Customer Centricity for Brick-and-Mortar. A new face of Hyper-Personalization

Hyper-Personalization is nothing new. Digital-first companies like Netflix, Spotify, Facebook, and LinkedIn, have been pushing the envelope of customer engagement and keeping the user engaged. Their drive to tailor the experiences to user preferences and behavior has increased customer loyalty and satisfaction. With strong competition where the customer time on these platforms is the key driver and any distraction from engagement leads to lost revenue, these companies are enhancing their products and services by actively using data, analytics, and artificial intelligence to gain insights and create or expand business products. As a result, these digital-first companies constantly reinvent their products and services to foster deep connections with their customers, anticipating their needs and preferences before they even express them.

The idea is pretty straightforward. Make your product tailored to individuals, and consider every customer unique—no two customers are alike, and providing them experience based on their unique behavioral persona will foster expanded lifetime customer experience. Technology like Artificial Intelligence, Machine Learning, and Deep Learning is employed by these sites to cipher through consumers’ likes, dislikes, interactions, and other related items to provide an experience that is unique to an individual. We as consumers must understand that we are being observed and analyzed (digitally in this case), for the system to provide this individualized experience. In other words, we are trading privacy for Hyper-Personalization.

While this behavior is quite common with digital-first companies, traditional businesses are trying to catch up to this changing customer behavior and expectations. Interestingly, more than half of us are very comfortable trading digital privacy for some "real or perceived" value. In a study "State of Connected Customer",?authors found out that customers are anticipating the use of this framework by most companies and expect that by 2020 most companies will “anticipate their needs and make relevant suggestions even before they make contact to these businesses.” Similar observations were made in a report "What is the Future of Data Sharing" published by a collaborative effort between Columbia Business School and AIMIA; where authors observed that younger generations and trust in a brand have a positive impact on individuals’ willingness to share data with the hope and desire of getting some value in return. While data sharing is becoming more and more common in younger generations, they are also becoming more tech-savvy in terms of setting their profiles.

If your company is not looking into Hyper-Personalization as a key strategic tenant of their customer strategy, you may risk falling behind competitors who are leveraging data insights to create tailored experiences that resonate with consumers on a personal level. McKinsey in their article "Marketing's Holy Grail: Digital personalization at scale" discusses the value of Hyper-Personalization in detail. The article claims that personalization "enhances customer's lives and increases engagement and loyalty" and has a direct impact on the bottom line of the company by influencing revenue increase by 5-15%, decreasing acquisition costs by as much as 50%, and improving marketing efficiency by 10-30%. What started with the digital-content and social-media-based entities is now actively employed by companies with physical products. More digitally savvy companies belonging to retail, consumer goods manufacturers, consumer electronics manufacturers, and automotive industry sectors are leading the charge of Hyper-Personalization. The solution journey for these entities is much more complex and engrossing and requires a change in business processes as well as culture, alongside technology advancements.

Here is an example of a hyper-personalized persona for a retail operation with a pharmacy footprint:

Technically, Hyper-Personalization requires an architectural framework that needs to be based on open standards and open architectural principles. Foundational pieces of this architecture include a data management layer, AI and ML capabilities, and a SOA/API-based integration layer. Here are some of the practical steps that a company can take to achieve the goals of Hyper-Personalization:

1. Invest in robust data analytics tools to gather and analyze consumer behavior, preferences, and feedback effectively.
2. Focus on a customer segmentation strategy that will tailor marketing to ensure messages resonate with specific audiences based on their characteristics and needs.
3. Foster a culture of continuous improvement by regularly reviewing and refining personalization strategies based on customer feedback and changing market dynamics, ensuring that the approach remains relevant and effective over time.
4. Manage Structured and Unstructured Data as Foundations for Hyper-Personalization. Integrate and consolidate data into a Data Lake based on Big Data technologies with the ability to process all types of datasets. Sources of information would be internal and external, including social media data and competitors’ data assets.
5. Implement real-time data processing and integration architecture to incorporate timely actionable intelligence into operations using technology like API connect or SOA-based integration layer.
6. Leverage AI and ML Foundation to analyze, synthesize, and evaluate the data to make actionable real-time hyper-personalized recommendations.
7. Incorporate hyper-personalization across all customer interaction channels.

Adopting hyper-personalization involves reimagining traditional business domains:

• Marketing: Design campaigns with individualized content and timing.
• Sales: Equip sales teams with real-time insights to improve customer interactions.
• Customer Support: Provide tailored resolutions based on prior interactions.
• Product Design & Delivery: Co-create products with customers using behavioral data insights.

With a comprehensive hyper-personalization strategy, brick-and-mortar companies can realize tangible business benefits:

• Increased Revenue: Targeted recommendations drive higher conversion rates.
• Enhanced Customer Loyalty: Tailored experiences foster trust and repeat business.
• Operational Efficiency: Data-driven insights reduce waste and improve ROI.
• Competitive Differentiation: Brands that master hyper-personalization will stand out in crowded markets.

In conclusion, companies must embrace data and AI as the backbone of their customer strategy and customerengagement, overcoming the limitation of their traditional business process boundaries, to offer an experience that feels personal in a way that had not been possible in the brick-and-mortar landscape. The idea that your business is unique and does not have the same type of innovation that digital-first companies have shown will lead to the demise of your existence. In this new world of hyper-personalization, all businesses are digital-first now and there is no bric-and-mortar-only operation.