How to personalize your approach in the era of consumer privacy

CLIENTELING WITHOUTCREEPINESS

Despite sweeping interest in clienteling, the retail industry has struggled to explain it in a meaningful way. We describe clienteling as the cultivation of a personal, mutually valuable relationship with customers, on the customers’ terms. This relationship provides the type of information and insights that allow retailers to better understand needs, motivations and desires at the individual level, and allows them to deliver a collection of services that take into account personal preferences, lifestyle interests, history, and stage in the path to purchase.

These customer and context-specific activities provide shoppers with uniquely tailored experiences to meet their immediate purchase goals, increase the likelihood of purchase and help to build sustained customer satisfaction and enduring relationships. In an age where customer loyalty is eroding, true personalization is at the heart of effective clienteling.

What is CLIENTELING?

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Personalization is widely seen as the Holy Grail of effective marketing and retail. Thirty-one percent of marketers polled by L2 stated personalization as their top priority in 2015, a commitment supported by the creation of new roles like ‘VP Personalization’ and ‘Director of Styling and Algorithms’ at high profile retailers.

These executives’ focus is the creation of an individualized customer journey and, in what might first seem counter-intuitive, companies are looking for ways to use technology to create more personal and individual connections with customers. They realize the power of customized, relevant experiences to increase customer loyalty and drive incremental sales.

According to Adobe’s Digital Marketing Optimization Study, retailers with high-performance personalization capabilities boast 1.7 times the conversion rate as those without, and wind up 26% more profitable. This is why the promise of clienteling combined with personalization has so much appeal.

Why does PERSONALIZATION MATTER?

31% of marketers polled by L2 stated personalization as their top priority in 2015

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What are the CHALLENGES?

THESE CHALLENGES BECOME EVEN MORE COMPLEX WHEN WE CONSIDER THAT:

• People don’t like being “sold to” aggressively - the majority of shoppers prefer to consult their own devices or kiosks instead of talking to a sales associate [Deloitte, The Digital Divide 2013]

• Shoppers have concerns about privacy and identity theft, and are hesitant to share personal information without a clear benefit

• In some parts of the world, particularly Europe and Canada, government regulations are becoming more and more strict about the collection and use of customer data

A standard tool to power all of the elements that make up effective clienteling does not exist. To think of all the capabilities needed to deliver effective clienteling, it helps to think of the skills and knowledge possessed by the trusted shopkeepers of yesteryear, or the most exclusive personal shoppers of today: a clear understanding of an individual’s personal tastes, styles and preferences; familiarity with the people in their family and other important connections; knowledge of important personal milestones; an understanding of the best ways and times to reach someone; the skill to make personal recommendations based on the combination of all these factors … and a personal touch that makes each customer feel valued as a unique individual. This is a tall order for any system, and is unlikely to be found in any single “out of the box” package. Although there may be some common components in a baseline platform, retailers can’t rely on a commoditized tool to create unique experiences. Clienteling tools need to be tailored to both the customer’s taste and to the retailer’s unique brand.

Given what it takes to provide a truly personal and customized shopping experience, shoppers who want to remain anonymous provide another challenge. This is especially true in a brick and mortar setting, where retailers do not have immediate access to the transaction and search history typically available with an online purchase.

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Retailers benefit from additional gains beyond increased engagement and sales. By collecting shopper input, retailers can begin to understand why shoppers shop the way they do, where they are most likely to take action, who they are and how they use their merchandise.

These insights are invaluable across the value chain:

Merchandising teams can conduct closed-loop merchandising reducing the need for mark-downs

Marketing can identify new target markets and deliver more effective messages

Store Operations can improve visual merchandising to better reflect customers’ expectations

Store associates will remain a vital asset in the collection process, and in the management of the ongoing relationship once customers choose to share information about themselves. They will play multiple roles, serving as field researchers, brand advocates and trusted advisors. Clienteling tools enable them to fill these roles more effectively and consistently, and will give them the new role of customer information curator.

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Beyond ENGAGEMENT

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What does it take TO SUCCEED?Retailers can create tailored experiences without obliterating customer privacy or becoming caught in the thickets of privacy challenges by focusing on three areas: Collect, Connect and Protect.

Understanding customers is the first step in creating a personalized experience. Online, this is relatively straightforward. We can use clickstream data, recently viewed items and other browsing or purchase information to make an informed guess about what the customer will love, and deliver a tailored suggestion or offer. This task becomes more difficult in a store setting, where clickstream data and cookies aren’t available. And then, many retailers make the mistake of asking customers for their valuable information without making clear the benefit to the customer. Shoppers are left wondering “What’s in it for me?”

