Getting to know you? Retail’s personalisation problem
How will retailers cope when they discover that customers just won’t do what they’re told?
The end goal of personalisation is predictability. Once retailers know everything about each and every customer, they can build and curate experiences and journeys that deliver a certain outcome.
That’s the plan, at least.
The problem is that the model assumes that customers will act rationally and predictably – but we know they won’t.
First of all, any psychologist will tell you that when consumers go into a store, the part of their brain that is most active is the irrational, emotional half – the part they use to actually decide what to buy. Only closer to the purchase does the other half – the rational part, which looks at the price, performance, warranty, returns policy and so on – take over.
So far, so good. If the retailer knows they have to take the customer from an emotional to a rational state and can provide milestones around their product at each stage of that journey, they should get a sale.
The problem is that the customer then does something silly. They get distracted by something entirely disconnected from what they came in for. They get an attack of guilt before paying. They forget why they came in and lose focus. They get put off by the price, and leave.
These are just some of the obvious reasons – there are plenty more that we don’t yet know enough about. Perhaps one customer is cold while another is too hot, or one is overstimulated, while another can barely stay awake, and so on. And they all act differently as a result.
Once retailers start talking about personalisation, they have to accept that they don’t really know much about their customers at all – other than the 10% or so who buy often and engage deeply. But what of the other 90%, who travel almost invisibly across channels, but may have even more value to offer?
In the new world of segment-of-one marketing, retailers may have plenty of raw data on their customers, but they can’t pinpoint them as they move from channel to channel, or see the journey undertaken – so they can’t react appropriately once the customer actually appears.
Without this knowledge, they’ll end up doing what marketing has done for years – directing the wrong message to the wrong people, at the wrong time.
To work, personalisation needs to be developed in collaboration with the customer. My worry is that many of the tools and technologies currently available are only solving the retailers’ problems, not the customers’.
That’s why personalisation tech isn’t a solution – yet.