Customized service delivery is a promising opportunity for retailers

Discuss about the Corporate Social Media Communications.

The changes in the technological environment have brought with them immense opportunities for the retail sector. A plethora of mobile technologies and the increasing sophistication of communication technologies have all contributed towards enabling retailers to reach new heights with consumer engagement and management of issues regarding their target markets. One such opportunity is the ability to customized service delivery in delivering products and services that meet the unique needs of each consumer (Zaphiris & Ang, 2009). Personalization is defined as the ability to effectively and efficiently meet the needs of a consumer while at the same time fostering faster and easier interactions that result in consumer satisfaction and repeat buying (Hatzithomas, Fotiadis, & Coudounaris, 2016; Tatnall, 2010). That should be clearly distinguished from customization, which is essentially making changes to match the needs of a customer or a business. Many organizations are now focusing on merging in-store and online experience to make them truly personalized. According to Brendan Witcher who is a principal analyst at Forrester Research, about 70% of retailers are considering personalizing their store experience (Tynan, 2018). The reason retailers consider personalization that much is because research is showing that many consumers are responding to it (Bardaki & Whitelock, 2004). For example, Witcher says that based on their findings at Forrester Research, three-quarters of all consumers respond to personalized offers recommendations and(or) experiences. That said, it follows that if retailers are in a position to provide their customers with more appropriate experiences, then they stand a fair chance of boosting their sales, offline and online alike (Bardaki & Whitelock, 2003; Abraham et al., 2017). In order to deliver such experiences, retailers not only rely on their sales people in stores, but also on the consumer data they collect online. The reason for such an approach is that while salespeople situated in the stores may recognize a customer by his or her face and even greet them by their names, they hardly remember what the customer bought or likes. On the other hand, there is plenty of data in online repositories that can be used to track customer taste and preferences. Therefore, the ultimate goal in personalization is to merge the two for a truly personalized experience and that goes beyond mere marketing function. It incorporates general management.

Retailers are yet to fully tap into the potential of personalization because poorly individualized marketing and merchandising continue to derail the efforts of the retail sector to deliver the expected hyper-tailored experience the sector has promised for years. While it is apparent that personalization comes with the benefit of potentially boosting sales in the retail sector, the journey is at infancy and remains elusive. There are two ways to look at this problem. First, there is the issue of the confusion between personalization and customization, which is exactly where most retailers miss the point. The second perspective to understand the problem that retailers seem not to solve to achieve a truly personalised experience is with regard to a mismatch between what consumers need and what they offer.

The importance of differentiating personalization from customization

Based on an article by Tynan(2018), beauty and fashion retailers are making greater inroads into personalization than sub-sectors of the retail industry, yet a closer examination of what they do is far more customization than personalization. Tynan(2018) cites several examples, one of which is the approach taking by New Balance, a sportswear vendor, in allowing online shoppers to “customize their kicks” by expanding their choice through “a large palette of colors and styles” (par. 8) as shown below:

Perhaps what is unique about the approach taken by New Balance is the attempt to integrate online and offline experiences of its customers by allowing customers to visit its flagship store in Boston for a similar interactive experience. In short, a visit to New Balance either online or in the brick and mortar stores makes a customer to walk away with a sportswear that reflects his or her personal aesthetics. However, that is not truly a personalized experience because the personal aesthetics are not truly unique to the customer. Another retailer, Form Beauty, is also trying a similar approach to New Balance’s. The retailer, who stocks and sells haircare products for the people of color, has a 15-question survey for online buyers that it hopes to help it match consumer hair-health needs with the products available in its stores (Tynan, 2018). The questionnaire also assesses whether or not the customer is under chemotherapy or is pregnant. According to the CEO of Form Beauty Tristan Walker, the questions included in the survey are unique to a person’s physiological makeup and hair-care needs. However, all that still boil down to customization, because they basically involve asking consumers what they want and then suggesting what products match their needs from which they can make a choice. As Witcher notes, personalization in the online platforms is all about content and thus content should be personalized to the unique needs of every consumer (Tynan, 2018). In the instore experience, what matters is the personalized experience. All that should go beyond product recommendations into being all-encompassing to produce truly relevant experiences.

