You may have noticed: The Internet is far from a refreshingly decluttered oasis of serenity.

Consumers feel overwhelmed and bombarded by marketing messages on their smartphones, computers, and TVs every single day. To cut through the communications clutter, more retail companies are investing in getting to know their customers better through marketing personalization.

Abundant online content

From social media to online shopping, digital communications can overwhelm consumers and drown out retail companies’ online marketing efforts.

Personalized marketing helps shoppers feel understood by delivering customized messaging and promotional offers that accurately reflect consumers’ personal preferences at the individual level rather than lumping them into a large, homogeneous target market.

To compete effectively, consumer packaged goods (CPG) and retail companies are personalizing their marketing to grip consumers’ attention with the convenience of relevant, timely, and beneficial content. Such content can include:

  • Customized emails
  • Retailer discount offers
  • Product recommendations
  • Coupons for items you buy often
  • Recipes that include specific CPG items

The business case for personalization

Armed with smartphones and immediate access to product and company information, consumers are more informed and empowered than ever. They have also come to expect a personalized shopping experience.

Accenture found 73% of consumers prefer to buy from brands that personalize their shopping experiences. And companies better make it snappy, as 54% of shoppers anticipate a personalized discount within a day, and 32% expect it within an hour of sharing their information with a merchant.1Alaimo, Dan. Nordstrom, Sephora, Amazon rank highly on personalized marketing. Retail Dive. February 23, 2018.

When  adapting to these new consumer expectations by creating effective personalized marketing, retail companies can:

  • Increase engagement and loyalty by delivering communications consumers actually want
  • Reduce acquisition costs by as much as 50%
  • Boost revenue by 5-15%
  • Increase the efficiency of marketing spend by 10-30% 2 Gregg, Brian, Hussein Kalaoui, Joel Maynes, and Gustavo Schuler McKinsey: Marketing’s Holy Grail: Digital personalization at scale. McKinsey & Company. November 2016.

In addition, the cost of ignoring this trend is steep, as a lack of personalization costs businesses $756 billion collectively in 2016, according to Accenture.

A word of caution: Some companies get a little too personal. Three-quarters of consumers find many forms of marketing personalization creepy, especially if their communications reflect intimate financial or health-related insights – which prompted 22% of these consumers to switch to another brand. In addition, 46% of consumers refrain from divulging personal information because they say they don’t receive value from sharing their data.3 Sweeney, Erica. 75% of consumers find many forms of marketing personalization creepy, new study says. Marketing Dive. February 21, 2018. 

How companies get personal

The key to personalization is data. That’s why retail companies are turning to data management and artificial intelligence (AI) to collect, clean, and make sense of product and consumer data across their supply chain. For instance, progressive retail companies are unifying all consumer data into a single source of information about an individual consumer, including their past purchases, products they have browsed or returned, social media engagement, and product reviews.

While it can be a massive endeavor for smaller companies to gather such data, it is undoubtedly important; according to BizTech, e-commerce giant Amazon “looks at that data every minute.”  As Forrester discovered, 94% of marketers are focusing on their data and analytics capabilities, personalization technologies, and customer profile data management capabilities to deliver personalized customer experiences that help them remain relevant and competitive in retail.4 Betts, Andy. A new era of personalization: The hyperconnected customer experience. Martech Today. January 23, 2018.

Accenture: 81% of consumers want brands to understand
them better and know when and when not to approach them 5Ibid.

McKinsey recommends that companies start their personalization efforts by grouping customers with similar behaviors and needs, such as mothers who shop for natural and organic CPG products for their children. The next step is to understand each segment’s unique, omnichannel customer journey, spanning initial consideration to repeat purchases. Combining this information creates insightful microsegments, which companies can prioritize according to their business objectives.6Gregg, Brian, Hussein Kalaoui, Joel Maynes, and Gustavo Schuler McKinsey: Marketing’s Holy Grail: Digital personalization at scale. McKinsey & Company. November 2016.

Discover more personalized marketing best practices for companies of all sizes.

