The Value of Personalization From Melody Vargas, Part 4 in a Series on Loyalty Retailing The concept is simple, recognizing a customer when they walk through the door or sign-on to a Web site allows the retailer to tailor the shopping experience for each customer. By recognizing each shopper as an unique individual with their own tastes, needs and desires, retailers can establish friendships and create customer loyalty. Where does the information come from to personalize the shopping experience? Are retailers using it wisely? Is there any need for consumers to be concerned about being known as a unique individual instead of one of countless, and nameless, purchasers? The information to personalize can come from different sources. When customers become members or order from Web sites, or when they sign-up for frequent shopper cards, information is collected. It frequently includes name and address. Sometimes salary history, social security, driver’s license, marital and family data is collected. Then, as the customers make purchases, their purchase history is added to the database. Even Web sites that may not directly ask for personal data, might track the “clickstream” — clicks, time spent per page, items selected, but abandoned, and similar information — all in order to find out more about their customers and their behavior. The clickstream data becomes a useful resource for data mining tools that predict gender, age, income, preferences, and a customer’s willingness to purchase. It isn’t necessarily a bad thing for a retailer to know a lot about their customers. Being seen as an individual, with certain habits and preferences can save time. Just think about the donut shop that knows you like an apple fritter and a large coffee with cream for breakfast. The person behind the counter sees you get out of your car and before you make it to the register, they have your order bagged, poured and waiting. Likely you’d consider this great service, not an invasion of your privacy. Let’s say you like variety and always try something different. In this case, the clerk suggests the new chocolate-cherry crunch donut fresh out of the oven. The service is still made-to-order, highly personalized, and assuming you like chocolate and cherries, valuable. Are retailers walking a fine line between providing a valuable service and invading customers’ privacy when they use their data? Of course retailers want an edge in knowing what product to pitch while you’re at their site or in their store. Of course they want to learn the elasticity in the price of an item. If it allows retailers deliver to you the right offer at the right time, is it worth it? Many customers believe so. There is great value in having drug interactions recognized and corrected in the pharmacy instead of after an incident. There is value in being informed of a sale on your favorite items so that you can stock up. The best description of this type of personalization comes from Accelerating1to1, “Enlightened companies remember information for customers, not about them.” And that is the key to personalization and it’s best practice. Remember for the customer, not about them. If you visit Amazon.com, you can pick a favorite book and see what other customers who have that book purchased. It gives customers an insight into what might be a good read for them. From prior purchases, Amazon will recommend new selections. General Nutrition Center’s format GNC Live Well provides customized vitamin packs based on their customers’ lifestyle and needs. The VitaPaks are then assembled and sealed into individual packages in front of the customer and automatic refills via UPS are offered to complete the personalized service. Personalized service best comes from retailers listening to their customers, learning their needs, finding out what they like and how they like it. Every retailer can personalize some portion of their customer interaction. The best part of it for retailers is that it doesn’t have to take buckets of money to get started. Just remember your best customers’ names. And by the way, if you own a donut shop, I like mine with hot chocolate, not coffee.
In the remaining parts of our series, we will continue to explore the pros, the cons, the alternatives, and the best practices of loyalty programs.