Pulse Check on Physical, Digital Commerce Health

Shop owners and internet merchants need to turn shopping into game-playing experiences to meet ongoing changes in e-commerce. They also need to forget the industry hype about the marvels of personalization as a marketing strategy.

The supply chain debacle and the rising costs of everything have forced consumers to make critical choices in how they spend their rapidly disappearing dollars. Retailers can no longer rely on personalization strategies alone to win over or retain loyal customers.

Once regarded as the holy grail of creating differentiated shopping experiences, personalization remains elusive for many retailers because it is an imprecise approach to do well, and the marketing space is constantly evolving, according to Kerri Drozd, senior vice president for strategy at Hero Digital, a customer experience company headquartered in San Francisco.

“Personalization used to mean using a customer’s name in communications, in logged-in experiences, or in brand rewards programs. Sure, in 2018, these may have been a big value add for customers. However, in 2022, every brand has these basics. To stand out, brands have to do differently,” she told the E-Commerce Times.

Next-Level Tech Tactics

To stay afloat in the rising economic flood waters, marketers should adopt recent trends in gamification, augmented reality (AR), and conversational artificial intelligence (AI) technologies.

Retailers and brands are leaning into these applications and techniques as a way to get more time with customers to build brand affinity and learn about them along the way, she offered. For consumer brands, gamification is all about harnessing human motivation to change behavior.

“It encourages people to engage with your business in a new way that can ultimately create value for both customers and brands,” said Drozd.

Augmented reality, on the other hand, helps connect the physical and digital dimensions — and it may well become critical in the near future for any brand looking to make online sales by allowing consumers to try their goods virtually before making a purchase, she added.

Conversational AI technologies are gaining favor as the tech evolves. They enable next-level personalization to even unknown customers by using past customer profile data, behaviors, and lookalikes, Drozd explained.

What Customers Really Want

Offering customers a personalized experience, whether that be in-store or online, is not the deal-making strategy marketers are led to believe. Basic personalization actually ranks very low on the list of experience attributes that are important to them, according to consumer surveys Hero Digital conducts.

Still, it is extremely important to offer customers personalized experiences both in-store and online shopping. In fact, two-thirds of consumers expect companies to understand their individual expectations and needs. That number will only grow as time goes on, according to Drozd.

What matters most to today’s consumer is meaningful, relevant interactions. That means knowing where, when, and how a consumer has historically and recently engaged with the brand — and what their current intention is.

“Contextualization moves brands beyond personalization. It is growing more and more advanced as brands connect zero, first, second, third party, and big data across silos,” said Drozd.

Companies must go further to take in both a customer’s online behavior and their offline behavior to enable a personalized experience regardless of where they are doing their shopping, she noted.

Changing Times

U.S. retail sales fell in May for the first time in five months, restrained by a plunge in auto purchases and other big-ticket items, according to a June 15 report in Bloomberg. The change in buyer behavior suggests moderating demand for goods amid decades-high inflation. The figures hint that Americans’ demand for merchandise is softening due to the worsening inflation.

Certainly, retailers are expecting decreased sales numbers for at least the rest of 2022. However, this does not mean that brands should simply take the next six months or so off.

“On the contrary, holding onto existing relationships is more important than ever. By engaging loyal customers, you can ensure they will shop with you again once they are able and feel comfortable doing so financially,” Drozd observed.

E-commerce sales spiked because of the pandemic. Until recently, projections were predicting sales would likely remain at these record-high levels, if not increase, in the coming years. Even at these record highs, more than four-fifths of all retail sales occurred in brick-and-mortar locations.

Despite challenging economic times, retailers still have an opportunity to make sales. Pent-up demand and pent-up social energy are driving people outdoors and out to stores.

“The physical and digital pendulum will continue to swing back and forth, and it is important for brands to stay as close to the customer as possible. Understanding purchase occasions and context can help brands architect experiences that are fit-for-purpose,” Drozd recommended.

How Can In-Store and Online Retailers Survive?

Cheaper may be the best option for most Americans when shopping in 2022. With consumers being less likely to make purchases in the coming months, now is a great time for retailers to fix the basics of what is broken.

Retailers — both in-store and online — must remember that customer loyalty is more vital than ever. It is important to invest in a positive customer experience, according to Drozd.

When you have thousands of loyalty reward members, for example, there is already an incentive to shop exclusively with a favored merchant. Coupons hold greater value when consumers are collectively budgeting.

“However, consumers are more challenged to engage in loyalty programs for brands they do not shop habitually. So, offering more than rewards points and getting the right messages to consumers at the right place and the right time is key to breaking through the continually escalating noise in the marketplace,” suggested Drozd.

CDP Solution

One approach retailers can take is to leverage their customer data using a customer data platform (CDP) to gain insights into changing preferences.

These platforms surface critical insights that provide companies with trusted, relevant, and actionable data on how to engage with customers at every in-person and digital touchpoint, according to Sameer Patel, chief marketing and solutions officer at SAP CX.

This equips businesses with powerful data to experiment with new engagement models, quickly pivot to new business models, deliver unique value to customers, strengthen loyalty, and meet business and financial goals.

But the majority of CDP use today is aimed at marketing and advertising use cases rather than at driving holistic performance across the entire enterprise.

“We see an opportunity to not only leverage actionable customer data to drive success in marketing but also across the entire customer experience stack, across sales, service, commerce, loyalty, and more,” he told the E-Commerce Times.

Patel also sees a chance to leverage CDP as an enabling technology. Ultimately, it can connect the back end of business processes for those trapped in enterprise resource planning or ERP systems to the front end of engagement across all customer touchpoints.

By combining data from front-office and back-office sources, companies have access to holistic customer profiles that provide a deeper customer understanding, actionable insights, and predictive actions, Patel explained.

Using a CDP boosts revenue, increases customer conversion, retention, and loyalty, and expands growth while reducing the strain on IT resources.

“This is what we consider to be enterprise-strength CDP,” he said.

Helps Brick-and-Mortar and Retailers Alike

Data matters for every size and every type of business — whether brick and mortar or e-commerce. The brick-and-mortar SMBs are dealing with steep competition and a landscape where every dollar, and data point, matters.

“With a unified data model, retailers will have a more complete understanding of their customers and have more agility to respond to changing behaviors and economic conditions,” said Patel.

As an example, CDP offers the ability to deliver a true lifetime value score based on profitability rather than simply purchase data. It also provides a means to prioritize segments based on customer profitability.

CDP can impact online retailers as well. For example, iconic clothing brand Carhartt recently transformed its entire back office to better respond to the needs of digitally native consumers.

At the heart of Carhartt’s strategy was its investment in digital technologies that deeply connect data from across the enterprise to fuel highly personalized omnichannel engagement. It helped the company ensure the entire value chain — from the e-commerce site to the manufacturing floor — is optimized to deliver what customers want, when, and how they want it, according to Patel.

Fighting Rising Inflation

Due to rising inflation, consumers are already changing their buying habits, he noted, referring to a drop in retail sales in May. As customers begin cutting back on expenses, it is more important than ever for businesses to provide exceptional customer experiences and pivot to meet customers’ changing expectations.

“Consumers will become even more selective in where they choose to spend their money, so brands that are not optimizing CX will not flourish,” he observed.