Understanding customer preferences is by no means a new concept for companies that offer a B2B service. These preferences are what businesses use to target their clients with personalised messages and offers; suggesting services and products that are tailored to individual client requirements and purchasing habits. Understanding those is essential to B2B success as a result. But how can we mirror this success in today’s digital world, where so much of our business is conducted online? We know large retailers have also been adopting these practices to great effect. Are there lessons to be learnt by smaller retailers?
Read on as we look at the use of data in the customer journey, and discover how retailers are taking the next big steps in improving the shopping experience.
Understanding customer preferences
B2B providers have always been the experts at understanding what separates their clients and the immense value this holds. Despite this, there are plenty of B2B companies yet to implement segmentation for their online services.
The picture is mostly the same for B2C. Major retailers such as ASOS have become the frontrunners in personalisation, with a 900-strong team of tech experts looking to improve the customer journey. But this kind of commitment is yet to extend to the vast majority of B2C retailers, who could soon fall behind in the provision of a personalised service. Research from Sitecore indicates that brands aren’t equipped to turn the customer data they collect into strategies that will drive customer loyalty, and further research by Retail Week has shown that in the last 12 months there has been little advancement in the use of personalisation techniques.
So, how does personalisation work? It’s similar to customer segmentation, but on an individual level. On its own, segmentation can be static whilst personalisation is dynamic, and can provide an additional layer of intelligence on top of segmentation. With this, it’s possible to personalise the content customers see, the marketing material they receive, what sizing they prefer and essentially provide a more bespoke shopping experience, both on and offline.
The more commonly used methods of collecting customer data are:
- Browsing – Knowing which pages someone has visited is hugely useful for remarketing: using targeted emails and adverts to convert that visitor’s earlier interest into a purchase. If a customer has not been able to complete the buying process, cookies enable personalised emails to be sent and relevant ads to show up on the rest of their web journey reminding the customer to purchase, and can suggest similar items that they may like
- Purchases – Products that are advertised or suggested for visitors can be tailored based on their previous purchases or that other clients purchased alongside those items, for instance.
But, the growth of NFC, RFID, location technologies, online cookies and machine learning has opened the pathways for more innovative retailers to use personalisation on other levels:
- Location – Larger stores across major cities hold hundreds of sensors which track the footsteps of customers via their smartphones. The same principle can be used for online purchases, tracking not only where you are in the world, but whether your closest store has the item of clothing you have been watching online item in stock. Shoppers are increasingly noticing email reminders and discount codes from retailers such as Urban Outfitters pop up when walking past the bricks and mortar outlets.
- Sizing – In late 2016 ASOS unveiled one of their latest tools: size recommendation. By utilising historical purchasing data, the online retailer can automatically recommend sizes, but can also take into account data customers enter about their shape and providing feedback on the fit of previous purchases. By recommending items with a similar style and fit to those previously purchased, you can hope to prevent unhappy customers and returns on mass.
- Returns – Companies such as Enclothed have developed an entire business model on understanding customer returns. The online subscription service requires customers provide initial data on clothing preferences, sizing and price range, and will go on to use returns data to understand the types of clothes people would like to receive in their deliveries. By refining its knowledge of the customer, Enclothed claims that it arrives at a 100% ‘keep rate’ by the fifth box that is sent to a customer.
Customer expectations are changing
Not only is personalisation something that benefits how businesses target different clients and customers, it’s something that’s become expected by the consumers themselves. The vast majority of consumers now expect tailored product recommendations, relevant currency and delivery information and personalised marketing content, and 63 % of consumers expect retailers to know their purchasing data.
As a result, it’s something that holds myriad benefits when used effectively:
- Higher conversion rates – 86% of consumers say a personalised experience makes them more likely to purchase.
- Improved engagement – targeted content produced 42% higher view-to-submission rates in online calls-to-action.
- Higher order value – Average order value is improved when personalised recommendations are included on sites.
- Increased customer loyalty – 96% of marketers say personalisation plays a big role in customer loyalty.
What’s holding you back?
With so many benefits, what is it stopping retailers from taking advantage of personalisation? For many, it’s because they’re unsure what exactly personalisation looks like and what it means for the sector in which they work. During times of recent uncertainty, it is clear this is not a priority for many retailers, with Retail Week confirming that 39% regard personalisation as ‘not particularly important’ to their customer strategy.
There are also many concerns about data privacy. With the arrival of GDPR (General Data Protection Regulation) in May 2018, it’s also something that’s becoming legally quite complex. GDPR requires businesses to justify how and why they collect and use customer data. In simple terms it means businesses need to be extra careful and completely transparent when using customer data, including for personalisation.
Capgemini found that 93% of consumers have negative views on the privacy initiatives of retailers. They also found that customers perceive just 14% of retailers positively for both personalisation and privacy. Many retailers will always state that they gather ‘no personally identifiable’ data, but understandably, personalisation could be seen as an invasion of privacy if it’s not executed properly.
So, what’s the verdict on personalisation? It’s clearly a hugely useful tool, which is becoming almost essential in modern B2B and B2C eCommerce. At the same time, customer privacy has become a hot topic of debate. Retailers need to show that they can deliver true value to customers when provided with this type of personal customer data – and that their data is being processed and stored responsibly.
Personalisation is the latest chapter in the complex challenge of online trading, but it’s not the only hurdle. Retailers need to understand the customer journey more broadly, and invest in the analysis of that data. As customer expectations change, it’s simply not enough to have good availability, an easy to navigate website, reliable transactional technology and carriers that keep their promises; your entire supply chain must be fit for purpose, and warehousing must be able to take the pressure of the demand.
As leaders in Supply Chain Consulting we can help you in mapping the end-to-end customer journey, understanding consumer information available at each stage of the buying process and auditing your fulfilment offer to help you to keep ahead of behaviours and trends, even on a cross border basis. If you want to speak more about optimising your B2B or B2C business, the team at Bis Henderson are ready to talk.