Personalisation in retail is often seen as the latest development in online marketing but the practice itself is as old as the concept of retail.
From the time of the earliest shopkeepers, good retailers would recognise their customer and tailor their pitch according to what they knew about them.
A clear example of this sort of personalisation is a story from the history of Lock and Co Hatters of St James. In the 18th Century, so the story goes, a trusted customer could simply descend from their carriage outside the door of the shop, shout ‘hat’ and then leave.
The shop’s workmen would then refer to their records for details of the customer’s hat size and style preferences before making the hat and delivering it to their residence.
This highly nuanced personalisation (if not to the same degree) formed the basis of all good retail for hundreds of years and it was only with the rise of supermarkets and chain stores that retail began to get impersonal.
The web, when it arrived as an engine of commerce, picked up where the faceless mega-chains left off. Early online retail made little if any effort to personalise their offerings, assuming instead that all customers were more or less the same.
Now, however, personalisation is very much back on the agenda. Falling margins driven by intense competition and rising customer acquisition costs mean that every conversion counts. If a personalised experience is what it takes to get you to buy, that is what retailers must do.
That said, not all personalisation is equal. There have been two distinct phases of best practice to date and we believe that there is at least one still to come.
1: The era of Amazon
Like so much in online retail, web personalisation was first introduced at scale by Amazon. Their ‘customers who bought this also bought that’, introduced a degree of personalised recommendation to the sales cycle based on your previous shopping habits.
However, it’s hard to call this ‘true’ personalisation. It’s more like simple recommendation which, whilst similar, falls some way short of the dream of an online experience built to your true preferences.
Moreover, this sort of recommendation requires a relatively advanced level of interaction before it can function to its full extent. Most importantly, it requires you to have expressed a strong retail decision before it can recommend – you basically have to buy something before it can suggest what else you might want to buy.
This is fine but the people that most retailers want to convert are not the 3% of people who have converted before, but the 97% of people who never do. Targeting prior customers is good practice, but its driving additional revenue from a small existing base rather than growing your overall market share.
2: Big data personalisation
The next stage of personalisation, and one which we are seeing now, is more akin to the ‘real thing’. Big data approaches to personalisation harvest huge quantities of information about individual user journeys and use this to serve bespoke content based on an understanding of patterns of behaviour.
For example, analysis of site journeys might identify that people who visit two category pages without putting anything in their basket are susceptible to pricing offers.
It might therefore serve a bespoke discount offer as a message layer to those users when they arrive at the second category page, hopefully driving conversions.
Alternatively, analysis might reveal that those arriving from specific search keywords will tend to be interested in a specific product area or attribute, enabling the retailer to serve a tailored home page to those users.
This personalisation meets the barrier of ‘real’ personalisation, as it delivers a bespoke experience based on an individual user’s behaviour. However, it does require a fundamental change in the way you manage and view your customer level data.
Rather than managing data about attribution, on-site activity, purchase history and the rest across multiple different software silos, for this approach you need to gain a single, easily interrogated view of the customer and then use this to build an understanding about aggregate patterns of behaviour.
Only with this insight can you then hope to deliver truly insightful personalisation campaigns.
3: Minority report
The final stage of personalisation is akin to that displayed in the Tom Cruise sci-fi film Minority Report, where personalised real world advertising and retail experiences are delivered by holographic projections.
The personalised website of the future, for this isn’t an experience anyone can yet deliver, will recognise the individual visitor and will then build a radically personalised experience based on a deep understanding of their preferences.
This might be to display a bespoke product range, particular sizing, colour or pricing preferences or even an entirely bespoke site design based on their visual and navigation preferences.
Clearly there are some barriers to the development of this sort of personalisation. First and foremost, this sort of customer insight would require a new agreement between retailers and their customers about data collection and usage.
Customers would need to both feel confident in retailer’s ability to keep their data safe and also in the value to them in sharing detailed personal preference data.
Moreover, this sort of personalisation has a real impact on the way that brands present themselves. It’s going to be hard to maintain a single look and feel for a brand’s website when every page is potentially bespoke to the individual user.
Clearly brands will have to make the call as to whether they value the sale more than the minutiae of their brand identity.
These barriers aside, this type of personalisation must be the Holy Grail for all online retailers. Hundreds of years of commerce have proven the efficacy of personalised experiences and this is surely the closest that the web can get to delivering the sort of personalisation and convenience that St James’ hatters did all those years ago.