Personalization in retail — the complete guide

Personalization in retail is certainly not a new concept. However, modern retail personalization is virtually indistinguishable from even just a decade ago.

In the past, retail personalization practices were viewed as a “nice to have” marketing bonus. Today, customers expect personalization in retail. When this expectation is not met, most consumers (71%) become frustrated with the entire shopping experience.

If your organization wants to avoid annoying customers, you need to leverage retail personalization. This guide will examine retail personalization, starting with a high-level overview and then getting into more granular subtopics, including examples, how-to steps, and tactics to optimize your personalization efforts.

In this article, you’ll learn about the following:

• What is retail personalization?
• The retail personalization gap
• How to improve retail personalization
• Retailers with top-notch personalization
• The future of retail personalization
• How to get started with personalization in retail

What is retail personalization?

Retail personalization is a process that addresses every touchpoint of a customer’s shopping journey and provides each consumer with a unique experience based on real-time intent, historical browsing and purchasing data, and insights derived from analytics technologies.

Retail personalization not only provides every customer with a unique shopping experience, but it also creates an emotional attachment to your brand. The latter is particularly important if you want to cultivate a strong customer base and maximize the lifetime value of consumers.

When done well, personalization in retail will increase customer loyalty and boost the return on investment of your marketing campaigns.

Customer data is the key to successfully implementing retail personalization. You must leverage purchase history, location, and demographic data so that you can effectively present each customer with a tailored shopping experience that appeals to their interests.

There are levels to retail personalization. At its peak, this process enables you to provide true one-to-one personalization. Ideally, you want the shopping journey of each individual customer to be shaped by the actions that they take across all channels of communication. With omnichannel personalization, no customer’s journey is the same.

For instance, let’s say that five shoppers are made aware of your brand and reach the purchasing stage of the sales funnel simultaneously. Each of these five shoppers is interested in the same product — a blue coffee mug that features a catchy seasonal phrase. These shoppers will be segmented by the action that they take next (i.e., save for later, add to cart, or buy now).

Let’s assume that three of the five purchased the mug. Theoretically, all three of these consumers would fall into the same market segment. But what if each shopper bought the mug for different reasons?

In our scenario, Shopper 1 purchased the mug because it was blue. They also clicked on every other blue mug before purchasing this one. Shopper 2 bought the mug because they liked the seasonal phrase. Prior to buying the mug, they viewed five other cups that featured similar phrases. Shopper 3 purchased the mug because it included a travel lid. They clicked on several other travel mugs and added a few to their cart before purchasing the blue one.

All three shoppers took the same final action. However, Shopper 1 liked the color of the cup, Shopper 2 found the phrase appealing, and Shopper 3 wanted a cup with a lid they could use as a travel mug.

With one-to-one personalization, you’re able to map out each individual’s journey. You can use this information to encourage customers to make additional purchases in the future. Without one-to-one personalization, you may inadvertently send all three shoppers blue mugs and accessories, even though only one customer bought the cup because of its color.

The retail personalization gap

Retail personalization, like many emerging or evolving concepts, has become a marketing buzzword. Many businesses claim to personalize their retail experience, but very few are actually achieving what they set out to do. This disparity represents the retail personalization gap.

There is a substantial divergence between what is possible from a retail personalization standpoint and what is actually being provided to customers. According to 69% of retailers, this gap is the result of a lack of advanced technologies. Perhaps more concerning is the fact that only a meager 16% of retailers are personalization leaders — those that personalize more than 75% of the shopper journey.

In addition to a lack of technology, there’s another issue contributing to the personalization gap. Many retailers confuse segmentation with modern personalization techniques. While the former is an important part of the latter, they are not one and the same.

Segmentation is only the beginning of the personalization process, yet many businesses use it as their only form of personalization. When segmentation is passed off as personalization, there are bound to be customers put into the wrong segments, like in the coffee mug example above. This is important because 68% of shoppers will likely not return to a store or site that fails to provide a positive customer experience.

Even those businesses that are focused on improving personalization often run into technical issues, as many existing tools are simply not enough. The primary hurdle is that many businesses lack a single customer view of their data or struggle with turning customer insights around within a reasonable timeframe.

To reach the level of personalization retailers must provide, it’s essential your business adopts a solution that is purpose-built for managing and leveraging customer data.

How to improve personalization in retail

Once the right technology is in place, your organization can improve personalization in retail by using some proven tactics.

Prioritize good data

Data is the lifeblood of personalization. Before trying any other tricks, ensure that you have access to high-quality customer data.

A centralized data source will make it easy to glean actionable insights from consumer information and turn them into personalization initiatives. If there are shortcomings with your data capture or insight creation processes, no other retail personalization tips will be useful.

In order to personalize data well, you must have the technology that supports it. Specifically, you need a customer data platform and a personalization solution that flawlessly share information with each other.

