. Using the right recommender system to quickly put those products in front of customers makes their trip faster, easier and cheaper, growing loyalty, satisfaction and value perception.
The best examples in personalisation and recommendation today aren’t retailers, but streaming services. Without a powerful and effective recommendation engine, Netflix and friends would be impenetrable for the user – it would be impossible to navigate the thousands and thousands of options. But because they know what I watch and what people like me watch, my streaming experience is curated and limited to only the things I’m likely to be interested in. It’s easy, frictionless and it keeps me coming back to that service.
Through loyalty data, retailers have an equally clear, long term view of each customer or household’s behaviour and preferences. With the right data science applied on the right data in the right places, many parts of the shopping journey can be fully personalised, so whatever the customer need and however their behaviour changes, the experience is always in line with their preferences. Some examples of where personalisation can be successfully applied:
eCommerce – Recommender systems on grocery eCommerce sites are well-established, but retailers need to ensure that the data and delivery are truly enhancing the customer journey. Whilst many systems only use online behaviour, the best approach is to include long loop data from both on and offline. Using only online data gives a very incomplete view for most retailers, making it more likely to deliver poor, even jarring recommendations. Done well, and on a full view of on and offline data, personalisation can be a virtual assistant to the online shop which grows basket size and profitability online:
- Recommending key items a customer is likely to need now at the start of the journey to quickly build baskets
- Personalised substitutions to show the right item when their choice is out of stock. If customer A always buys the same brand of pasta, regardless of type, and customer B buys the same type of pasta regardless of brand, their recommendation will be very different. The same logic applies to complementary items
- Before checkout, prompting the customer with items they may have forgotten, checked in real time against the basket. This saves customers having to make multiple amends to the basket or the frustration of forgetting a product
Promotions – Promotions are a major driver of retail price perception, a vital battleground in tough economic times. But with hundreds of offers in the store and online at any one time, customers sometimes struggle to find the ones that are relevant to them. Using a recommender engine to show the top few promotions for each customer increases promotional uptake and customer satisfaction as they save money on items they love. Delivery via email, app or even an instore kiosk helps customers plan and find those items on the trip. In markets where flyers are an important vehicle, retailers can consider the benefits of personalising the flyer at the customer level, delivered digitally, for effectiveness as well as a significant print saving.
Loyalty and reward – In a time where many customers will need to find value in their shopping, personalisation can allow retailers to offer individual discounts on regular items, relevant NPD, categories and the whole basket. Individually personalised coupons, delivered digitally or physically, are a smarter and more effective mechanic than mass-level coupons, and they resonate better with customers. The ability to personalise at the customer level also makes this an attractive proposition for CPGs who can fund these activities as they grow loyalty to their own brand directly with key customers, drastically reducing CRM costs for the retailer.
Choose a partner wisely
The data to power these kinds of advanced personalisation are well within the grasp of many retailers, but they need the right partner to build the recommendation engine and delivery mechanisms based on long term, on and offline customer behaviour. A well-run personalisation programme can be transformational for retailers, especially in an era where the old models of customer understanding are suddenly unreliable. By listening to and acting on what each customer wants, retailers can give customers a great experience and grow their engagement no matter their needs.