To Remain Profitable, Retailers Must Connect with an Audience of One
The internet, as far as we know, is the only space where you can shop for a pair of shoes and a new dating partner all in the same place.
With an infinite variety of options resting at their fingertips, consumers should feel empowered to make the best purchasing decisions to fit their needs.
Except they don’t.
It turns out, having too many choices can leave consumers feeling anxious and uncertain about their shopping selections.
According to data retrieved from Accenture Interactive’s 2018 Personalization Pulse Check, 40 percent of consumers have reportedly “left a business’s website” to make a purchase on another site or in-store because they were “overwhelmed by too many options” when trying to make a decision.
In an interview with RETHINK Retail, Stanford Behavioral Economist and Nobel Laureate Alvin Roth revealed that a bombardment of variety and a “short supply of attention” have hindered many new retailers from making a lasting impression on consumers.
“We have come to find that the internet is not frictionless and online retailing takes work from both sides,” he revealed. “Therefore, cutting down on that work is important.”
Roth went on to suggest that, to remain profitable, internet retailers should focus their efforts on designing customized incentives and services that will attract new customers and keep the old ones coming back.
“There was a time when people would search for the lowest prices but searching takes time and people are busy,” Roth told RETHINK. “[...] So, something helpful retailers can do is personalize those alternatives.”
And Roth is right: personalized communication is rapidly becoming a major business strategy as more consumers seek out retail options that offer an experience tailored to their individual preferences.
In fact, a recent report from Epsilon revealed that 80 percent of shoppers are more likely to buy from a brand that offers a personalized experience.
Case in point: Coca Cola’s hyper-personalized “Share a Coke” campaign — the one where they stamped hundreds of names on the side of their 20 oz bottles — was credited with growing the national beverage company’s sales for the first time in 10 years.
This, of course, is not to say that turning your product into a souvenir keychain will help drive sales. Products are only one part of the battle in retail personalization and, according to a study conducted by Pure 360, timely engagement is the best opportunity for a retailer to influence what a customer does next.
Such strategies include presenting consumers with customized offers designed from predictive analytics.
According to Accenture Interactive, 65 percent of shoppers are more inclined to shop with a company that recommends products based off information from their purchase history and browsing data.
For any retailer aiming to acquire new customers in 2019, investing in data-gathering methods is the best way to ensure consumers are getting exactly what they want while feeling special in the process.
Take Amazon, for example: when a customer searches its database for a set of whiskey glasses, the interface will automatically recognize the search and a “Frequently bought together” section will appear with items like chilling stones and mixing sets.
In 2017, 44 percent of Amazon’s sales were estimated to be generated by its recommendation engine.
“If you look at a big company like Amazon, a big part of their success is that they make shopping easy,” Roth told RETHINK. “They already know your credit card, your home address and what you want.”
As consumers become increasingly busier and tech-dependent, retailers must stay ahead by investing in the preferences of today’s digitally connected shopper. Whether it's through virtual try-on services or a boost in personalized email campaigns, the average consumer is demanding to be seen by businesses as their own person with their own pocketbook — in this regard, personalization is a trend retailers can no longer afford to ignore.