To clear the path-to-purchase, companies need to prioritize uncovering consumer experience pain points and the critical moments when they are likeliest to surface.
Businesses across all industries are increasingly aggregating consumer data from smart devices, web platforms, and even in-store interactions, consciously dismantling barriers between channels. The immediate aim of this channel convergence is to deliver curated, highly personalized experiences that remain consistent across all touchpoints. The ultimate goal is to grow sales and boost retention by offering customers precisely what they’re looking for through sophisticated personalization strategies. Here’s a closer look at how the retail and financial services industries are using what they learn through personalization to make the right business decisions.
The Retail Sector Overcomes Legacy Barriers
In a study conducted by artificial intelligence platform Kahuna, 36 percent of marketers still find that personalization is a major challenge. While the ability to narrowly segment demographic groups is increasingly important for companies to make decisions about products and marketing, fewer than 10 percent of top retailers responding to the survey currently feel that their personalization strategies are “highly effective.” Almost half of retailers struggle with the limitations of their legacy technology, and 32 percent simply say that they don’t have the technology available for digital personalization. Meanwhile, more than 48 percent of senior marketers acknowledge that good personalization will improve response rates, increase sales and enhance brand identity.
Despite these impediments, however, many retailers have taken bold steps toward improving their customer experience through targeted communications that make interactions easier. Artificial intelligence (AI) opens up a broad set of opportunities, and some of the biggest legacy names are taking advantage of these.
Focusing on Mobile
As the majority of online interactions shift to handheld devices, retailers who prioritize their mobile apps are reaping benefits. For these forward-thinking retailers, apps generate over 50 percent of mobile revenue. As customers download a store’s app, they input some of their information in order to customize it based on their needs. Touchpoints further within the app enable customers to set more detailed preferences, thus allowing stores to deliver highly targeted content and recommendations. Clothing and accessories retailer Tilly’s saw a 40 percent increase in conversion rate after they added personalized suggestions to their mobile app.
Enriching Consumer Interactions
Macy’s is partnering with IBM Watson to pilot “Macy’s On Call,” a mobile web tool that brings AI into the retail environment. Shoppers at participating locations can input natural language questions regarding each store’s products, facilities, and services. Their questions generate customized responses — all powered by a self-learning system that evolves as it collects more customer data from each location. Among digital incumbents, subscription delivery service Stitch Fix deploys algorithm-based machine learning to generate effective individualized styling recommendations, resulting in more than 80 percent of first-time buyers returning within 90 days to place a second order and a third of its client base dedicating 50 percent of their clothing budget to Stitch Fix.
Taking Cues from Social Media
A leader in dynamic personalization, Nordstrom tracks Pinterest pins to identify specific trending products to promote in its brick-and-mortar stores. As retailers gain new skills aimed at reaching their customers via social media, 80 percent of consumers say that their buying choices are influenced by user-generated social content.
Enhancing In-Store Experiences
Removing barriers between digital and in-person channels, Nordstrom is also trialing an in-store notification digital tool. This tool lets store associates know when a customer who has reserved an item through the mobile app arrives in the store. At that time, the Nordstrom staff can begin preparing a dressing room stocked in advance with the items the customer reserved.
The Financial Services Sector Gains Ground
Compared to retail, the financial services industry has been slower to adopt best-in-class personalization capabilities. A benchmarking report of over 300 banks finds that “there is a clear disconnect between what customers want and banks know they need to provide — more personalization — and what banks are currently able to deliver.” The survey reveals that only 6 percent of banks are observing digital best practices, while the majority (75 percent) are either progressing minimally or not at all. Relative to their retail counterparts, forward-looking banks also tend to prioritize digital personalization for web and mobile touchpoints over enriching brick-and-mortar branch experiences.