However, retailers can begin to put together a rich understanding of shoppers by creating interactions and experiences that demonstrate the value of sharing information in an engaging and non-threatening way. More personal engagement and relationship-building starts with delivering an enticing experience to anonymous shoppers, then gaining permission to learn who they are if they choose to share.

the customer will love, and deliver a tailored suggestion

COLLECT, CONNECT

andPROTECT

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Collect Insights to DELIVER PERSONALIZED SERVICE

COLLECT

CONNECT

PROTECT

Consider a typical store visit. Shoppers enter a physical or online store with a goal in mind. They might just want to browse, or be hell-bent on finding the right brown leather jacket, or be in desperate need of information to complete their latest home renovation project. In a physical store, a sales associate typically greets the shopper and offers to help. Already, the sales associate gains a few valuable pieces of information – the shopper’s objective, the customer’s physical attributes and, in the case of clothing, an indication of the shopper’s personal style. Without knowing the identity of the shopper, the sales associate can begin to provide valuable assistance to achieve that shopper’s objective based on their merchandise and customer knowledge. This is a prime example of capitalizing on contextual information, without personally identifiable data, to deliver a personalized experience. In effect, this is manual, in-the-moment, anonymous analytics.

Clienteling tools with personalization software that mimic the role of a personal shopper are a powerful way to provide a personal touch to a store visit. Consider how this might work in the context of shopping for clothes, one of the most personal shopping missions. The tools could take any number of forms, depending on the retailer’s context. For example customers could assist themselves by taking a brief interactive quiz on a smart mirror or tablet, or a sales associate could take them through an app on their mobile phone to generate the best suggestions for the customer’s body type.

By demonstrating how input is directly used to help the customer meet his or her needs, the retailer encourages the customer to provide more information. By sharing information on what styles they like, what specific items they find attractive and where they might want to wear it, customers can get more refined recommendations of clothing that might work for them. Retailers in turn can use this information to suggest not only individual items, but also combinations or complete outfits. Now, in addition to providing a value-added service for the customer, the sales associate is empowered and the retailer may also have an opportunity to increase the overall transaction value for that interaction.

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OPPORTUNITIES FORINTERACTION BASED INPUT

Self Service In StoreCustomers could use smart mirrors, tablets and other connected devices to volunteer information for personalized suggestions. For example, a simple style quiz could generate the best items to try on and have them sent into the fitting room or a do it yourself project generator could make recommendations on fixtures and fittings for a room renovation project.

Assisted Selling In StoreStore associates could use devices containing attribute information on all the products in inventory to capture customer preferences and requirements to make more targeted solutions. Augmenting the associates’ product knowledge and combining it with additional insights volunteered by the customer would allow them to be more effective personal advisors.

Shopping OnlineCustomers could complete a quick online quiz to help define what their immediate needs in order to present the best information, e.g., whether they are shopping for an individual sofa or furnishing their entire living room. Rather than providing generic recommendations, this is about catering to individual shopping scenarios.

MobileMobile devices could be used to provide customers with access to relevant information that is not available at that point in time for the customer. e.g. bringing up digital wardrobe of clothes a customer already owns when they are in-store, or matching store items when they are at home. Providing access to past purchases creates the additional context that provides a better informed perspective from which to shop.

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Connect to Deliver A PERSONALIZED EXPERIENCEEffective clienteling solutions move beyond collecting and sharing information. A well-designed solution is designed to be practical and enjoyable for both associates and customers, in order to create and reinforce a deep brand connection. The information that is captured must be used in ways that help to reinforce the brand relationship. It is not enough to know a customer’s tastes, history and habits. This information must be acted on in a way that seems natural and unobtrusive if a retailer wants to earn the right to be a customer’s trusted advisor.

This means using analytics and workflows to prompt actions that will be of most valueto a customer, whether they are on the shop floor or elsewhere. Imagine the power of knowing exactly when to contact a customer with merchandise that might be interesting to them when new inventory arrives, or suggesting just the right items when a customer is approaching an important milestone like a birthday, anniversary or graduation. These communications become even more powerful if a sales associate is able to pull together carefully curated recommendations that are based on a deeper understanding of the individual customer. Next generation clienteling tools need to provide information on customers’ communication preferences, and have the types of workflow and notifications that prompt associates to take action at the right time. Combining this with customer analytics and machine learning to refine communications and recommendations based on actual customer behavior, provides a compelling value proposition all round.

