Our Thinking

Up Close and Personal: How Optimizing the Customer Could Revolutionize Retail

By Ed Higdon. Posted in Insight

March 27, 2017

Most retailers have spent the last decade or so optimizing their marketing tactics. Countless resources are constantly poured into getting the right offer in front of a customer at the right time. Millions of dollars go toward initiatives to push messages, with an emphasis on optimizing things like marketing channels, messaging and dollars.

These strategies do work, and they provide returns when executed well, but it might be time to shift the thinking behind optimization. With all the data retailers have been collecting on their customers, perhaps this is the year to start moving toward customer experience optimization.

Think You’re Getting Personal? Think Again.

Marketers talk a lot about personalizing the customer experience, but just how personal are brands getting today? Segmenting customers is the norm, but people are individuals. Not all “empty nesters” behave the same way. Every “upper middle class soccer mom” has unique priorities and habits. The ultimate goal should be one-to-one customer messaging; providing John Smith and Jane Jackson with their own tailored messages at the optimal rate for every personal profile.

With all of the data being collected today, retailers are still settling for generalization rather than true personalization. They may, for example, push a mass email about a sale on winter coats to everyone in their database at 8 am. They get the most opens and highest response rate at 8 am, so the email goes out then. Period. Even if 50,000 people purchased winter coats two weeks prior, they still get that email. Because it reaches some customers and prompts them to buy, it’s classified as a success.

Some retailers are a bit more focused on segmented messaging. Rather than blanketing their entire database with every single message or postcard, they may break it up into three or four segments, with each group getting a different version of the offer. Better, but still not quite optimized and certainly not personalized.

What Truly Optimized, Personalized Experience Looks Like

What if, instead, you could send John Smith, who bought the winter coat an offer on hats and gloves because that’s what he needs next? And what if you could send him an email at 9:30 PM on a Tuesday, because that’s when he’s most likely to respond? Or if you could identify that Jane Jackson bought her daughter a coat but is now in the market for a new sweater for herself, and she prefers postcards to emails? Truly personalized communications could have a major impact on customer relationships, and ultimately, profit margins.

Anticipating customer needs and optimizing the experience so that you’re communicating with customers directly and personally, through the right channels at the right cadence would revolutionize customer relations.

The Path Of The Righteous

This kind of personalization might sound like it is only within reach for the retailers with the biggest pocketbooks and the most high-tech resources, but in reality, optimizing the customer experience is within reach.

Consider this scenario: Say a company typically gets a six-cent return on email offers. They cut that list in half and tailor the messaging. With a streamlined approach, the response rate to that thinner list triples and the return per email doubles. Now they are seeing a twelve-cent return, plus they aren’t spamming customers who aren’t interested in the messaging, so they are managing relationships more effectively and overall, customers are happier and coming into the store more often.

If you could hyper-personalize that messaging even further, returns would continue to rise and relationships would continue to strengthen. Optimization – and the profit that comes with it – can be a reality for retailers who are willing to shift their mindset and stop doing things the same way.

When you optimize, you stand to increase your response rates, while saving time and money over the long term. When a customer knows that your brand sends you exactly what they need, when they need it, they’ll come to your door first because they know that their experience will always be personally tailored to them. Will this be the year you shift your thinking about optimization?