A Framework for Omnichannel Personlization

A Framework for Omnichannel Personalization

A prescriptive guide to help retailers bridge the gap between vision and reality.

Personalizing the shopper experience across channels is a goal most retailers covet; yet few truly achieve. The gulf between vision and reality is as much a reflection of the lack of a clear definition of the end-state and its associated benefits as it is of the gap in retailers’ current business processes and technology systems.

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The Importance of Omnichannel Personalization High Customer Acquisition and Retention Costs Repeat customers drive current profitability and new customers drive current growth and future profitability. This simple axiom of retail is still true.

Yet, acquiring and retaining customers is harder than ever before. Consumers expect personalization – being offered a customer experience tailored to their needs and preferences based on their implicit behavior and explicit permission – across all interactions with a retailer. Not being able to do so counts as a failure in the eyes of the consumer.

And, with proliferation of choice and ubiquitous mobility, consumers can abandon engagement with a retailer at the slightest friction in the customer experience. For every customer experience failure, brands lose an average of 65% of the customer’s share of wallet during the following year.1

78%

of consumers are more likely to be repeat customers if a retailer provides them targeted, personalized offers.

Source: Vanson Bourne’s Rethinking Retail, 2014

Source : 1 SDL

25%

86% of consumers will pay up to 25% more for a better customer experience

Source: The Annual Customer Experience Impact (CEI) Report, 2011

Commerce and Engagement are Converging For decades retailers have invited consumers into environments they control (stores, retailers’ websites and mobile apps). Over the next few years, consumers will continue to push retailers outside the comfort of their four walls – from social media buy buttons to over-the-top messaging services with integrated payments such as WeChat; from personalized concierge services to full-featured mobile wallets.

To stay relevant, retailers need to embed themselves in the ongoing “phygital” lives of their consumers and earn the right to be part of this continuous stream of engagement. They can’t do so by following traditional means of marketing, communications and customer service.

Personalization is their “way in”.

Stores are the Last Frontier Consumers’ rich digital body language – online and offline behavior that signals their intention and preferences – is all but lost on retailers.2 19% of consumers actually expect the shopping experience to continue seamlessly across multiple devices whether or not they have logged in.3

eCommerce orders originating from social media grew at 202% in 2014

Source: Shopify, 2015

550 MILLION

monthly active users on WeChat

Source: Tencent Press Release, 2015

Store Associate Recommendations are the Most Effective Personalization Tool

A key reason: Personalization has largely been the domain of online retailers or the ecommerce teams of brick and mortar retailers. With more than 90% of retail sales still occurring in stores4 and stores increasingly influencing digital sales, stores can no longer be consigned to the dark ages.

2.5x

3.5x

25x

Personalized Product Emails Recommendations on Website

Social Media Buy Buttons

Store Associate Recommendations

Source: EKN-Mindtree Omnichannel Personalization Survey, 2015 Source: 2 Accenture, 3 Forrester Research 2014, 4 Deloitte

What is the Business Value of Personalization?

Meeting Consumer Expectations

Improved Conversion

Revenue Impact

35%

60% of consumers prefer offers that are

Personalized call to actions result in

targeted to where they are and what

of Amazon’s revenue

42% higher conversion than generic

they are doing5

are generated by its

CTAs8

recommendations engine11

64%

60%

of retailers believe that their consumer’s shopping experience should be more personalized

6

6.6% sales uplift from a unified

of abandoned cart emails

marketing personalization

generate revenue9

strategy12

52%

74% of consumers get frustrated when website content has nothing to do with their interest7

1 in 2 retailers using automated

of shoppers buy more with cross-

product recommendations increase

channel personalization13

their average order value year-on-year

10

Source : 5Boxever, 6 Vanson Bourne’s Rethinking Retail, 2014, 7 Online Personal Experience study, 2013 Janrain, 8 HubSpot, 9Salesforce’s exacttarget, 2014 10 Annual State of Retailing Online Report, Forrester Research & Shop.org, 11 Amazon Release,12EKN-Mindtree Omnichannel Personalization Survey, 2015, 13The e-tailing group Personalization Comes of Age, 2014

Why a Framework for Omnichannel Personalization?

Often Misunderstood The simplest definition of personalization can be summed up as “Relevance + Trust”, i.e. providing a customer experience that understands her context across channels, puts her in control of how her personal information is used for her benefit and prioritizes the protection of that personal information over all else.

From Turkey’s Grand Bazaar to the local butcher, retail has always been about building personal relationships. Retailers must extend the definition of personalization to include the strategies they adopt at the store to recognize customers (opt-in) and arm sales associates to deliver not only a personalized but also a truly personal experience.

Lack of Current Maturity Retailers’ maturity lags their intent. Though the business value of personalization is relatively clear, few, if any, retailers are able to truly personalize the omnichannel retail experience. Moreover, the fundamental building blocks required to do so aren’t in place at most retailers.

