Retailers tailor promotions, websites for you — just you
Customized offers based on shoppers’ data
After years of using customer data to fine-tune their marketing efforts to smaller and smaller groups, retailers now are making a massive and expensive effort to tailor their websites and promotions for an even narrower target: an audience of one.
Retailers and experts say the industry is in the early stages of a push toward personalization, in which individual shoppers have different experiences on retailers’ websites and receive highly customized e-mails, coupons and special offers. CVS pharmacy, for example, might e-mail a shopper about allergy medication based on weather conditions in their geographic location.
At luxe department store Barneys New York, shoppers who have browsed a collection from Italian designer Marcelo Burlon are likely to see a version of the Barneys website that prominently features clothes from like-minded designer Russell Westbrook.
Personalization might not sound cutting edge if you’ve ever browsed for a sundress on your favorite
retailer’s website, only to have ads for that same sundress chase you around the Internet for days. But the technology retailers are using now is much more sophisticated: They are studying a wider range of activities — not just the last websites you visited — but also whether you opened or clicked on their e-mails, read a company blog post or previously redeemed a certain kind of coupon.
“For 1 million users, we want to have 1 million different site experiences,” said Matthew Woolsey, Barneys’ executive vice president for digital.
In March, Barneys rolled out a new website in which nearly every page — the homepage, category pages and individual product pages — features personalized content based on data from both a shopper’s in-store purchasing and online browsing behavior.
This combined analysis of in-store and online patterns is particularly leading edge, industry experts said, as many retailers are still struggling to funnel these data sets together.
Woolsey said the unified data can have powerful results. For example, Barneys has learned that many of the women who buy fine jewelry in its stores previously have browsed for it online. If Barneys purely looked at these shoppers’ Web browsing history, Woolsey said they might deduce, “She’s never buying anything, so let’s try something else.”
In fact, by looking at this shopper’s behavior across channels, Barneys learns it is indeed valuable to keep showing her digital jewelry lookbooks: She’s interested in the products, she’s just closing the deal in person.
Zulily, the flash sales site, said the key to its personalization algorithms is learning about the customer over time, rather than simply looking at recent activity.
“We don’t like to shift preferences too quickly,” said Mike Errecart, the company’s director of software engineering, since a click or two on an item outside your comfort zone might not be a good reflection of your brand and price preferences.
The exception to that rule, Errecart said, is on maternity purchases. Since pregnancy is inherently short-term, the algorithm gets tweaked.
“We weight your most recent interactions more heavily and decrease weight of older interactions,” Errecart said.
As retailers invest in personalization, they are closely watching how consumers respond to these new tactics, which experts say can quickly go from cool to creepy. The results of a recent study from consulting firm Accenture captures the challenge retailers face: While 60 percent of shoppers said they want retailers to serve them real-time promotions and offers, only 20 percent of customers want those stores to know their current location. In other words, it appears shoppers are uncertain about exactly what kind of data they want to turn over to retailers.
Experts say that consumers, especially millennials, are generally willing to provide information to retailers if it’s being used in a way that generates value for them. (Think of this as the Google Maps principle: People are willing to give their location to Google when using this app, because, in exchange, they’ll get accurate directions that simplify their travel.)
Marcie Merriman, a consumer-engagement consultant at Ernst & Young, said some nascent personalization strategies have struggled because they’re too simplistic. “It’s not based on understanding what’s missing in the consumer’s life,” Merriman said.
That’s why retailers such as CVS also are paying attention to what you’re not buying at their stores. CVS’s personalization efforts are centered around its ExtraCare program, which was used by more than 90.8 million households in the last year. Even if you haven’t bought vitamins or toothpaste there in a long time, their data may still determine you’re a good candidate for a coupon for those products.
“Sometimes they may not realize we carry some of their other favorite items, or that we may have a special that week on a type of product they would normally pick up elsewhere,” said Melissa Studzinski, CVS’s vice president of customer relationship management, in an e-mail.