Though retailers have typically viewed clienteling tools exclusively as sales associate support tools, there are also many new opportunities to make them part of an interactive customer partnership. Combining clienteling solutions with investments in the Internet of Things, including RFID, digital signage and smart fitting rooms allows retailers to interact with customers in new contextually-relevant ways. Retailers can create interactions based on the merchandise customers are considering, without requiring the retailer to know who they are. Even without identifying the customer, this sort of high-touch in store experience can create the type of delight that keeps customers coming back.

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Gamification is a great way to encourage use – this can create an enjoyable experience that meets customers where they are and guides them down a path that entices them to engage with the retailer. The experience should be designed to convert anonymous (and potentially suspicious) shoppers into trusting customers, by encouraging them to identify themselves and provide additional information along the way in exchange for additional benefits at each step.

Connecting through the effective use of next generation clienteling solutions can help to build loyalty in several interesting ways:

Letting customers design their own journey. Almost half of all shoppers prefer self-service over speaking to associates. Give both customers and associates the right tools across devices to allow shoppers to experience the brand on their own terms. They might want to linger and do extensive research online and in store, or checkout as quickly as possible. Either way, brands must cater to highly individualized shopping preferences.

Determining what customers value most and rewarding them with uniquely personal rewards tailored to their interests. If someone is always first in line for the new seasonal collections, why not provide her with invitations to sneak previews? If she defines her personal style as urban trendy, how about a pair of tickets to the latest hot club opening?

Demonstrating continuous value based on the information a customer shares, making interactions, recommendations and offers increasingly relevant. Developing an integrated, contextual view of the customer provides a logical way to embed the right behavioral cues and triggers to encourage desired behavior and increase conversion. Once customers see that the information they provide is used to deliver a visibly more personalized shopping experience, they are more willing to share more information.

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WHAT MIGHT THIS LOOK LIKE IN THE REAL WORLD? IMAGINE HOW A SALES ASSOCIATE AND CUSTOMER WORKING TOGETHER MIGHT CREATE AN ENGAGING, MUTUALLY VALUE-CREATING INTERACTION BROUGHT TO LIFE WITH TECHNOLOGY:

Under this scenario, the retailer is able to deliver a personal experience without the “creepy factor,” and the shopper is able to get the benefits and remain in control.

Solutions that allow anonymous shoppers to store their input, with the understanding that it will enable them to receive even more enhanced levels of service in the future, may be enough to (1) convert non-loyal customers; (2) prompt loyal customers to identify themselves so their activity can be captured; (3) allow uncommitted customers to decide not to store information, but encourage them to return anyway, because of the higher level of service.

A prospective customer Marie is browsing ladies’ wear. She is looking for some outfits to

refresh her fall wardrobe.

Seeing her with a blouse in her hand, Gloria, the sales associate, approaches to help her. Marie explains that she is looking for some smart outfits for work.

Gloria scans the bar code for the blouse and selects a shopping occasion “Work formal” to

show Marie a complete outfit including other items that will go with the blouse.Using the app, Gloria helps

Marie complete a short, fun quiz to get a better understanding of her personal style and her most

typical activities. With this information, Gloria demonstrates the blouse’s versatility, showing Marie even more options

for various ways to complement the blouse. She creates a personal Look Book, just for Marie.

Marie loves the various looks and decides to buy the blouse, a jacket and some of the other items.

Gloria asks if Marie would like to create a profile to store her style profile and a wish list of items she liked but chose not to buy today. She creates a profile by asking for only two pieces of personal information.

Following her visit, Marie receives an email with her recent purchases, her wish

list and recommendations of other items that would complement her new clothes.

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VALUE EXCHANGE“I’m offering something of value – the way that you the customer defines value.” This point demonstrates transparency. – WHY we ask for information and HOW you will benefit.

CHOICE“You choose how your data will be used.” Customers have the option to determine whether they value the anticipated benefits enough to share their personal data.DATA SECURITY

“Your data is safe with us.”Customers feel secure that their data is being protected and managed with the highest security standards.