It turns out from the preceding discussion that what consumers get is not exactly what they expect from retailers’ promise of a hyper-tailored experience. A recent survey finding by McKinsey researchers support this position, showing that in many ways, retailers’ attempts at personalization cross borders of consumers and fail to deliver genuine value and relevance.  A good example of annoying experiences that seem to derail the efforts to deliver personalized experiences is that documented about by Sarah Halzack(2017) on Bloomberg.com. According to Halzack(2017), she once received a series of email marketing messages that seemed to suggest she was settling for a semester when in reality, she had been long done with her college education. She claims to have received many unsolicited messages about “off to college electronics” and also on how to organize herself while in college (Halzack, 2017: par.3). Without a doubt, such marketing messages are quite annoying because they do not reflect the current needs of the customer and what are truly unique about her. What should worry any consumer is that such messages were actually from one of the gold standard companies, Amazon.com. That goes a long way to provide insight into what it really is like with personalization in the retail industry. The industry has not yet fully been capable of property managing personalization not only as a marketing strategy to deliver recommendations, but an approach to deliver a genuine and relevant experience to one consumer at a time (Adomavicius & Tuzhilin, 2003).

Merging online and in-store experience for a truly personalized experience

Personalization is defined in many and varied ways in existing literature. Some researchers are focused on a technology-based definition while others integrate both online and offline aspects of personalization in their definitions. According to Personalization Consortium(Vesanen, 005), personalization is defined as “the use of technology and customer information to tailor electronic interactions between business and an individual customer” (p. 7). In using technology as defined, the consortium observed that business use customer information obtained from earlier interactions and that obtained in real-time. The aim is to alter the interaction between the business and the customer so as to fit the needs of the customer, perceived and explicit needs alike. However, the definition by the Personalization Consortium is not far from that of customization because it lacks an attempt to make customer’s genuine and with human touch that is missing in customization (Awad & Krishnan, 2006). Perhaps this is a reflection of what many businesses that pioneered personalization in e-commerce such as Amazon.com did or have been doing for a long time (Ansari & Mela, 2003). Amazon.com, for example, includes within its personalization strategy three stages: (1)learning about preferences of a customer; (2)matching product offerings to the needs of the customer; and (3)evaluating the learning and matching processes to see whether there is need for improvements (Boudet et al., 2017; Kaneko, Kishita, & Umeda, 2018). The entire process as described is an attempt to control customer journey, which is far from what customers are looking for in customization. Instead, customers are looking for a purchase journey that is not controlled, rather made easier and faster. All retailers focusing on personalization will only win by adopting a service model in which they enable cuatomers to cr3ate their own purchase journeys, something that is still largely missing from the current practice.

In terms of statistics, the failure of retailers is captured in every survey and research into personalization initiatives. For instance, surveys indicate that personalization is carried out by retailers in a siloed or limited manner. Bloomberg Gadfly provides the following graphical representation of the extent to which personalization is done across various media alternatives.

As the graph clearly shows, it seems that most retailers are finding it easier to personalize an email campaign that to personalize website content or messages on a mobile app. That only serves to limit the extent to which such the target customer is reached, especially now that customers are more on social media than on reading emails. And the problem is more managerial because it tends to arise from technical challenges. For example, Halzack(2017) notes that most websites of retailers are run on a standalone software that does not link up with the points-of-sale, an idea backed by a study on web-based marketing by Li(2016). When that happens, the retailers typically lose track of consumer purchasing trends to enable them syndicate personalised messages through their websites. Second, there is more data at the disposal of retailers than they know how to manipulate and use. The retailers, accprding to McKinsey researchers (Boudet et al., 2017), are missing on the granular information that would provide appropriately provide insight about consumer behavior when they visit retailers’ websites (Kinard & Kinard, 2013). The graph from Bloomberg’s Gadfly provide insight into the lack of focus on more granular information:

