As a retail consumer, your proximity to a store and the price of a product used to be the primary value drivers that determined your loyalty to a brand. As we explored in an earlier blog post, those long-standing value drivers have given way to a desire for a unique connection with a retailer reflected by a personalized customer experience that demonstrates a deep understanding of you as a consumer.
In a 2022 Dynata survey on brand loyalty, 74 percent of consumers said that feeling valued and understood by a brand was the key component in brand loyalty. Furthermore, 64 percent of consumers said they would rather purchase a product from a brand that knows them, with 34 percent claiming they would spend more money on the product to do so.
The previous blog framed the emerging value drivers in terms of how producing that value (i.e., one-to-one personalization) leads to cost-efficiency benefits for digitally mature retailers, with their maturity level distinguished from laggards according to the Accenture retailer maturity curve.
Generate Revenue Via Advanced Personalization
The focus in this follow-up blog will be on how the delivery of a personalized customer experience (CX) generates new revenue. Accenture defines digitally mature retailers as those who have aligned people, processes and technology around a customer-centric strategy as the core business priority. They have paired analytics and augmented third-party data with advanced technologies to intelligently orchestrate customer journeys for individual customers.
74 percent of consumers said that feeling valued and understood by a brand was the key component in brand loyalty.
There are four primary ways to generate revenue through one-to-one personalization:
- Find the right customers
- Increase purchase size/frequency
- Create meaningful interactions
- Keep customers loyal
Find the Right Customers
One characteristic of digitally mature retailers is that they understand the tastes, wants and behaviors of individual customers – not just demographic and behavioral cohorts – and they leverage this knowledge by taking predictive actions at the individual customer level at exactly the right time during digital engagements.
A personalized website experience for a first-time visitor is one way digitally mature retailers drive revenue through increased affinity and conversions. When every behavior, preference and action is included in a Customer 360 or Golden Record that is updated in real time, retailers have the foundation for understanding every customer on an anonymous to known journey. Intelligently orchestrating that journey based on the actionable insights of a Golden Record is the key to first-touch personalization that demonstrates the personal understanding that aligns with customer expectations.
And because a Golden Record is created using persistent keys, the unified profile helps build a deeper understanding of a customer over time. By leveraging existing profiles to build lookalike models for ad segmentation and personalization, digitally mature retailers discover audiences that capture what’s important and meaningful to an individual customer.
Increase Purchase Size/Frequency
Demonstrating a deep understanding of a customer increases purchase size and/or frequency because a brand that leverages a Golden Record is always prepared to deliver a next-best action across an omnichannel journey, in real time. Hyper-relevant offers maximize cross-sell and upsell opportunities. Brands personalize content across channels based on expressed and perceived customer preferences; across every touchpoint, brands engage with content that matters to the customer in the moment.
In addition to providing personalized next-best actions in real time across an omnichannel journey, brands utilizing a Golden Record also reduce negative behaviors (e.g., cart abandonment) by using context and cadence as cues for triggered events. There are many reasons for a cart abandonment, in other words, and knowing everything there is to know about a customer through a Golden Record allows a brand to respond to each one with the most relevant action.
Create Meaningful Interactions
An important distinction between a personalized experience on one channel vs. true omnichannel personalization in real time is that the latter drives revenue opportunities by creating an end-to-end frictionless experience. A seamless buy online, pick-up in-store (BOPIS) experience, or curbside pickup, are perfect examples of meaningful, omnichannel interactions.
Value is created by serving customers relevant content in real time in the cadence of the journey. In a BOPIS or curbside pickup experience, real-time relevance might manifest itself with a personalized recommendation in the context of the journey, such as an SMS when the customer checks in with an offer on a product complementary to their recent purchase.
Keep Customers Loyal
There is a direct link between customer lifetime value (CLV) and revenue. One study, for example, found that personalization lifts revenue by 10 percent or more and delivers up to eight time the return on marketing spend.
Contextually personalized offers such as open-time email, location-based offers and targeted advertising drive revenue growth by incentivizing return visits and purchases through hyper-relevant interactions at the moment of engagement. Customers at the receiving end of omnichannel personalization understand that a brand values them as an individual customer, not solely on a transactional basis. Mirroring the results of the Dynata survey that link brand loyalty to feeling understood and valued; Gartner estimates that a personalized CX drives 66 percent of customer loyalty, more than price and brand combined.
The financial rewards for digitally mature retailers that meet or exceed customer expectations for an omnichannel, personalized CX are undisputable. Cost avoidance and revenue growth are both achievable for retailers that recognize there are new ways to progress on the maturity curve while delivering the type of personalization that consumers demand. Enterprise alignment around a customer-centric strategy as the core priority for the business delivers long-term loyalty and customer value over time.