Who’s rocking retail personalization?
Several companies successfully use personalized marketing to stand out in the crowded retail landscape. For instance, Nordstrom, Sephora, and Amazon were voted by their peers working for best-in-class retailers as the best at using personalized marketing.7 Alaimo, Dan. Nordstrom, Sephora, Amazon rank highly on personalized marketing. Retail Dive. February 23, 2018. Here are some examples of their, and other retailers’, efforts:

  • Nordstrom: The department store recently acquired two retail technology companies, BevyUp, a digital selling tool, and MessageYes, a conversational commerce platform, in part to identify their most loyal shoppers and collaborate with them in real time across multiple channels, including voice shopping.8Renfrow, Jacqueline. Nordstrom acquisitions solidify cross-channel personalization. Fierce Retail. March 14, 2018.
  • Sephora: The beauty retailer analyzes data from its Beauty Insider program to send personalized communications and product recommendations. In stores, Sephora also uses data from beacons, which send mobile notifications to shoppers when they approach an item they abandoned in a digital shopping cart.9 Pandolph, Stephanie. Sephora leads the way in personalization. Business Insider. September 22, 2017.
  • Amazon: The e-commerce powerhouse excels at personalization due to its mastery of artificial intelligence, machine learning, and predictive analytics, and 35% of all its sales are generated by its personalized recommendation engine.10Schneider, Gene. Learning from Amazon’s embrace of personalization. SPS Commerce. March 6, 2018.
  • Walmart: The retail giant recently revamped its website to personalize the content to individual consumers while they are browsing. This overhaul includes displaying best-selling items in a shopper’s location and profiling the local Walmart store. The new site also specifies the availability of online grocery service and your order status.11Deahl, Dani. Walmart’s getting a much-needed site overhaul in May. The Verge. April 17, 2018.
  • Godiva Chocolatier: In a scrumptious CPG example, even candy is getting personal. Godiva collaborated with an e-commerce partner to create personalized chocolate cards and lollipops made from 3D printed molds of people’s heads.12Yu, Douglas. 3D chocolate heads: Godiva Chocolatier taps into personalization gifting market. Confectionary News. July 10, 2018.

As these studies and examples suggest, CPG companies and retailers can differentiate their offerings, improve the customer experience, and boost sales and loyalty. That’s because effective personalized marketing acknowledges consumers as  unique individuals and evolves from a mass market mindset to a modern one-to-one model.

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1. Alaimo, Dan. Nordstrom, Sephora, Amazon rank highly on personalized marketing. Retail Dive. February 23, 2018.
2. Gregg, Brian, Hussein Kalaoui, Joel Maynes, and Gustavo Schuler McKinsey: Marketing’s Holy Grail: Digital personalization at scale. McKinsey & Company. November 2016.
3. Sweeney, Erica. 75% of consumers find many forms of marketing personalization creepy, new study says. Marketing Dive. February 21, 2018.
4. Betts, Andy. A new era of personalization: The hyperconnected customer experience. Martech Today. January 23, 2018.
5. Ibid.
6. Gregg, Brian, Hussein Kalaoui, Joel Maynes, and Gustavo Schuler McKinsey: Marketing’s Holy Grail: Digital personalization at scale. McKinsey & Company. November 2016.
7. Alaimo, Dan. Nordstrom, Sephora, Amazon rank highly on personalized marketing. Retail Dive. February 23, 2018.
8. Renfrow, Jacqueline. Nordstrom acquisitions solidify cross-channel personalization. Fierce Retail. March 14, 2018.
9. Pandolph, Stephanie. Sephora leads the way in personalization. Business Insider. September 22, 2017.
10. Schneider, Gene. Learning from Amazon’s embrace of personalization. SPS Commerce. March 6, 2018.
11. Deahl, Dani. Walmart’s getting a much-needed site overhaul in May. The Verge. April 17, 2018.
12. Yu, Douglas. 3D chocolate heads: Godiva Chocolatier taps into personalization gifting market. Confectionary News. July 10, 2018.
Lisa Goller

Lisa Goller is a marketing and communications professional with over 15 years of experience serving retail, consumer goods, B2B and technology companies. She helps businesses tell their story through irresistible content marketing and strategic communications.

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