Personalization and User Experience is Key to Winning in Retail

McKinsey research shows that personalization most often drives 10 to 15 percent revenue lift.

Introduction

Retailers are always looking for ways to improve the customer experience. To compete in the digital economy, they need to provide personalized experiences that anticipate their customers' needs, wants and preferences. But how do retailers deliver those personalized experiences?

For example, as retailers strive to present more relevant products and offers, they will take advantage of technologies such as natural language processing, virtual assistants and augmented reality to provide personalized experiences that improve the ability to connect with individual customers.

Personalization and user experience are key to winning in retail, but they're not the same thing. Personalization is about understanding an individual's needs, wants and values through data analysis and insight. User experience, or UX, refers to how a customer interacts with your brand—and it can be influenced by many factors outside of personalization.

For example, as retailers strive to present more relevant products and offers, they will take advantage of technologies such as natural language processing (NLP), virtual assistants like Alexa or Google Assistant-powered smart speakers; augmented reality (AR) that allows consumers who search for a product on their mobile devices to see it virtually in front of them; computer vision that identifies objects in real time even if they don't have barcodes; artificial intelligence that predicts future purchases based on previous ones; text analytics software for analyzing unstructured data such as emails sent by customers about their experiences at your store location(s); sentiment analysis which sifts through online reviews posted online sites like Facebook or Yelp to gauge overall public perception about brands/retailers’ performance in areas such as product quality service delivery and more.

Retailers will also use a suite of tools to collect customer data and generate insights at scale.

Retailers will also use a suite of tools to collect customer data and generate insights at scale. These tools range from basic CRM, which is a system for managing customer information, to more advanced analytics solutions that are able to capture the full value of all types of data by analyzing it in real time. This includes a growing number of applications that help retailers understand their customers’ buying habits, preferences, and psychographics (what they like).

Additionally, retailers can gain deeper insights into specific segments through real-time user behavior analysis or even predictive modeling based on machine learning algorithms that analyze historical data as well as what’s happening right now at the POS (Point Of Sale).

Some industries have already made big gains in improving the user experience.

Retailers have made some of the most dramatic strides in improving the customer experience. Consider how Amazon has transformed itself from an online bookstore to a full-fledged retail business, with warehouses, distribution centers and fulfillment centers across the country. It has also developed its own delivery service called Amazon Flex that allows individuals to make money by delivering packages for them.

As part of their efforts to improve customer experience, retailers are now taking steps such as: digitizing all customer service functions; implementing chatbots or virtual agents on websites and apps; creating mobile loyalty programs; using augmented reality games in store displays; offering same-day delivery services; building stores that have become showrooms where customers can test products before they buy them (such as Apple stores); launching subscription-based services like Netflix which provide automatic movie streaming without needing to go online first...to name just a few examples!

The retailer's online store offers a tailored shopping experience in which each customer receives recommendations based on past purchases and customer preference data.

The retailer's online store offers a tailored shopping experience in which each customer receives recommendations based on past purchases and customer preference data. The retailer's online store offers a tailored shopping experience in which each customer receives recommendations based on past purchases and customer preference data.

By applying advanced analytics, retailers can better understand their customers, personalize the customer experience and create a competitive advantage over other digital players.

By applying advanced analytics, retailers can better understand their customers, personalize the customer experience and create a competitive advantage over other digital players. Customer data is at the core of personalization initiatives. This data can be used to identify patterns in behavior that drive business performance and inform decisions on how to optimize it.

Customer insights from an analytics platform help retailers understand their audience’s preferences, motivations and purchasing habits; what they like or dislike about products or services offered by the retailer; how best to communicate with them; and what content resonates most with them – all of which helps deliver a more personalized shopping experience.

Conclusion

The retail industry is undergoing a transformation as digital players like Amazon, Alibaba and JD.com move into the marketplace. Retailers need to adapt to these new competitors by focusing on improving their user experience and deploying advanced analytics tools that enable them to understand their customers better than ever before. By combining these two strategies, retailers can tailor the shopping experience so that it’s more personalized and relevant than ever before—and they can create an edge over other digital players in this space.