Protect toMAINTAIN TRUSTTrust is delicate. In an age where customers understand the value of personal data and fear privacy breaches, earning that trust can be challenging. The barrier to data collection is particularly high in stores, where sharing personal information requires a conscious act from the customer. The situation becomes even more complex in places like Canada and Europe, where collection and use of Personally Identifiable Information (PII) is restricted without explicit consent.

BUILDING TRUST:3 Pronged Approach

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Retailers must find approaches to personalization that work for both known and unknown customers. Engagement-based shopping solutions that can store a customer’s profile toward the end of the Interaction, help gain shoppers’ trust by first delivering value, e.g. personalized recommendations tailored to the input they provide. This also puts the power in the customers’ hands. They get to decide whether, when and how to share information. At each stage of the process, they can determine how much information they are willing to share. Collecting data in these ways is valuable for getting customers to consent to collection and future use of their data.

Of other critical importance is to be scrupulous in the protection of customer data. With one spectacular data breach after another making news, customers have every right to be concerned. Appropriate levels of encryption and security are the obvious first step. Another option is for retailers to collect just the information that is relevant and useful for specific transactions, and design that into their business and technology solutions.

Explaining how data will be used in plain English goes a long way too. For example, a retailer could explain that it is asking for a customer’s children’s date of birth in order to make better age appropriate recommendations of toys or clothes, which will evolve over time as the child grows up. Or remember that search for the perfect leather jacket? Customers may even be willing to share something as personal as their body shape or personal style if they can actually see that it results in different recommendations for the type of jacket that best suits them.

And finally, skip the legalese. Shoppers want to know in plain terms what an organization will do with their data.

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Today’s customers are more demanding, more savvy – and more suspicious – than ever. A study from Motorola revealed that 54% of customers don’t want to be identified in-store, so brands need to think differently about the way they approach personalization. Effective clienteling builds trust and demonstrates the value needed to create enduring customer relationships.

We encourage retailers to think about the capabilities that it takes to deliver powerful personalization and clienteling without creepiness.

These are an essential part of our pillars of modern retail.

Enabling an integrated, unified view of the customer

Providing real-time visibility to unique product attributes and data

Facilitating fluid, secure commercial transactions

Enabling a holistic, seamless view of inventory across the supply chain

Creating a more adaptable technical architecture to support rapid change and innovation

FEDERATED “ME”: PRODUCT INSIGHT: SEAMLESS COMMERCE:

UNIFIED INVENTORY: PLATFORM FOR GROWTH:

BUSINESS MODELINNOVATION

PLATFORM FOR GROWTH

FEDERATED “ME”

PRODUCT INSIGHT

SEAMLESS COMMERCE

UNIFIED INVENTORY

CUSTOMER LOYALTY

WHAT’S NEXT?

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ABOUT

the authorsDianne InnissCustomer Experience and Innovation Strategist, ThoughtWorks Retail

Dianne is a member of the ThoughtWorks North America Retail team. She partners with clients to design meaningful customer experiences and deliver digitally-enabled solutions that create shared value for retailers and their customers. By helping clients to craft solutions that integrate front and back end-technologies, and embed the necessary

process and organizational design changes, she positions them to generate customer delight, drive sustainable growth and increase profitability.

ABOUT

ThoughtWorks is rethinking retail. We take a customer-centric approach in delivering digital business transformation and unique unified customer experiences. Our retail team accelerates ideas to outcomes, driving differentiation to boost your brand. We use agile and lean principles to better leverage technology as part of business strategies that help retailers respond faster to market conditions, ensuring rapid time-to-value.

ABOUT SHOPTELLIGENCEShoptelligence is a Unified Commerce personalization engine offering dynamic ensemble recommendations using artificial intelligence, enriched product data and consumer engagement. Empowering consumers and sales associates alike, Shoptelligence just jolted the shopping journey with a sophisticated “digital smart shopping assistant” in the cloud enabling retailers to now personalize the shopping experience without getting too personal.

Copyright © 2015 ThoughtWorks, Inc. All rights reserved

Laura KhouryCEO, Shoptelligence

Laura is a versatile and seasoned business strategy and analytics leader whose primary focus is coupling deep business acumen with advanced data and analytics and innovative technologies to deliver new growth opportunities. She brings over 15 years of experience in retail strategy and technology helping large companies improve customer facing processes, design B2B and B2C applications incorporating analytical

engines to enhanced customer loyalty and grow profitability.

LET’S CONNECTContact us at retail@thoughtworks.com to learn more about how you can deliver differentiated customer experiences in ways that are both personal and practical.