Beyond brick and mortar: Omnichannel personalisation for retailers

While the focus of personalization efforts has generally been on the online customer journey, in certain industries such as retail, grocery, and hospitality, more than 80 percent of sales occur in a physical location. Better personalization of the offline journey is only part of the answer. The best companies are focused on improving the personalization of both the online and offline journey together.

Barriers to omnichannel personalization

Many companies recognize the need for omnichannel personalization, but a number of reasons keep them from implementing it:

• Adopting large technology investments with distant returns. Personalizing the in-person customer experience requires setting up digital touchpoints (which often do not exist) in places like customer-facing digital screens, kiosks, or tablets for in-store associates to use. In addition, many companies are still working to strengthen the connections between their marketing technologies and on-site systems, such as inventory management, that together enable better omnichannel personalization capabilities. Deploying technology - both hardware and software - can feel like a big investment of time and resources.
• Difficulty delivering seamless customer experiences and training employees. Personalizing the personal customer experience often leads to changes in the flow of the customer journey that, if not done carefully, can detract from the customer experience. The bar is high when it comes to making the physical experience intuitive and easy for customers, such as signing in at a kiosk, downloading and using an app, or providing information to an employee in a live interaction. Frontline employees need to be trained to understand and reinforce the customer value of these new steps.
• Complex organizational and cultural shifts. Omnichannel personalization requires companies to rethink their organizational structure, capabilities, and incentives across digital and physical business units. This transformation is only possible if incentives are aligned with outcomes and measurement is across online and brick-and-mortar channels. However, companies typically operate their digital and physical channels independently, each with its own strategy, goals, and accountability for results. There is little incentive for one channel to support the others. In addition, channel-specific teams have no visibility into what's happening elsewhere, which prevents meaningful collaboration.

Get omnichannel personalisation right

To overcome these obstacles and drive growth, companies should take the following five steps.

1. Define the omnichannel personalization strategy and learning agenda

The best companies have a crystal clear understanding of the key moments of influence in the customer journey, from pre-visit awareness to conversion during the visit to deepening engagement after the visit. They then identify the desired business outcomes for each step of the journey: additional trips, cart size, and/or customer satisfaction. Finally, they prioritize the use cases to test based on their ability to deliver business value and value to the customer. Below are some examples of how companies have successfully done this:

• Driving traffic and pre-visit awareness. Whole Foods wanted to increase brand awareness and drive traffic to its new stores, primarily to attract new customers-a key element of its strategy. The company used geo-targeted notifications to encourage customers who were near a Whole Foods store or a competitor's store to visit. About 5 percent of those who responded to the notification visited a store, which is three times higher than the industry average for one-click conversions.1 Driving traffic to stores through retailers' apps is still a relatively untapped opportunity. In a recent McKinsey analysis in a major U.S. city, less than 25 percent of retailers attempted to drive their engaged app users to the store when they were nearby. Of course, businesses must be extremely careful when using pop-up notifications to avoid message dilution and customer dissatisfaction. Nonetheless, contextualized messaging, when used properly and selectively, will increase in-store traffic.
• Conversion during the visit. McDonald's had identified increasing order volume as a core element of its strategy, leading the chain to integrate the physical and digital worlds in its drive-thru facilities. The drive-thru menu boards were equipped with Decision Engine technology to customize the menu based on time of day, trending items, location and weather. These efforts have simplified the ordering process, increased conversion rates and enlarged the shopping cart by making it easier for customers to find the products they want and purchase additional recommended products.
• Deepening engagement after the visit. Sephora's strategy to grow its customer base led it to make efforts to increase store visits. It sent location-based notifications to mobile app users to remind customers of reasons to visit local stores. These notifications could be tailored to the customer's communication preferences or time since last visit to put the retailer front and center.

2. Address five digital touchpoints to activate personalized experiences in the physical environment.

To achieve omnichannel personalization based on identified use cases, companies need to connect their digital and physical footprints. Companies should focus on five touchpoints where this convergence occurs: mobile app, digital displays, interactive screens, tech-enabled employees, and the point of sale.

