The world of retail is going through a transformation. In the past, retailers would employ mass marketing campaigns to attract customers. But in the present era, where consumer tastes are becoming more diverse and wide-ranging by the day, mass marketing is a much less effective tool than it once was. As a result, retailers are now focusing less on what the masses want, and more on what the individual wants. Personalized marketing in retail is what’s vogue nowadays, and it’s driven by the cloud and big data science.
What’s personalized marketing all about?
Personalized marketing attempts to generate customer loyalty by offering customers items, deals or promotions which correspond to their preferences. If you’re a regular user of Amazon or Taobao, you’ll be familiar with the concept. These popular online storefronts present you with suggestions on what items to buy via analyzing your past behavior, such as your purchasing history or what products you’ve tended to search for when visiting those sites. In this way, each customer has a unique shopping experience which matches their interests.
Personalized marketing is not just the domain of e-commerce giants. Smaller retailers are also rapidly embracing this trend, since a failure to do so could risk losing a large proportion of shoppers who enjoy a personalized experience. According to a survey, 73% of customers like to do business with retailers that use personal data to make their shopping experience more relevant.
The technology that powers personalized marketing in retail is usually a cloud service and big data analytics. The behavior of potentially thousands of customers is tracked and uploaded to a cloud database in real-time as they shop or browse. The data is then analyzed by algorithms which produce recommendations for customers, again in real-time. In addition to behavioral data, other types of data such as demographics or location are also used to form customer recommendations.
The future of personalized marketing in retail – Online 2 Offline
The kind of personalized marketing described so far is actually the tip of the iceberg. Leveraging the capabilities of the cloud, personalized marketing is projected to develop in very exciting ways in the future, especially in the area of Online 2 Offline (O2O).
O2O refers to when retailers use online channels to enhance the experience of shoppers in brick and mortar stores. O2O used to be fairly simplistic, such as offering customers coupons on social media platforms which could be used in physical stores. But O2O will become more sophisticated as retailers realize they can use the cloud to transfer the personalized shopping experience people have online to physical shops as well. For example, the online shopping behavior of customers which is uploaded to the cloud for analysis could be used to suggest items or deals for shoppers when they enter brick and mortar stores. Let’s say a person searches for a particular sweater at the online store of a retailer but ultimately chooses not to buy the sweater. At a later date, the person enters the retailer’s physical store, which retrieves data on how that customer behaved on the online store from the cloud. Based on this data, the person is provided with a large discount on the same sweater which entices them to purchase it from the physical store.
The above example could work the other way around as well. How customers behave in brick and mortar stores could be uploaded to the cloud and analyzed in order to shape the recommendations they are given online. In this way, the cloud can help blur the boundaries between online and in-store retail by enabling customers to have a personalized shopping experience across both channels.
Transparency is important
Personalized marketing ensures customers have a more intimate rather than cookie-cutter experience when going to shop, which should drive sales and profitability. However, a marketing expert recently warned that personalized marketing could get ‘creepy’ and backfire if companies gather and use the personal data of customers without acquiring their consent.
Microsoft crossed the creepiness threshold when it launched Windows 10. The Operating System collected some personal data from users by default in order to help “improve” the product. This triggered a huge uproar from many users who thought the data was being collected for nefarious purposes, and forced Microsoft to be more transparent about its data collection policies and how users could opt out.
So if your business plans to collect personal data to provide a tailored shopping experience for your customers, it’s better to be up front about it and obtain their permission first.
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