Retail’s pivotal moment: how to deliver effective personalization

1Executive Summary

The world of online retail has endured epic change over the past decade and reached a pivotal moment. Driven by customer behavior, merchants must integrate their online and physical channels. For many retailers, online is their biggest single store; the blend of digital and physical is the new normal. Differentiation is going to be about delivering the best customer experience in context. Yet at the same time, many installed e-commerce platforms have aged into calcified near-obsolescence.

Data-driven personalization will be the key to delivering that experience. Mass markets and coarse-grained segmentation for messaging and offers will no longer cut it. While online personalization has been around for a while, only now are things really lining up for implementing it in a truly meaningful way for consumers online, in stores, and interacting with smartphones. Retailers must re-evaluate their platforms and data strategies and act on the following:

  • Actionable data is pouring in from every touchpoint across the enterprise: online, smartphones, physical stores, and customer service. Merchandisers must push data interpretation beyond basic demographics and behavior, and IT must accommodate data personalization in context.
  • Many of the core e-commerce systems are aging. They touch every element of the online enterprise and increasingly are integrated into traditional store operations. Changing out core platforms is extremely risky. Replacement, development, and service costs are expensive and nearly always slower than planned, placing pressure on critical time-to-market needs. Yet in most cases, many of their core elements function very well on a day-to-day basis. Rarely is a complete change mandated.
  • Companies with functioning e-commerce environments should consider implementing Software-as-a-Service (SaaS)-based personalization and other services as overlay technologies. The time-to-impact is much shorter, and the risk is more controlled. A SaaS overlay is often a more cost-effective solution with an easier-to-quantify return on investment (ROI).
  • In this newly emerging world, application programming interfaces (APIs) are an integral part of the strategy. Technology organizations should work with their business counterparts to understand what’s key to their company’s offerings, what’s unique to their brand, and how they can best focus their efforts on build-versus-buy decisions without making functional compromises. The proliferation of services and data available through APIs dovetails with corporate needs for differentiation, agility, and lower-risk customer experience upgrading.

Thumbnail image courtesy of Yahor Piaskouski.

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Bud Albers

CEO Interactive Technology Strategies

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