In one example of banks effectively meeting customer expectations, BB&T empowers customers to build their own custom digital banking dashboard. Each individual user can select their preferred post-login features from an array of movable “tiles,” including credit card rewards, a mortgage rate tracker and spending categories. Called the “U Platform” and built in-house by BB&T, this personalization feature “is where we think online banking is going,” according to BB&T’s president of community banking. Turkey’s Garanti Bank has made a similar set of flexible preferences available to customers since 2013, and its website promises that “with different menu steps that will make your life easier, performing banking transactions on Internet Banking is now more pleasant.”
Communicating via Messenger and Chatbot
One of the ways institutions can demonstrate that they care about customer preferences is to reach out through social media channels that people already enjoy using. Through its strategic partnership with Facebook, American Express sends recommendations to users based on their Facebook likes and is piloting a Facebook Messenger chatbot that will allow U.S. cardholders to opt into notifications. These notifications deliver information related to balances, benefits, and services linked to recent purchases made within the Messenger app. The customer will be able to conduct a variety of banking transactions without having to leave the Messenger app, further streamlining the end-to-end experience.
Appealing to Emotion
As they gradually recognize that handling money taps into powerful emotions, banks are beginning to provide a warmer customer experience through personalization. They have been slow to arrive at this realization, however; personalizing checks and credit cards with customer-sourced images has traditionally been as far as banks would go in the direction of lending warmth to consumer interactions. Meanwhile, financial startups such as Hip Pocket, Meniga and Simple have found success by embracing the concept of “emotional banking.” Even TurboTax has started to incorporate questions such as “How are you feeling about filing your taxes?” into its routine Q & A process.
Although the in-person experience at banks tends to be much the same as ever, some personalization features are starting to emerge out of ATM interactions. PNC’s is a typical example, enabling customers to set their own ATM preferences. When PNC members put their card into a machine, the machine automatically communicates in their preferred language, gives them a predefined amount of fast cash and sends the transaction receipt to their email account. FTSI is the tech engine used by many banks to power such new ATM features, and they emphasize that personalization can make the ATM interaction 40 percent faster because the customer can bypass repetitive routine questions. Wells Fargo has offered personalized ATM experiences for several years now, focusing on “cash tracker” technology that lets a customer view all their withdrawals for the month on the screen.
Tailoring the Messaging
Beyond performing high-level demographic (e.g. age, gender, location) and behavioral (e.g. browsing activity) segmentation, companies across both industries should aim to capture comprehensive insights from proprietary data. This data can be further refined at a granular level to deliver truly context-aware, targeted personalization campaigns — based on, for instance, insight into spending patterns, household income, credit utilization ratios and more.
A financial services provider can modify messaging to anticipate and address consumer needs: Depending on a customer’s financial situation, for instance, a bank can promote either a mortgage or a personal credit line. Research has also shown that while retail banks are not currently proactively cross-selling wealth management and insurance offerings, 80 percent of consumers would prefer greater personalization for these services.
Additionally, companies should prioritize uncovering consumer experience pain points and the critical moments when they are most likely to surface. For example, when and why are consumers most likely to abandon their digital shopping carts? What factors cause them to leave a credit card application unfinished? Answering such questions will provide insight into how known consumer data can be leveraged to mitigate these sources of friction, clearing the path-to-purchase in the process.
A Word of Caution
While there is strong momentum in the direction of personalized offers, it’s important to remain aware that customers can be ambivalent about this trend. An Adobe survey found that while 71 percent of retail customers say they would enjoy receiving personalized offers, 20 percent state that these offers are not well done. Another 20 percent report that they find some personalization to be intrusive. In banking, there are large swaths of customers who complain about “trying to be sold on products I don’t need or want.” While Wells Fargo may have made the news for excessive upselling, the graph below suggests that other financial institutions also need to keep this potential marketing hazard in mind.
Digital personalization, when handled skillfully, offers ample opportunity to guide decision-making both around marketing spend as well as targeted product launches. Organizations can use the information they glean from personalized interactions not only to identify areas of untapped opportunity but to bring an empathetic, emotionally cogent experience to their customers.