Retailers’ challenges in offering a hyper-tailored experience

The fact that retailers are missing out on granular information is why 75% of customers expect personalized experience but only 23% get it (Halzack, 2017). The next question would be why it is the case that retailers are missing out on what they claim to be a priority to them, a question to which researchers at Boston Consulting Group(BCG) have since respond to. According to BCG, there are several obstacles that many organisations, not limited to retailers alone, face in their efforts to provide personalised experience (Abraham et al., 2017). Organizations are pressured by changing consumer taste and decreasing traffic into their stores. They continue to shift focus from personalization and its promising boost on sales revenue. Organizations, retailers included, are not investing in human capital for personalization initiatives and as such, they emerge weaker and not ready for the hyper-tailored experience they continue to promise consumers. In the process, retailers are losing between 6% and 15 % potential increase in sales revenue (Abraham et al., 2017; Boudet et al., 2017). Surely, there is a strong reason to believe there are so many lost opportunities due to failures of retailers to achieve a truly one-to-one experience for their consumers (Allen, Kania, & Yaeckel, 2001; Cöner 2003). However, judging by the facts and figures in the preceding discussion, there is no doubt about a problem with the current approach to personalization by retailers.

The current research is focused in personalization, not only as a marketing strategy, but as management imperative in the age of fierce competition and dynamically changing consumer behavior. Therefore, the theory behind the current research will be consumer behavior theory. The objectives of the study will be:

1. To understand why it is so hard for organisations to get human touch from an algorithm on data analytics.
2. To understand how best to provide recommendations than basing such on the previously purchased goods.
3. To provide an understanding of the key elements of a truly genuine personalized experience.
4. To create a personalization model that will help to achieve integration of online and instore experience to achieve the ultimate goal of creating a truly seamless personal experience across all channels.

The above objectives will be the primary focus of the research. The research will need to rely on a research based on an inquiry into the nature of a truly personal experience by answering several questions that are currently answered in existing body of literature. Among some of the most important questions for the current study are:

1. What the opportunities that personalization could bring to retailers?
2. How does the nature of retailing affect pesonalization approach?
3. What are the technical challenges faced by retailers in their personalization marketing initiatives?
4. Where to retailers miss out in personalization?
5. Why does personalization matter for retailers?

New technologies have provided retailers with an opportunity to reach new heights concerning target market management and consumer engagement. However, the retailers must be able to clearly differentiate between personalization and customization to ensure that the activities and the strategies to be adopted allow them to meet the personalization objectives. Through personalization, retailers are able to meet consumer needs efficiently and effectively and at the same time ensure that there are easier and faster interactions hence increasing consumer satisfaction and experience as well as repeat purchases. Retailers have realized that the customers are responding to personalization hence many of the retailers are now considering adopting this approach. Many organizations in different parts of the world are embarking on a process that will ensure that they are truly personalized by merging online and in-store experience. This is due to the fact that these organizations have identified the strategic importance of this aspect on their revenues, profitability and growth. Personalization incorporates general management and ensures that not only does an organization recognize its customers but it understands their tastes and preferences. However, poorly individualized merchandising and marketing continues to derail the ability of the retail sector to adopt personalization and provide the consumers with the highly anticipated customer experience that has been promised by this sector for long. The journey to achieve personalization remains elusive and can be regarded as one that is still in its infancy. The above evidence has shown that the retailers in the beauty and fashion industry have made greater inroads into personalization compared to other sectors in the retail industry. However, they are involving themselves in far more customization than personalization. New Balance’s and Form Beauty are some of the retailers that have been used to shows that the retailers in this industry are undertaking far more customization than personalization. The available information clearly shows that the retailers in different sub-sectors have not been able to manage personalization as a marketing strategy as well as an approach to ensure that the customers are provided with relevant and genuine customer experience. The inability to adopt personalization is proving to be expensive for the retail industry since the retailers are losing potential revenue.

References

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