By systematically assessing the impact of these touchpoints on consumers, companies can understand customer behavior and develop more effective two-way communication strategies. However, for these interactions to be effective, companies must accurately identify their customers, typically through self-identification or digital identification. Customers can be automatically identified via location tracking on their app or via a wearable device, or via visual recognition (which varies by market due to legal issues), or they can self-identify via a digital screen or in conversation with an employee. The request for self-identification should be as overt as possible, such as asking for an email address or phone number, with the customer receiving a tangible benefit in return, such as a personalized offer, free services such as Wi-Fi or phone top-up, or a promotion. The point of sale also provides a natural opportunity to encourage customers to identify themselves in exchange for incentives, such as linking purchases to a loyalty account or receiving an electronic receipt.

3. Use an omnichannel decision engine to deliver experiences and measure performance.

To accurately and quickly determine the next best action for each customer, businesses need a decision engine that uses artificial intelligence or machine learning. Over time, as the decision engine ingests and adjusts more data about customer behavior and sales metrics, such as store offerings, inventory, and web publications, its business logic improves and the machine becomes more successful at delivering what customers want. Many companies have already laid the foundation for a decisioning engine by investing in marketing platforms and integrating analytics and data into their decision making.

For example, if a customer has chosen to be identified via an app or facial recognition, the decisioning engine can automatically send specific offers or messages as soon as the customer enters a store or other physical location. Even if a customer has not been identified, a decision engine can make real-time decisions based on contextual, location, or shopping cart data. Weather conditions, time of day, buying trends in a particular location, or complementary shopping cart items ("Customers who bought this item also bought ...") are automated through the engine. The more sophisticated the engine becomes, the more testing possibilities become possible. The key is to develop thoughtful tests that allow you to measure both online and offline impact - for example, capturing the journey of a customer who interacts in person with a tech-savvy employee but actually buys after receiving a follow-up email with personalized recommendations.

4. Introduction of agile working methods

The shift to personalized marketing requires more than just better technology; it requires a fundamentally new way of working.

Agile marketing teams, or pods, bring together different functions to work collaboratively to achieve omnichannel personalization goals. They typically include data scientists who measure performance, marketing teams who create test hypotheses, marketing technology experts who help with implementation, and team members who represent offline channels (e.g., touchpoint-specific product managers for mobile apps, kiosks, and interactive screens), field operations managers who lead on training frontline employees, and hardware and software technologists who work on technical solutions. The best agile teams focus on specific consumer segments or journeys (new buyers, buyers returning a product) and work with customers on new services, offerings, and experiences in a process of rapid learning and adaptation.

Assembling this cross-functional team encourages shared ownership of the customer journey, rather than having a single department responsible for each isolated touchpoint. The team then works quickly, developing ideas and hypotheses based on existing data, designing and prioritizing omnichannel personalization tests, executing them, and measuring results across channels to gain insights - all with executive support.

5. Activate omnichannel personalization in the field

Bringing all of these steps together and realizing the full value of omnichannel personalization requires an aligned and trained sales force. Therefore, it is critical that field staff actively support personalization, understand its value, and learn how to leverage digital technology to create a comprehensive omnichannel experience. For example, one retailer provided its in-store staff with a sales support tool on a tablet and targeted training to help them use it to better support customers and upsell products and services. The success was clear: the average order value increased by 5 percent in the test stores.

Training can not be done just once. The best companies provide online and offline training at least quarterly, and supplement it with a culture of continuous feedback to further build skills and ensure that changes last. In addition, the best omnichannel companies ensure that incentives are aligned with key performance indicators, such as number of customers contacted, percentage of customers making a purchase, and additional products sold.

When it comes to personalization, the next digital frontier is in the physical world. Surprising as it may sound, companies that are able to personalize the customer experience across all physical and digital channels (omnichannel personalization) can achieve a 5 to 15 percent increase in revenue across the entire customer base.