The importance of personalized marketing for retail success


Technology has evolved to truly support customer centricity through personalized marketing. Today, many different systems exist to support a two-way communication stream that is fully tailored to the individual and his/her preferences, a task that might have been possible but would have been fairly resource-intensive and expensive 10 years ago.

Despite that fact, many companies’ marketing plans still start with identifying a product centric strategy such as what products they want to promote first and then determine from there what to say about these products to specific customer segments. For example, a grocery retailer together with their manufacturer partners might identify 300 products that they want to promote. They’ll then find a way to promote those products to the customer base they have. They may create a version of a communication for “moms” for example, and choose a subset of the products to promote, with corresponding content that relates to what they believe moms might be interested in.

The reality is we are not defined as individuals by any one specific attribute. The key to customer centricity is building a comprehensive customer profile of each customer, which then can power a custom communication approach for said customer. Sound impossible? Perhaps if marketing plans were being built solely by segment, as they have in the past. However with advancements in technology and analytics, marketers no longer have to chart the customer journey by segment, they can score customers against various attributes and match them to the right products and content, so that they are served up at just the right time for that customer, in the right channels.

That being said, it is important not to discount segments altogether as while we can activate marketing based on individual behavior, it is still critical to build segments in order to report how marketing efforts are doing as it is near impossible to communicate performance at an individual level. It is vital to be able to report how well marketing efforts are doing against key segments that line up to the strategic focus of the organization. This enables the organization to understand how well they are doing with different groups of customers, and whether or not they need to shift resources to focus on one segment or another. Building segments is also important to help fill in details about what a customer should find relevant in absence of other data points. For example, grouping customers at a fairly granular level, based on variables that make them relatively similar, can be very useful for identifying product or content recommendations.

Today’s customers are looking for ways to save time and money. Customer-centric communications offer enhanced convenience to the customer so they do not have to dig for the information or travel to multiple stores to fulfill their needs. Tailoring any promotions you send to the customer based on what you know about them means that customers are getting the most out of the content and offers you are sending. That does not go unnoticed.

A number of targeted marketing efforts today also focus on rewarding loyal customers with discounts on items they already purchase. While this approach can deliver fantastic response rates it doesn’t always drive net incremental sales; as a result “Thank You” offers like this should be used primarily at the start of a program when creating customer engagement is the primary goal. By understanding where individual customers fall in the current and potential value landscape, companies can understand where opportunities exist to both reward loyal customers for existing purchases and encourage incremental upsell, cross-sell and basket/trip building. This level of offer optimization delivers true ROI in a relevant context for each customer.

For a retailer, the prime benefit of a personalized approach to marketing is that your customers stay interested and engaged. From a business performance perspective, this translates into more trips, greater spend and greater ROI on your communication efforts. For example, retailers who are using the tools to drive a more personalized marketing strategy have seen response rates greater than 80 per cent for products that the customer has purchased before, and nine to 11 per cent response rates for products that the customer hasn’t purchased in the past but through the segmentation referenced earlier, we know should be relevant. In the latter case, up to 50 per cent of those customers continued to purchase these products beyond the promotional period, illustrating that a customer-centric approach drives sales lifts that last well beyond an individual promotion.

Personalized marketing in this customer centric space is not something of the future and in fact is up 11 per cent from 2015. This marketing strategy needs to be implemented now in order to retain and grow market share. Companies can do a better job in delivering to their customers by focusing less on what they want to promote and more on what the customer has signaled would be relevant to them to receive.

The vast majority of marketing messages received today are still push messages, promoting product lines that there may have been no interest in by the customer. Start with the customer’s interests first, informed by data, and then tailor the content of the message based on those interests. Always-on, dynamic, insight-driven and personalized communication based on a customer-centric approach is a win-win for both the company and the customer.

This article originally appeared in the July 2016 issue of Direct Marketing.

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Emily Bobko

Emily Bobko is director CS marketing at Precima, where she works with world-class retailers and manufacturers to develop and execute leading-edge, customer-centric marketing programs. With over 15 years of experience, she oversees every detail of the strategy, design, implementation, and optimization of CRM programs. She has a passion for developing innovative solutions, and spends much of her time exploring new ways to leverage data to create more effective marketing strategies in today's ever-changing digital world.