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Personalization vs Relevancy

I have been tempted to declare this year the “Year of Retail Relevancy.” Retailers are getting a better picture of customer behavior in their stores, thanks to more technology touchpoints that can capture what consumers are up to, including consumers’ personal devices.Retailers have more data about consumers than ever before, and are (theoretically) getting smarter about using it well. Retailers also understand that while consumers have concerns about privacy and how their data is getting used, they also desire for their favorite retailers to demonstrate that they “know” them.

This last concept, at the surface level, seems contradictory. Actually, I’ve had a lot of complaints from retailers about this contradiction. The conversation goes something like this:

Me: All of our research shows that retail winners are working hard to provide more relevant experiences to individual customers.

Retailer: Yeah, but all our customers tell us that they don’t want us to violate their privacy. So how do we create personalized experiences without getting personal?

Well, that hits on exactly the problem. Personalization does not equate to relevancy. However, done well, relevancy can feel like a personalized experience to a shopper.

Confused? Let me give you some examples.

Personalized Experiences

  1. I walk into a grocery store. A sales clerk hurries up to me and says, “Welcome, Mrs. Baird! We’re so happy to see you today. We noticed that you hadn’t bought cupcakes in a while, so we’d like to give you this coupon for cupcakes!”

    Highly personal, and completely irrelevant. What if I’m there to buy the 3 ingredients I’m missing for dinner tonight? How creepy is it to be greeted personally by someone I don’t know from Adam? What if I haven’t bought cupcakes in a while because I’m on a diet?

  2. A man comes home from work (I have it on good authority that this example has actually happened). His wife is waiting for him, glossy promotional mailer in one clenched fist. She says, “So, we got an offer from the jewelry store today.”

    Husband says, “Oh?”

    Wife says, “Yes, it’s an offer to come in and buy the tennis bracelet that matches the diamond stud earrings we purchased six months ago.”

    Husband, starting to sweat, reaches to loosen his tie and says faintly, “Oh? Really?”

    Wife says, “Yes, I was wondering about those diamond stud earrings because I certainly never got them.” (That would be because the mistress did.)

    Highly personal – just for the, um, wrong person. Which kind of makes it hard to argue that it was relevant.

Now, the interesting thing to me about both of these examples is that they show where a retailer attempted to sell something to a consumer. From the retailer’s point of view, you could argue that they thought they were being helpful – reminding a lapsed customer about a product they obviously loved in the past in one case, and identifying a matching piece of jewelry that the happy couple might love to add to the collection in another case. But in both cases, the retailer took a piece of purchase information with no context and acted on it as if they understood the context. And from the consumer’s perspective, the retailer didn’t try to “help” them out, they just tried to sell them more stuff.

Relevancy

Let me give you one more classic example. My household is a die-hard Coca-Cola household. We have never once, in the fifteen years that I have been married, purchased anything other than Coke. So as a retailer, you might have Pepsi breathing down your neck (and paying you fistfuls of cash) to give me an offer that might tempt me to switch from Coke to Pepsi – to try a new Pepsi line or flavor, something, anything to try to win me away from Coke.

If you approach me through the lens of personalization based on purchase history, but no context to that purchase history, you might be tempted to take the money and deliver me the offer. I may not redeem it, but it doesn’t hurt, right? And if I do redeem it, it’s no skin off the retailer’s back because you sell a product either way. Wrong. And that’s why this is the year of relevancy in retail.

If I have been your customer for, let’s say six years, and in that time I have never once purchased a Pepsi product, what is my perception of you when you hand me that offer for Pepsi? Increasingly it is, “I have given you six years of my grocery business, week in and week out, and you have just given me an offer you know I will never use. Don’t you know anything about me?”

That’s the difference between personalization and relevancy. It’s not about acting in a unique way to unique customer purchase patterns or history. That can, indeed, be personalized. Rather, it’s about context. And context, fortunately, is not unique to individuals. Every day there are hundreds, if not thousands of people walking through the doors of your stores, or visiting your website, operating from the same context. Whether that is looking for dinner or shopping for a gift, or a personal splurge or whatever.

If you approach your customers with only the idea of selling them more stuff, then you’ve already lost the battle – that is the narrow vision of personalization: how can I use their purchase history to sell them more stuff? If instead you approach your customers with the intention of helping them out, whether that yields an immediate sale or not, then you are approaching them through the much broader vision of relevancy. And customers will notice. And keep coming back for more.

Consumers are really starting to keep score – they understand the difference between personalized and relevant. How do you shape up?


About the authorNikki Baird is a Managing Partner at RSR Research, a technology analyst firm specializing in consumer and retailer technology adoption trends. Her retail technology column is syndicated to Blue MauMau.

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About Nikki Baird

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Although Ms. Baird writes on issues for big retailers and company chains, franchisees can learn what is leading edge in retailing trends. These issues will be coming down the pike, if they aren't there already.

Managing Partner of Retail Systems Research, Nikki has led retail research and analysis at RSAG. Forrester Research, Viewlocity,and PwC Consulting, now IBM Global Services. Nikki has an M.B.A. from the University of Texas, Austin and holds a bachelor of arts in political science and Russian, with a minor in physics.

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