Which data sources should be driving personalization?
Purchase history, email activity and website behavior remain the three primary data sources retailers are tapping in their personalization efforts, according to Monetate’s third-annual “Personalization Development Study.”
WBR Research in December 2018 reached out to more than 600 senior marketers across the retail, travel and hospitality and insurance sectors in the U.S. and Europe to explore their personalization progress.
Asked which data sources they use to support their personalization efforts, nearly all retailers indicated purchase history (93.8 percent), a similar finding from the prior year’s survey. Close behind was e-mail activity, 88.1 percent; followed by website behavioral data, 72.4 percent; and mobile actions, 66.5 percent.
Compared to the travel and hospitality and insurance sectors, retailers are using purchase history and mobile actions significantly more and using website behavioral data to a lesser degree.
The fifth most used data source for retailers was POS systems, at 41.5 percent. That was also significantly higher than travel and hospitality and insurance and likely tied to access to in-store purchase history. Sales associate data was used by 36.5 percent of retailers.
Somewhat controversially, 37.7 percent of retailers indicated they are using third-party data for personalization, well above marketers in other sectors. The practice of using third-party data has drawn wide attention amid a sea of data breaches, with many calling for more transparency and regulations.
The study also found that integrating third-party data was the second biggest obstacle to personalization. Monetate believes that was likely due to challenges adapting to GDPR, the EU’s data protection legislation that became effective in May 2018.
Generally, however, the report showed personalization gaining traction. Other findings:
- Building a sustainable data architecture replaced data quality as the top obstacle.
- The majority of retailers (57.7 percent) are generating two times ROI or greater from personalization efforts.
- Thirty-eight percent of retailers are planning to implement a personalization strategy (20.2 percent are just beginning their implementation), 27 percent have nearly or fully implemented a strategy, and 6.5 percent are in advanced stages. Only 8.3 percent have no plans to implement a strategy.
- 2019 Personalization Development Study – Monetate
- What Is the Future of Third-Party Data? – eMarketer
DISCUSSION QUESTIONS: Ideally, which data sources should guide personalization efforts for retailers? Will in-store sources (i.e., POS systems, sales associates) become more integral in the years ahead? Is third-party data too risky?