Customer experience personalisation is essential for retailers’ strategies. According to IDC’s predictions, by 2021 nearly 30 per cent of retailers will provide real-time contextual experiences wherein conversational search is empowering, services find customers, content supports sales and consumers monetise their data.
Customer experience personalisation is a key differentiation opportunity, and companies that understand this are already seeing concrete results. Look at Nike: Its digital engagements — the “Reserved for You” campaigns — achieve 40 times higher conversion rates compared to the traditional non-personalised campaigns. eBay is working on striking just the right dialogue tone with its consumers, which is an important milestone for conversational commerce and text commerce. Pizza Hut’s “dealbot” is increasing conversion rates by 35 per cent, while Sephora is capturing data throughout the client journey to personalise future journeys.
Another interesting case is John Lewis & Partners. This UK chain of department stores accelerated its digital transformation program in 2015, when it saw that online sales went up 17 per cent while physical store sales went down. However, the company had been investing in its mobile web and mobile app experiences for some time, making it one of the top mobile-friendly online retailers. The results are clear: John Lewis’s app user customers are more loyal than the non-app users and generate higher levels of repeat business, with an average of nine app visits per user over a 12-week period. Web retail now accounts for a third of its total sales. Sales via smartphones and tablets grew by 84 per cent, while “click and collect” (shop online and collect at store) was up 16 per cent, accounting for about half of online orders.
Neiman Marcus, an American chain of luxury department stores, is another great example of how to succeed where others fail. Launching its iLab in 2012, the chain defined a clear digital strategy focused on customer experience, leveraging technologies such as artificial intelligence (AI), augmented reality (AR) and visual recognition to improve the shopping experience. The most interesting iLab project is around Memory Mirror technology, a dressing room with full-length mirrors with liquid crystal display (LCD) screens, and a high-definition (HD) camera that records short videos, allowing shoppers to see outfits in a 360° view and compare clothing options side-by-side. How did these innovative ideas help? Look at the numbers: Neiman Marcus reported total revenues of $1.48 billion in the second quarter of 2018, an increase of 6.2 per cent compared to the same period in 2017. More importantly, its net earnings were $372.5 million, compared to a net loss of $117.1 million in 2017.
So, how can retailers enable personalisation at scale, moving beyond a “segment of one” towards a dynamic behaviour approach? By adopting a flexible Customer Experience Architecture (Figure 1) that leverages real-time data and advanced analytics capabilities, and supports the dynamic composition of services to deliver contextual experiences.
While the intelligent core based on AI capabilities is the heart of the Customer Experience Architecture model, the levels are its lungs:
- Information level: Enables removing silos and makes the data accessible to a wide audience across the organisation and the partner ecosystem, through an open and decentralised data lake. The information level accelerates data ingestion, understands and governs data; this is a primary step for setting up a “segment of one” strategy.
- Process level: The organisation should be connected on a cultural and operational level so that its processes are aimed at customer experience personalisation at scale. The process level allows retailers to be aligned and consistent with the customer strategy, monitoring the entire customer journey.
- Engagement level: Combining real-time contextual data, insights and action through a dynamic iterative process, the engagement level supports retailers to deliver the most relevant products and services through contextual discovery experiences.
The Customer Experience Architecture model can guide retailers and help them implement an open and extensible customer experience platform to abstract customer interfaces and engagement input (text, image, voice, video, AR), thereby enabling more rapid development of consumer services and more efficient and personalised execution of customer journeys.
Now and in the future, your success as a retailer will depend on your ability to constantly adapt and transform your business model to meet the changing and evolving customer expectations. The customer experience has to be deeply rooted in retailers’ products and services, processes and organisational culture — and in that way become the unique way to do business.