Whilst most retailers see personalization as a priority and think that personalized promotions dramatically increase customer visits, only a minority say they have properly implemented it
Personalization is becoming more important, with 95% of WRC retailers surveyed stating it is a strategic priority for their business – 64% consider it a Top 3 priority. Yet only 15% admit to being fully implemented, with 43% saying personalization efforts and initiatives are on the roadmap for 2017/18. This suggests that whilst many retailers are at the start of their journey towards personalization, and recognize its strategic importance, their efforts towards implementing it are lagging considerably behind what their customers have been demanding for some time.
Providing a more customer centric approach for the business
To support this viewpoint, when asked about the top reasons for implementing personalized marketing, 46% of the retailers surveyed stated they see it as a way to provide a more customer centric approach, with 36% saying it is a necessity to keep up with changing consumer expectations and demands. 10% believe it will play a key role in helping them use their marketing budget more efficiently.
Impact on revenue
Another highly compelling factor for personalization revealed by the research is the increased opportunities it offers to generate additional revenue streams. When asked how they would rate the impact of ‘personalized’ versus mass promotion in creating the potential for additional revenue streams, 15% of retailers said that they saw a 100-300% increase, especially with regards to new customer conversions. 41% of respondents stated that they experienced a high impact (50-100%) to their revenue streams, especially in cross-sell conversions.
80% of respondents felt that switching to personalized promotions was having a direct impact on the volume of customer visits they were receiving compared to the previous year. 59% said they saw a 25%-50% increase, with the remaining 21% seeing customer visits as high as double.
The channels most used or planned by retailers for the delivery of personalized promotions were Social Media and email (each 74%), followed by App push messaging (51%) and Direct Mail, with a staggering 30% saying this was the third key component in the delivery of personalized promotional activities.
Challenges to implementing personalized marketing
Only 17% of respondents currently have consolidated and simplified their technology to a single personalization software suite, and this became clear when they talked about the challenges of delivering personalized promotions. 67% said gathering, integrating, and synthesizing data was their greatest challenge, with the same volume admitting they did not have the correct tools to execute personalized offers and marketing. 41% stated that finding the right solutions partner was creating a challenge for their business in continuing their journey to deliver personalized marketing.
Getting the data and executing
When it comes to the automated delivery of personalized marketing campaigns, two thirds of respondents (67%) said their content management system was the most important piece of technology they relied on to manage creative assets and copy. This was followed by automated campaign management systems (56%) to trigger re-targeting, e-mail campaigns, targeted promotions and ‘next best action’ analysis. 53% placed their distribution platform in third place – responsible for pushing out notifications, emails and other communications.
Brian Elliott, Managing Partner of Periscope By McKinsey, commenting on the findings, said; “Many retailers are still in the early stages of experimenting with personalized marketing. As such, they are only beginning to see the impact this is making to their businesses. Our own experience shows that there are both short and long-term gains to be made in both performance and health. For example, retailers can expect to see more efficient marketing and cost savings, alongside increased customer retention and revenue, personalization can also play a key role in generating a larger customer base that is more engaged and satisfied with their brand experience.
“However, making the move from mass to personalized promotions and marketing can be challenging,” he continued. “The key to success is being able to bridge the gap between data and creating an automated near real-time environment. In addition, to have impact on the customer journey, promotions must be both journey context relevant and delivered quickly after a trigger is detected, before the moment is gone. To this end, we work with retailers globally to overcome their data integration and technology challenges with our personalization solutions. Helping them to adopt more agile ways of working within their marketing teams to multiply the number of personalized offers and customer relevant triggers to enhance customer experiences.”
To download the report “Retail Gets Personal: Accelerating the Journey to Personalization” that accompanies this research, visit https://www.periscope-solutions.com/download.aspx?fileID=2901
Founded in 2007, the Periscope® By McKinsey platform combines world-leading Intellectual Property, prescriptive analytics and cloud based tools with expert support and training. It’s a unique combination that drives revenue growth, both now and into the future. The platform offers a suite of Marketing & Sales solutions that accelerate and sustain commercial transformation for businesses. Periscope leverages its world-leading IP (especially from McKinsey but also other partners) and best-in-class technology to enable transparency into Big Data, actionable insights and new ways of working that drive lasting performance, improvement, and a sustainable 2-7% increase in return on sales (ROS). With a truly global reach, the portfolio of solutions comprises of: Insight Solutions, Marketing Solutions, Customer Experience Solutions, Category Solutions, Pricing Solutions, Performance Solutions and Sales Solutions. These are complemented by ongoing client service and custom capability building programs.
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