Enhance recommendations

After you have the right data, you need to perfect the product recommendation. This is the tactic that will most likely lead directly to a conversion — if done correctly, of course.

At times, it’s best to cast a wide net. This means offering broad recommendations like “viewed together” or “similar products” based on what items the customer is looking at. As you gather additional data on a customer, you can begin to offer more personalized suggestions like “Top picks for you.”

Dynamic recommendations are even more personalized. These types of recommendations take into account every click the customer makes and every page they view. This is very close to one-to-one retail personalization.

An important caveat to keep in mind is that not all types of recommendations are perfect for all types of web pages. As you improve your recommendations, the effectiveness of your personalization campaign and overall customer satisfaction will both increase. Even when you have great customer data at your disposal, this will take a little bit of trial and error.

Once you figure out what types of recommendations and placement work best for your customers, you will begin experiencing measurable sales improvements.

Personalize the entire journey

Product recommendations are just a single component of retail personalization, albeit an important one. If you want to strive for one-to-one personalization, you must curate the entire journey.

Personalize your home page, landing pages, product pages, and even the cart page itself. Focus on making the journey seamless, frictionless, and truly unique for every shopper.

When a customer navigates your website, they should believe that every piece of content was created just for them. This will drastically increase their chances of making a purchase and lead to feelings of loyalty toward your brand.

As part of this process, make sure to personalize other channels as well. This includes social media channels, emails, and any other platform on which you interact with customers.

Achieving omnichannel retail personalization will enable you to differentiate your brand from competitors and eliminate potential points of friction from the shopping journey.

Think outside the box

Sometimes the best way to personalize the shopper journey is to get creative. Think up something that might not work at scale but will make an impact at a personal level.

Prime examples are written thank-you notes or personal sales guidance provided over the phone. These tactics are particularly effective in the B2B space, as you can use these strategies to form strong bonds with high-value clients. However, thinking outside the box is a good practice for B2C businesses as well.

As a B2C retailer, leverage modern technologies like artificial intelligence (AI) tools to work around scalability issues. These technologies make traditionally labor-intensive tasks far more cost effective and efficient. For instance, you could use AI and machine learning (ML) technologies to create and manage an email campaign that sends “personalized” messages to customers that have recently abandoned their carts.

Don’t overwhelm customers

Retail personalization is important, but providing a good customer experience should always be at the top of your priority list. Overreaching in the name of retail personalization can create unnecessary friction during the shopping journey. If you push too hard, you may even alienate customers, discourage them from making a purchase, or cause them to cut ties with your brand altogether.

If customers don’t want to share data, let them shop on their terms. Provide clear opt-out opportunities and be transparent about your data collection practices. When customers voluntarily agree to share data, don’t barrage them with a multitude of personalized messages and recommendations. If you do, these communications will become less effective or even downright annoying.

Also, don’t over-personalize. When you reach a certain level of familiarity, some customers will find your communications creepy and not accommodating.

Be particularly wary when it comes to using pop-ups for retargeting purposes. Occasionally retargeting customers with pop-ups may help you grab a few conversions. However, many customers find pop-ups annoying, especially if they are bombarded with them on every page.

Utilize AI for extra insight

The retail personalization process can seem tedious, labor-intensive, and time-consuming. Fortunately, you can work around these roadblocks to retail personalization by implementing AI and ML technologies.

AI solutions enable you to automate personalization across all channels. You can use these capabilities to ensure that customers receive a consistent experience each and every time they interact with your brand.

AI and ML technologies hold the key to achieving one-to-one retail personalization. These technologies also provide actionable insights that you can use to improve marketing efforts and boost overall sales revenue.

Retailers with top-notch personalization

In the world of retail personalization, several brands stand above the rest. Here we’ll take a look at four such brands that have top-notch personalization.

1. Amazon

Amazon is the unquestioned king of personalization. The ecommerce giant uses all the data from your Amazon account to ensure that you’re constantly served hyper-personalized product recommendations. Amazon has used its retail personalization model to develop a huge following of fiercely loyal customers.

One of the most successful aspects of Amazon’s personalization initiative is that the retailer has struck the ideal balance between providing unique experiences without being overbearing. Every user is targeted with product suggestions ranging from broad and generalized to highly specific. Amazon’s “You may also like” section is particularly effective at driving conversions and boosting sales.

When crafting your own retail personalization strategy, you should strive to emulate Amazon’s balance. Create a program that offers shoppers unique experiences but does not come off as pushy or invasive.

2. Sephora

Sephora’s retail personalization program is tailored to meet the needs of its unique customer base. Sephora has successfully personalized all touchpoints along the buyer’s journey, including customer service and marketing.

One of the best features of Sephora’s personalization program is that it allows users to opt in for personalized emails. These messages can be used to notify customers when products they use are back in stock, remind them to reorder previously purchased items, or notify them of upcoming releases.

