The power lies in not only anticipating customer needs but also preventing churn, an essential mitigation factor in critical scenarios.
A version of this article was originally published in ANA.
Businesses no longer just need to capture markets, they also have to capture moments – the exact points in time when a customer is searching for a product and is ready to buy. This means brands need to be right there when those crucial high-intent moments occur. They need to be able to anticipate those moments using data and analytics—and then capture those essential moments by quickly connecting customers with whatever they want.
Facebook, Twitter, TikTok and other social media platforms customize news feeds to match your interests and habits. Netflix, Hulu, AppleTV+ and other streamers know what you watch and what you likely want to watch next. Even your car, which is not that smart, knows what radio stations you listen to and what temperature you like.
Changes in personalization have accelerated in the pandemic with the shift to digital-first. People are consuming more media at home than ever before, doing more of their day-to-day shopping at home, and leaning into technologies that provide personal recommendations and experiences. Each interaction a business has with its customers must feel tailored specifically to that customer and their moment in time. And this personalization should reflect previous purchases, browsing history, affinity, location and more.
But there’s another reason personalization matters: Insulating your business from the negative effects of modern supply chain challenges.
Considering the ongoing pandemic, inflation and international conflicts, supply chain disruptions are here to stay for the foreseeable future. And these pressures mean that retailers are constantly scrambling with inventory management issues, making it more important than ever to display relevant, in-stock merchandise for every potential customer. Even more challenging and essential: retailers need to show customers meaningful alternatives when their first choice isn’t available.
It doesn’t take much for a bad experience with out-of-stock items and irrelevant product placement to send a customer elsewhere for good. Thoughtful personalization and dynamic customer experiences can prevent customer churn and are essential mitigation factors for these risks. Shoppers respond better to thoughtful substitutions than they do to “out of stock” notifications.
A Force Multiplier
A recent McKinsey study found that the fastest-growing companies drive 40 percent more of their revenue from personalization than their slower-growing counterparts. The companies that invest significant resources into personalization see strengthened relationships and lifetime value leading to better revenue per customer, retention, and loyalty. The McKinsey research also shows that those companies see faster revenue growth and that those benefits grow with time and sophistication.
Digital personalization is a tall order. Recommendation engines anticipate what customers want (or what’s similar and in stock) and analytic solutions turn precious customer data into insights on what they really want, at the right price and the right time. With the right technology partner and the right implementation, personalization is essential and a game changer—for managing supply chain challenges, for delivering a great customer experience, and for driving the bottom line.