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Retailers Can Improve Personalization by Putting Consumers in Control

The key to personalization is greater integration between customer communications and the creation of feedback loops.

Retailers and brands are daily urged to embrace personalization in their communications with their customers as a route to greater loyalty. However, the business case is often not well explained or supported with hard facts. Organizations will therefore continue to accept industry benchmarks for the performance of tactics like email on the basis that few further improvements can be made—or that improvements can made but only at high cost.

Let’s look at the business case. It is well established that customers are more demanding than ever around traditional product preferences on size, style, color and fit. But progressively, they are expressing their requirements in terms of sales channel, fulfillment method, sustainability, brand story and communications.

This has caused two outcomes for retailers. First, these demands have led them to complement their products with layers of service, but this has raised costs and squeezed profit margins. Competition has necessitated this response, but retailers have simply concluded this is the cost of doing business.

Second, retailers are realizing they are gradually building an increasingly complex picture of each customer, which adds further costs through the need to manage the data arising from these insights and communications.

However, this complexity represents an opportunity for brands that communicate with customers in the right way. The scale of the problem is spelled out in dotdigital’s annual report on e-commerce trends, “Hitting the Mark.” One of the key findings is that many U.S. retailers are fairly immature in their personalized marketing and customer loyalty programs.

The two main problems are low utilization of certain communications methods and a lack of integration between them in order to create a feedback loop.

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Across a range of industries, from fashion and sport to homeware and handmade goods, the report evaluated the marketing tactics of 30 brands in the U.S. The country is clearly a leader in some areas. For instance, 93 percent of these brands sent a welcome email upon sign-up, introducing the reader to new brands, and clearly setting customer expectations.

For one, 90 percent of brands offered a guest checkout and 93 percent included alternative payment solutions. Another 40 percent have adopted live chat in order to make the customer’s shopping experience as easy and pleasurable as possible.

Overall, the experience beyond the email from U.S. brands was superior to most others in the study. However, there has been little-to-no improvement to after-sales practices, which enable retailers to collect data and feedback that will enable them to personalize communications over time.

70 percent of brands surveyed failed to request reviews or feedback post purchase. The U.S. also had the lowest proportion of brands requesting feedback from unsubscribes. Only 23 percent of brands asked shoppers why they were choosing to remove themselves from mailing lists.

With the adoption of welcome programs, live chat, and payment options, brands are doing well to keep up with global trends. But, without tailoring their experiences to their audience based on feedback and reviews, U.S. brands run the risk of blending in with the competition. For instance, the report shows across all countries surveyed that preference centers were missing in 66 percent of emails, which is a strong opportunity to empower customers to tell brands what they want, insight that enables progressively personalized communications to be orchestrated.

Ultimately, these are simple fixes; once brands look at their own businesses from the customer’s point of view, it is easy to see how personalization involves them more deeply in the relationship. Customers are taking control of their shopping and they will graduate towards those that give them that control.

Personalization ultimately is just the start. Longer term, by enabling customers to get more involved in their experience, they can also become more interested in personalizing the products as well. According to research by fashion consultancy Lectra, 74 percent of millennials and Gen Z are interested in buying products that are personalized to their taste or made specifically for them. 42 percent have a least once personalized a product for themselves. And consumers are ready to pay a 20 percent premium for a personalized product. Forty percent of all age groups expressed an interest in purchasing personalized clothing.

Clearly, this is not the goal of all brands, particularly those want to focus on limited but highly desirable ranges. However, the research does show that customers are taking more control. Retailers need to take advantage of this rebalancing of power with the customer by recognizing that the more they personalize, the more data will come back to them, enabling insight that can be used to build valuable relationships.

Genelle Kunst is head of marketing, Americas, dotdigital, where she manages all aspects of communications and marketing for the company’s omnichannel marketing automation platform.