Retailers can make personalization work


More often than we see good examples of personalization, we see the bad. There are countless examples across social media of customers experiencing companies that are missing the point when it comes to personalization.
Take this Amazon.com customer for example:
Dear Amazon, I bought a toilet seat because I needed one. Necessity, not desire. I do not collect them. I am not a toilet seat addict. No matter how temptingly you email me, I'm not going to think, oh go on then, just one more toilet seat, I'll treat myself.
— Jac Rayner (@GirlFromBlupo) April 6, 2018
Obviously, this customer bought a toilet seat as a one-time purchase out of need rather than desire. This is just one example of personalization gone wrong, which explains why so many companies have a difficult time developing and implementing a successful strategy.
But personalization is not a lost cause. The most successful companies understand that personalization is at its core a data problem. Spotify, the leader in music streaming, pays close attention to how their customers use its service, creating data driven personalization.
Spotify can plug the data on the songs subscribers listen to into an algorithm and generate a personalized playlist of new music for the user every week. This feature, called Discover Weekly, drives deeper product usage by solving the challenge of finding new music in a highly personalized fashion.
As customers listen to these playlists and indicate their preferences by skipping some songs and repeating others, the personalization flywheel kicks into full gear and Spotify can improve playlists week after week. These engagement-based improvements lead customers to be deeply attached to the brand and create a significant churn barrier.
In retail, Vans creates personalization through its Vans Custom program. Customers are given the opportunity to create their own product, customizing style, design, color and material via an online portal on the Vans’ website. This drives fierce brand loyalty while putting the customer in charge of the personalization, thus avoiding many of the issues we see with traditional personalization approaches.
DISCUSSION QUESTIONS: What’s holding back better personalization efforts by retailers? Can you name another example of a retailer, brand or other service doing personalization well and what lessons they offer?
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17 Comments on "Retailers can make personalization work"
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Chief Executive Officer, The TSi Company
Strategy Architect – Digital Place-based Media
Personalization wants to go beyond t-shirt shops, labels on self-brew beverages, options selection at auto dealers and motorcycle seat customization. It has already found its place in many consumer product areas and is destined to move into areas where health and beauty products can be compounded to better meet individual needs.
Managing Partner, Advanced Simulations
First is the assumption that shoppers want personalization — this is not always true. Lots of times, shoppers want a better price or faster availability or a choice of variants. Second, algorithms are deterministic — like the toilet seat letter, they assume consistency of purchasing. While this may be true on some levels, it may not be true on individual products. I might always buy Coca-Cola or Pepsico products, but sometimes I want a cola, sometimes a root beer and, when I’m feeling particularly wild and crazy, an orange soda. AI makes no allowance for variety seeking or whims.
Co-founder, CART
Consumers want value. It can be in the form of low price, experience, personalization, etc. The difference is that low price is a commodity. It’s only inside the world of personalization and experience that retailers can create some differentiation to compete. Modern AI (different than algorithms) can create some variety allowance to add to that value over time. AI will play a larger and larger role in these decisions (think AI-powered businesses) over time and the sooner retailers can start with the technology the farther ahead of the curve they’ll be. Personalization is a great place for them to start.
Founder and CEO, CrunchGrowth Revenue Acceleration Agency
Loyalty Strategist, Chapman & Co. Leadership Institute
If every brand had the same advantage as Spotify — a new data point on every customer every three minutes for two+ hours a day — I think they would find a way to execute in this space.
What Spotify inherently has and Vans has done is provide a platform for the consumer to self-identify preferences in a manner that doesn’t seem forced. They also both provide an incentive to do so: with Spotify I get better playlists and Vans gamifies their info journey by giving away points for questions answered. The key to good data is creating an environment where the consumer is actually excited to provide information. It not only creates a better CX, it actually improves the quality of the information provided by the consumer.
President, Global Collaborations, Inc.
Data is not the problem. Not analyzing data and not listening to consumers is a problem. Without doing these things well, retailers give consumers choices that they think are personalization but are not choices that consumers want. Shortcuts to personalization do not work.
President, The Ian Percy Corporation
President, Protonik
Past purchase is no indication of future interest.
I’ve written about this in this blog post about how data and machine learning tell us less than we think.
Where the idea goes wrong is with this sentence: “The most successful companies understand that personalization is at its core a data problem.”
Data only reveals a very small portion about us. Something that lives up to the idea of “personal” is based on far more than what’s available in the data.
Only when we realize this can we pull back from pestering consumers with ads for things they’ve already bought.
President, The Ian Percy Corporation
Could not be said any better, Doug! I’m proud just to have my contribution next to yours. It’s like we’re abandoning the unlimited potential of our humanness to create the future, relegating that responsibility to semiconductors. That strategy is futile, IMO. Your blog post is well worth looking at as well. Thanks.
Managing Partner, Smart Data Solutions, ThreeBridge
When retailers blindly implement business rules that are driven by technology without data insights, then you get the kind of miss that is illustrated in the toilet seat example. Leveraging data to better understand customer shopping patterns in terms of product associations and timing will lead to personalization that is perceived by the customer as truly valuable.
Global Retail & CPG Sales Strategist, IBM
Awareness of the potential to capture the relevant shopper information and make more appropriate offers is the challenge here. I still believe the majority of retailers and CPG brands are literally unaware of the technologies that are helping brands right now avoid the kind of misdirected offers highlighted in this article. One of the earliest applications of real artificial intelligence in retailing is the 1-800-Flowers.com module that uses personalization to dive deep into their cross–brand assortment to help increase the product movement of not only the promoted items, but also those items that are typically well below the radar of human call center agents.
VP of Retail Innovation, Aptos
Managing Partner Cambridge Retail Advisors
Contributing Editor, RetailWire; Founder and CEO, Vision First
Survey says: Lots of contempt for the level of success retailers have received for personalization! Unless personalization is relevant (which changes at any point in time) to individual shoppers, then it’s a detriment not an incentive.
Founder | CEO, Female Brain Ai & Prefeye - Preference Science Technologies Inc.
I agree with Nikki! Inferring individual human preferences based on behavior means nothing when it comes to “knowing me” or “knowing you” as an individual. Inferred behavior to recommend a car, a house or a dress? Certainly the brain trust of the world can go deeper than that! After all, the brain trust is composed of humans! We all get the inexplicable feeling of knowing when we love a product. Why we fall in love with things, the space between our thoughts — our unconscious and time-saving ability as humans to prefer one thing over another.
Founder, CEO, Black Monk Consulting
Knowledge of the customer is the first hurdle to personalization. Knowing something about customers who are like a customer — age, income, zip code, etc. — isn’t the same thing as personalized knowledge. A more realistic goal for most retailers would be something akin to mass customization — advertised as mass customization not personalization. You want personalized? Look at effective personal shopper programs. Now, those are personalized.