Top 3 Omnichannel Personalization Challenges

Inability to integrate data from multiple data sources

Poor quality of data provided to personalization engine

Inability to derive actionable insights

Source: EKN-Mindtree Omnichannel Personalization Survey, 2015

Difficult to Measure ROI With most retailers losing line of sight into a single view of the customer at the store, it has traditionally been difficult to measure the ROI of omnichannel personalization. Through a combination of a single view of the customer and a unified marketing personalization strategy, GameStop is able to encourage profitable customer behavior. For instance, they focus on driving store visits for customers that recently made an online purchase. Consumers that visit a store within 48 hours of an online purchase spend 10X at the store vs. what they spent online.

No Single Solution Retailers have no dearth of marketing, analytics and personalization solutions. However, there is no industry standard framework or solution that can help drive a personalized customer experience across channels. Most retailers end up with a patchwork of different systems that limit agility and bloat cost of ownership.

The Framework Customer Relevance Customer Value: Relevance

Retailer Value: Single View of the Customer

Key Enablers: Customer Data Master | Customer Activity Repository

The foundational component of an omnichannel personalization framework is a unified view of customer profile, preference, purchase and behavior data. Combined with data such as location, weather, social media sentiment and demographics, retailers can better understand the context in which customers engage with them.

More than 70% of retailers do not have a single 360-degree 14 view of the customer

Only 18% of the retailers use ‘customer contextual’ data in-store to personalize marketing offers, content and communication 15

Only 7% of retailers recognize their customers across different channels all the time 16

Personalization Engine Customer Value: Personalization

Retailer Value: Experience Secret Sauce

Key Enablers: Personalization Software | Proprietary Algorithms and IP

With a better understanding of the customer – who they are, what motivates them to make mutually profitable decisions, what their communication preferences are – retailers can supercharge their messaging and engagement strategy for individual customers or segments of customers. They must do so through a combination of analytics tools (that elevate a retailer’s current capability to analyze data), proprietary algorithms (that are the “secret sauce” that tie customer analytics to their business model) and human ingenuity (that ensure personalization isn’t the domain of digital channels exclusively).

55% of retailers are dissatisfied with the quality of data input into their personalization engine 17

Only 3 in 10 retailers have the capability to 18 perform investigative or predictive analytics

Source : 14EKN-Mindtree Omnichannel Personalization Survey, 2015, 15 RIS-EKN Customer Engagement Study, 2015, 16The e-tailing group Personalization Comes of Age, 2014, EKN-Mindtree Omnichannel Personalization Survey, 2015, 18EKN 2nd Annual Future of Stores Study, 2014

17

Offer & Content Execution Customer Value: Seamless Experience

Retailer Value: Efficient Marketing Ops

Key Enablers: Digital Content Repository | Marketing Automation

The personalization engine defines the best offers and messages for a set of customers. Offer & Content Execution enables the consistent, flawless cross-channel execution of the same. The effectiveness of offers and communication goes beyond the degree to which they have been personalized. The plethora of content consumption devices (TV, desktop, mobile, tablet, smartwatch) and channels (stores, web, email, social media, messaging, SMS etc.) presents a tremendous challenge for retailers to deliver content consistently in a format suited for the native strength of the particular device and channel combination. Retailers can address this challenge through marketing automation tools, digital content repositories and SLA based service agreements with partners that help manage marketing IT operations at scale cost-effectively.

1 in 2 retailers do not have a single digital content repository 20

Only 15% of retailers are always consistent with their messaging and marketing across channels and devices 21

More than 40% of shoppers have left a store without purchasing because they knew they left a 22 coupon at home

Code of Honor Customer Value: Trust

Retailer Value: Risk Mitigation

Key Enablers: Customer Preference Center | Encryption & Security

Retailers must balance greater personalization of the shopper experience with the inherent risks associated with managing larger amounts of sensitive customer data. Clearly, retailers’ current data management practices lag their own intent across 3 key dimensions consumers value the most: Currently do Transparency Only use the customer data for the purpose that they have agreed to Notify customers when they are being tracked online or on their mobile phones Disclose who (retailer/third party) is collecting their information Control Take express consent from the customer on how their data will be used Allow customers to access their data and make edits Privacy Customer data is encrypted and no personally identifiable data is stored as-is There is an executive/ombudsman who customers can reach out to for any question related to privacy

Plan to do

67% 25% 14%

98% 42% 38%

25% 18%

72% 68%

38% 11%

95% 52%

Source: EKN-Mindtree Omnichannel Personalization Survey, 2015 Source :19EKN-Mindtree Omnichannel Personalization Survey, 2015, 20the e-tailing group Personalization Comes of Age, 2014, 21Google Commerce

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