DISCUSSION
Retailers lack of trust undermines predictive personalization’s potential
Written by Nikki Baird
Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.
Predictive personalization’s greatest pitfall is retailers themselves. Why? Because they don’t trust the technology.
Marketers and merchandisers who are considering optimized (“predictive”) personalization have to first overcome their bias towards “gut feel” — as in, “I know what consumers want and I’m going to override this recommendation." Secondly, they have to consider far more angles to personalization (like consumer behavior or social media trends) than they’re used to when thinking about things like product recommendations or landing pages on the website.
That process challenge is complicated by the fact that personalization, by its very nature, also reveals things about the consumer shopping process that go against the grain of merchants’ and marketers’ gut feel. Part of the challenge is getting used to a more granular view of customers — averages from grouping consumers into segments hide a lot of variability, and anywhere there is variability there is an opportunity to drive more value. Another challenge is a lack of trust in the recommendations personalization software makes to specific users in the first place.
The trust issue seems to explain why in our latest digital selling benchmark report predictive personalization was at the bottom of retailers’ opportunity list for using personalization.
A host of things can be said about that, for both retailers and personalization providers.
Learning the lessons of price optimization, providers would be wise to open up their black box more and help marketers and merchants understand the reasons behind personalization recommendations, rather than leaving them in the dark and just telling them to trust the math.
For retailers, optimization isn’t going to go away. They have a responsibility to understand what it can do — both its capabilities and strengths and its constraints.