Personalization is a retail trend that everyone is trying to figure out – and with good reason. Positive experiences with personalization can boost the number of items purchased, amount of money spent and net promoter scores, according to a BCG-Google Customer Survey. However, there are some pitfalls brands need to be aware of when developing a strategy to offer more personalized experiences.
Pitfall #1: Data Control
What control do (or don’t) brands have over consumer data? Digital personalization, such as email or text prompts when a particular item is on sale, or an ad of previously searched items in a social media feed, is only possible because technology allows brands to collect information about consumers. This technology developed and went to market quickly, faster than most brands have been able to properly manage. Consumers, at first unaware, are increasingly concerned about how their information is being handled.
According to Accenture’s study on what they call “hyper-personalization,” even Millennials, who are generally more open to sharing personal information, want to know their data is secure. And being a big brand doesn’t mean consumers will assume you’re inviolable. Panera, Macy’s, Marriott, Saks and Lord & Taylor have all suffered massive breaches in the last year alone. According to KPMG, 19 percent of consumers will no longer shop a brand that allows their data to be compromised, while another 33 percent would take “an extended break” in such a case. Cybersecurity must become a top concern and in case of a breach, brands must be accessible, open and pro-active.
Pitfall #2: Transparent Data
Brands are not currently offering consumers complete, transparent control over the use of their personal information. This is a problem because consumers want to know what kind of data brands are collecting and for what purpose. They want to be able to opt-out of contentious practices such as selling data, to turn off technology such as geo-fencing or facial recognition and have the right to delete their information from your database. It’s not enough to inform customers in small print – what, how and why brands collect data should be communicated with the utmost transparency. Make it easy for customers by offering immediate access to a control panel that allows them to choose how much information they share. If consumers discover a brand is overreaching without their explicit understanding, it won’t matter if they clicked “I Agree” – the brand will lose consumer trust.
Pitfall #3: Loss of Discovery and Community
On a more philosophical note, pitfall #3 of the retail trend towards personalization is the potential loss of a sense of discovery and community. The resurgence of independent bookstores sheds some light on what we could see happen more broadly if brands ignore this concern.
Consider this: Amazon can recommend books based on past purchases or browser history, but for many book-lovers, stumbling across something new while browsing a store is an intrinsic part of the book-buying process that they cherish. Indie book retailers are enhancing their in-store experiences with book readings, clubs and other artistic events. They’re including more local authors and locally sourced merchandize, as well as a curation of book-related items. All of these efforts create community hubs where people linger, explore and discover. And it’s working. Sales in indie bookstores have gone up 7.5 percent in the last five years. The experience of discovery and community are key consumer benefits that Amazon can’t easily beat.
Pitfall #4: Impersonal personalization
Technology is easy to get excited about, but human beings can deliver the most exceptional personalized retail experiences of all if they are engaged. Often the very mention of staff engagement results in the communal glazing over of eyes at head offices – but when personalization is personal, it’s much more effective. Bigger brands can take a cue from indie retailers who offer better compensation, training and flexibility, allowing them to retain staff for a much longer time. Experienced, engaged staff cannot be replaced by apps and algorithms. Technology should be used to support staff to deliver personalized experiences, and brands already doing this are coming out on top.
Personalization in the retail space is something that can be a win-win for brands and consumers. It’s wise to take a long view when considering data usage and to ensure technology is not the only tool you rely on to deliver customized, personal experiences.