Retailers deliver poor personalisation

It’s impossible to escape the increasingly loud talk of personalisation. There is a growing recognition that the massive amounts of customer behavioural data collected from shoppers’ visits to websites represents a significant opportunity for retailers.

If only it was
But the reality is that very few merchants are using the goldmine that largely sits wastefully in their data warehouses. According to data specialists QuBit only 18% of businesses do some form of personalisation strategy. And even this boils down to merely recognising whether the customer is male or female, or which country they are from.

This is embarrassingly basic stuff and hardly scratches the surface of what is possible. It’s stating the obvious to suggest that this is a big mistake in these times when the cost of acquisition of new customers online has risen significantly and conversion rates have fallen dramatically.

Worryingly the need to bring in personalisation will become even more critical as a result of the need for retailers to improve the experience for online shoppers. Graham Cooke, co-founder of QuBit, reckons the web is splitting into two camps.

Firstly, there is utility sales that by 2016 will be 25% of all online sales. These will be handled by the big guns such as Wal-Mart, Amazon and John Lewis. Secondly, there is experiential sales, which will be in the hands of every other retailer who will be fighting it out to grab sales that are not falling into the hands of the utility players.

Among the first retailers to recognise the need to up their game in the experience stakes through improved personalisation are the fashion brands.

But don’t think it is necessarily about one-to-one personalisation because even looking at sizeable groupings of similar types of customers can throw up big insights. At FarFetch up to 40% of its sales come from customers in two segments and they are targeted with specific messages – to great effect.

Looking to take engage with customers more effectively
Improving the experience of customers in the fashion space is increasingly coming down to mixing the retailers’ hard meta data with some element of human interaction. At Dressipi fashion students are employed to ‘tag’ all items in a way that enables a relationship between them to be created.

It also regularly asks questions of its customers to gain feedback such as whether they like particular products or not, which is then fed into the company’s customer database.

When the links between specific items – as at Dressipi – are combined with the existing customer segmentation and the ability to utilise this in the customers’ shopping journey then major progress is being made down the personalisation road.

Ironically, Andrew Robb, COO of FarFetch, says very effective personalisation can be achieved by customers simply using his site’s powerful filtering capabilities but most shoppers simply do not use it – especially women.

Rather than having the customer do the work he says FarFetch would like to do it for them,  hence its work to develop personalisation on its site. This combination of convenience and personalisation will be powerful ingredients in the fight to ensure retailers win in the experience camp and can fend off the threat of the increasingly pervasive utility players.