Driving Profitability Through Personalization
by April Cox, Retail Solutions Director, Catalina UK
Let’s get personal…and drive profitability.
With ever evolving advances in consumer digital engagement, data analytics and marketing technologies, it’s fair to say that consumer expectations have never been higher. Our retail world has bestowed on them a far better, more personal experience than ever before. They want it all, and they want more.
So, how do we keep harnessing the opportunity for our business and ensure that by giving our customers what they want, we impact our bottom line?
The simple answer is, make personalisation a priority. It’s now possible for businesses to truly interact on a personal basis with all their customers all the time, so it’s important to leverage this and get it right.
Aligning the right message, at the right time to maximise conversion is marketing efficiency and retail leaders understand this. We know that consumers want purchasing experiences, and they want to feel special. They don’t want to be bothered with irrelevant offers or coupons. They want personalised offers that speak directly to them. By creating a path to a more personalised customer experience, the closer you get to the consumer, the bigger the gains for your business. When done well, personalisation can deliver impact and growth quickly and, in the dynamic retail landscape, it plays a critical role across the full customer lifecycle.
There are challenges, of course. Unfortunately, retailers price matching initiatives have essentially created a price war, and it’s having an impact. Personalisation is starting to get diluted and consumer loyalty is taking a hit. Customers no longer need to be loyal to one supermarket as they can get the same price wherever they go.
Recent data* has shown that 97% of consumers are signed up to at least one retail loyalty scheme and 53% are signed up to 4 or more. 92% are utilising additional cost saving measures when they shop, with buying cheaper brands (62%) and using offers more (55%), being the most popular methods.
With inflation continuing to rise, and impacting cost to serve, the investment and focus on every day low price and price matching is creating further noise, and this approach is not sustainable long term. Competition is making it hard to pass this cost onto the consumer, so retailers are facing some of the hardest times yet. Suppliers and brands are feeling the impact from retailers, so they can protect their margins, but they can’t keep reducing their prices due increasing energy and labour costs. It's gotten so highly charged that some brands have even been threatening to remove their lines from retailers if they are forced to reduce price.
Okay, personalisation is not simple but it’s far more achievable than some businesses may think. Nearly three quarters of shoppers (72%) are more likely to shop at a supermarket that provides personalised offers. And 69% are more likely to choose a brand because of it.
Sophisticated data analytics and digital technology now offer companies the ability to deliver more personalised and better customer experiences at scale - in store, online and via apps. The financial benefits are significant, including an enhanced opportunity to up-sell and cross-sell, increased likelihood of transactions, a reduction in the cost to serve and greater marketing spend effectiveness.
Retailers therefore need to find a way to combat the current challenges by investing in their customers individually to give them the value they want and return their businesses need. This will help them avoid any number of potential risks such as the impacting employees due to retailers’ cutbacks and reduced product ranges due to brand pressures. A suggested solution for improvements here is to turn the key on personalisation. This comes back to getting it right and importantly, ensuring you stay ahead of the curve. For me, this would include having more relevant offers available; and for coupons to relate to what’s purchased most regularly and in harmony with individuals purchasing cycles. This could be a turning point in the battle and ensure retailers are well-positioned to improve conversion while still driving customer value.
*Catalina UK, shopper research conducted by Simpson Carter. Research Method: 1009 online interviews with food and grocery shoppers who have shopped both in store and online in the last 3 months