Personalization is dominating the retail conversation right now, and for good reason. The trend of tailoring sales and marketing campaigns towards individual shoppers is proving to pay promising dividends, with personalized marketing delivering a five to eight times higher ROI. Catering to individual consumers is an opportunity competitive retailers simply can't afford to ignore.
The goal of a customer-centric marketing strategy is to make your marketing efforts feel honest and organic instead of like a series of mad-libbed email messages. The challenge lies in delivering a truly personal experience to every customer. What’s more, extreme personalization—attempts to personalize as many details of the customer experience as possible across every channel—has the potential to overwhelm consumers. While in theory, extreme personalization can distinguish a brand and surge sales, in reality, this process could actually compromise the consumer experience.
Therefore, as retailers pursue personalization to ever greater degrees, it's essential they understand how it could negatively impact both operations and consumers. For instance, extreme personalization can...
- Distract from other business opportunities. Personalization is a major ongoing effort, which often leads retailers to focus on certain segments of consumers over others. That can lead to more repeat sales or an increase in a particular type of consumer, but can fewer new customers overall.
- Annoy target customers. There is a fine line between a personalized message and an unwanted sales pitch—or worse yet, a breach of privacy. Retailers who are overzealous about personalization risk alienating consumers with endless emails and push alerts that are uncomfortably relevant, and ultimately irritating.
- Make mistakes in outreach efforts. The detail-oriented nature of personalization makes it ripe for error. Including the wrong name, location, or product interests makes the entire outreach effort seem shallow in the minds of consumers.
- Compromise the customer experience. In a brick-and-mortar setting extreme personalization takes a huge amount of input. If you do manage to create an in-depth experience for one customer, but can’t replicate it for everyone, it could cause others to feel neglected or ignored.
- Hurt the omnichannel. Consumers expect to have similar experiences across sales channels. It may be easy to personalize the online experience but harder to translate that in-store, which means personalization can compromise a broader omnichannel strategy.
- Commit too much to customers. Once customers are exposed to personalization through one sales cycle or channel they will expect it at all times. Retailers who are not able to commit to an ongoing personalization effort could set consumers up for disappointment.
Retailers must acknowledge the pitfalls of personalization, but recognize its advantages as well. One study suggest that companies that are fully invested in personalization will outsell their competitors by 20%.
The key issue for retailers moving forward will be managing the scale of personalization. Huge repositories of consumer data are hard to organize and secure, and ongoing personalization efforts require a massive amount of human input. The companies that use technology most effectively are able to turn extreme personalization into excellent personalization.
Today’s mature technologies are able to collect consumer data from more touchpoints, organize it between individual consumer profiles, and automate how that data is used in personalized messaging across channels. Marketers and managers are still in the driver's seat, but technology can do more of the heavy lifting.
Interested in creating effective marketing strategies that aren't crossing the personalization line that customers find creepy? Join in on the expert-led webinar from the marketing gurus at Sourcely to find out how!Photo credits: Shutterstock / Rawpixel, GaudiLab, Gaudi Lab