Sephora enables customers to interact with the brand through its user-friendly mobile app. Through the app, customers can even try on products virtually. This mobile app streamlines the purchasing journey and makes it even easier for customers to buy Sephora products.

3. Best Buy

Best Buy has successfully bridged the gap between offline and online retail personalization.

When a customer enters a Best Buy brick-and-mortar location, their Best Buy mobile app automatically transitions to “local store” mode. It will send the user timely push notifications about current sales specials, that location’s available inventory, and other information.

After users purchase a product online via the app, they can notify associates when they are headed to the store to retrieve their item. This decreases delays during the purchasing process and incentivizes users to support local stores by opting for in-store pickup as opposed to delivery.

The “My Best Buy” program takes personalization to a whole new level by serving up personalized emails and providing shoppers with rewards. Best Buy follows up its retail personalization efforts by providing top-tier tech support via its Geek Squad service.

4. Nike

Over the years, Nike has expanded its product lineup to include athletic wear and other apparel. However, sneakers remain integral to the massive company’s business model. Naturally, many of Nike’s retail personalization efforts are centered around its extensive footwear line.

Nike’s general app provides users with a curated shopping experience based on previous purchase history. It encourages them to take advantage of Nike’s direct-to-consumer sales offerings. However, the Nike app also makes in-store shopping fun and interactive, thanks to its scanner feature. The scanner not only reveals pricing data but also provides interesting background information about each pair of shoes in Nike’s line.

Nike also created the SNKRS app specifically for its sneakerhead audience. Avid collectors of Nike footwear can use the app to unlock rewards and get early access to the latest pair of shoes. These superfans not only purchase a large volume of Nike products, but their actions can also encourage more casual customers to spend more.

The future of retail personalization

Most retail personalization strategies involve using relatively basic personal data, such as the customer’s location, gender, age, and purchasing history. In the future, several personalization trends will reshape this strategy by incorporating cutting-edge technologies and omnichannel tactics.

The trends that will play the biggest role in the future of retail personalization include the following:

The merging of offline and online

One of personalization’s greatest weaknesses was that it was incapable of marrying the offline and online experiences. All of that online data isn’t helpful to in-store associates if they have no way to access and use it. On the other hand, traditional in-store shopping doesn’t provide any data to facilitate retail personalization.

Slowly, this is changing. Brands like Best Buy have begun to bridge the gap between brick-and-mortar and online shopping journeys. However, there is still work to be done. Other brands can expand on these efforts by using customer emails to link together in-store purchases and online data.

Mobile apps are making it easier than ever to collect vital customer data when they are making in-store purchases. In the past, shoppers would have to manually enter their email addresses to link purchase data to their accounts.

Now, they can orchestrate their entire shopping experience through the app while the retailer compiles all that valuable data.

Chatbots become even more useful

Customers want the ability to shop 24/7. However, there is a limit to the amount of work an employee can do in a single day. Staffing communication channels around the clock is cost-prohibitive and impractical.

Once again, technology provides a viable solution. Chatbots can provide basic levels of customer service and answer simple FAQ. This technology ensures that customers can get answers when they need them. Additionally, chatbot technology frees up retail staff to perform more dynamic, value-driven tasks.

As chatbots become more sophisticated, they should be able to provide unique product recommendations and contribute to retail personalization. This will eliminate or reduce the need to speak to an in-store associate, thereby expediting the shopping experience.

Post-click optimization

Countless resources and a significant amount of time are devoted to getting customers to click on a targeted advertisement. But many retailers neglect to consider what happens after a consumer clicks on an ad. Far too often, consumers are directed to a generic landing page that may or may not highlight products relevant to them.

Unique landing pages that load quickly and provide exactly what customers are looking for are the next step in retail personalization. Known as post-click optimization, this process will significantly increase conversions and help retailers get the most out of every marketing dollar.

Post-click optimization is a multichannel tool. It can be used to customize landing page redirects that stem from targeted search engine ads, as well as social media advertisements.

Get started with personalization in retail

Investing in retail personalization enables your brand to provide every customer with a unique shopping journey. In turn, this will lead to a higher conversion rate and more revenue for your business. Most importantly, retail personalization endears customers to your brand — which can turn them into repeat buyers.

When you’re ready to start leveraging this proven strategy, ensure that you have a solution that can handle all of your data and personalization needs. If your goal is true retail personalization, you need Adobe Target. It’s a dynamic personalization solution that enables you to deliver optimized experiences to all customers at scale.

This powerful personalization engine uses multivariate and A/B testing to determine precisely what types of content resonate with your customer base. When Adobe Target is paired with the machine learning and unified customer profiles available via Adobe Sensei, the results are astounding.

To learn more, watch the Adobe Target overview video.