The prevailing sentiment today is that the US is heading into an economic downturn. And while fewer dollars moving through businesses is never easy for retail brands, there is a singular lever they can pull to give themselves the best possible chance of both retaining their customers, and also increasing revenue from their base.
That lever is personalization.
No brainer, you say? Well there’s evidence to suggest that during recessions, customer service takes a big hit. Customer support is often one of the first departments that see layoffs when times get tough, and 56% of customers surveyed by Front agreed that “when the economy slows, customer service deteriorates.” And as a result, less customer service means less personalization across the board.
Unfortunately, reducing the level of service is precisely the opposite of what retail brands should be doing when the economy takes a downturn. Rather, research shows that 86% of buyers will pay more for great customer service. To bolster your brand during recessions, you should double down on personalizing the customer journey more than anything else.
So just how good are your personalization efforts when it comes to your customer relationships? Because as good as you feel your efforts are, they could be better.
Let’s Talk Hyper-Personalization
Yes, it’s exactly what you think it is, but let’s get a proper definition. Hyper-personalization refers to brands providing individual customers customized experiences that are data-driven, delivered at the right time & through the right channels.
Hyper-personalization helps brands engage their customers in more meaningful ways including contextualized communication, curated recommendations, and excellent service.
An example of personalization is an automated product recommendation during check out. Say Lisa is purchasing a sundress online and the algorithm recommends three other similar sundresses in her size to view as well. That’s obviously personalization.
An example of hyper-personalization is a sales associate knowing Lisa well enough to text Lisa a picture of a new product that hasn’t even arrived in store yet saying, “this is coming out next week and I think you’re going to love it!” Of course, Lisa loves it, and texts back to pre-order it.
That is hyper-personalization.
And it works. According to McKinsey, 76% of consumers are more likely to consider purchasing from brands that personalize; and 78% are more likely to make repeat purchases from those companies. The study goes on to say that brands see 40% more revenue from personalized marketing tactics.
So how does your team get started with hyper-personalization?
Hyper-Personalization Starts With Great Customer Data
According to the founder of EcommerceIntelligence, Rayn Turner, brands can master hyper-personalization by increasing engagement levels with customers to fully leverage first-party data.
“The leading brands in ecommerce and SaaS [software as a service] are using extremely advanced levels of personalization. This is made possible because of the granular data they’re collecting from customers and prospects at various stages of the buying cycle,” Turner explained. “For example, an ecommerce retailer selling jewelry could hyper-personalize their marketing and communications both pre-purchase and post-purchase by collecting valuable data from people such as gender, birthdate, jewelry color preferences (e.g., gold, silver, platinum) and style preferences (e.g., necklaces, earrings, anklets, etc.)” - Source
Gathering this data is a combination of developing a personal relationship with your customers, and having a robust CRM platform in place to efficiently capture and organize your first-party customer data into actionable insights.
We’re also stressing “first-party” data because that’s the cleanest and most accurate data on which personalization builds upon. Due to the decline of trustworthy third-party data from social networks, brands have to rely more than ever before on CRM systems that can capture data right from their own website, their ecommerce platforms, and from communications channels such as email and SMS.
Speaking of which…
Hyper-Personalization is Really About Great Communication
When it comes to providing that personalized clienteling experience that drives more sales, the main attraction is in how your brand communicates with your individual customers.
In fact, according to the Front research mentioned earlier, customers value good communication so much that they “prefer waiting twice as long to solve a problem with a human over using a chatbot to solve it in half the time.” To rephrase, even if the chatbot is effective at solving their issue, customers would still rather wait longer and talk to a human. We are social creatures, and that human connection matters a lot more than most retailers think.
What is Your Barrier to Hyper-Personalization?
According to surveys, while most marketing teams understand the value of good communication and better personalization, they cite two main barriers to adopting these tactics.
The top barrier to 64% of respondents was cost. The second to 42% was a lack of visibility and actionable data. Both are legitimate concerns to small and busy retail teams that may not have the resources to put into data analysis.
However, the alternative is falling behind the competition who are increasingly using personalization tools to earn more revenue and loyalty from their customers. Brands should consider the ROI on investing into hyper-personalization tools. Nucleus Research points out that the average ROI on a CRM is $8.71 for every dollar spent. In other words, it’s actually costing your business not to use a CRM.