Looking for Sales Growth? Be Relevant to Your Shoppers

Every retailer is looking to increase sales, and there is no better way to do that than by providing savings on products each customer wants to buy. Marketing personalization is proven to increase sales to participating customers by 5% or more. 

Marketing personalization—precision-targeted promotions relevant to the individual customer household—has been a cornerstone of The Kroger Co.’s widely admired customer-centric strategy for more than a decade. I can speak to the power of personalization from my own retail experience, where we routinely saw identical customer household increases of 7% or more in year-over-year spending from customers who participated in our personalized marketing program. Well-known regional retailers are seeing similar results from their programs.

And if you need another reason to pursue marketing personalization, consider this: Shoppers today expect promotional relevancy. They are getting it from Amazon, Kroger and other key retailers. Personalized marketing is rapidly becoming a cost of entry as supermarket industry competition focuses on digital customer engagement and shoppers bypass mass promotions in the same way they fast-forward through irrelevant ads on T.V.

While retailers with loyalty programs have a head start, traditional loyalty is no longer a prerequisite for providing marketing personalization. Leading solutions enable any customer to identify favorite products and build a profile to help in providing relevancy. With the use of AI, even a few transactions can begin to provide powerful insights for personalization.

Related:Many Retailers Are Asking the Wrong Question About Personalized Offers

Extending the Benefits, Evaluating Options

As online sales grow, retailers have customer-identified transactions by default. But they should extend marketing personalization to all customers—not just online shoppers.

Sophisticated marketing personalization is no longer the province of only the largest retailers. There are a growing number of solutions available to retailers of all sizes. The most important things to look for when evaluating solution providers include:

True segment-of-one personalization. Customer segment-based targeting is no longer the most effective approach. The best solutions leverage big data to maintain hundreds of attributes for each individual shopper and apply AI to drive personalization.

Strategic personalization. While giving customers offers on items they frequently purchase does provide some value, leading retailers strategically grow customer share of wallet by communicating a mix of relevant promotions to each shopper: some offers on frequently purchased products to win the shopping trip, and then savings on other relevant products to grow basket size.

Related:Poor Personalization Will Cost You

Omnichannel integration. Many solution providers will state that they are omnichannel, but most solutions provide only an API requiring the retailer to integrate the targeted content into their website, mobile app and email. The best solutions are tightly integrated with web and mobile apps, providing a real-time view to intent: what’s on the shopping list, the digital coupons the customer just clipped, products searched for and so on. This kind of integration requires sophisticated IT resources, and even large regional retailers should look to solution platforms that include this capability.

Vehicles. Create regular communication vehicles that customers look for, such as a weekly personalized ad, a weekly digital coupon email that communicates the most relevant coupons for each customer, etc.

Looking across retailers with effective personalized marketing initiatives, we see these best practices:

Good-quality data. Good product descriptions, accurate pricing and product categorization are key to good personalization.

Large offer pool. Effective personalization is dependent upon having a sizable offer pool to draw from; a minimum of about 500 offers is necessary for effective personalization, and more is better. Many retailers grow frustrated seeking to obtain incremental offers from their brand partners. Instead, they should look to content they already have:

Measure. Measuring the percentage of total weekly sales generated by digitally engaged customers helps retailers close the loop and provides a powerful feedback mechanism.

Drive participation. If participating customers increase spending, doesn’t it follow that retailers should want to grow the number of customers in a personalized marketing program? Promote the program everywhere: in-store signage, the weekly ad, email, website, social media, etc.

Consider this: If customers participating in a personalized marketing program generate a 5% increase in sales, and if those customers account for 10% of total weekly sales, that represents an increase in overall top-line sales of 0.5%. If retailers can drive participation to affect 50% of sales, they can increase overall top-line sales by 2.5%. The best I’ve seen: a retailer impacting over 60% of weekly sales by customers participating in personalized marketing.

The benefit does not stop there. As retailers drive customer digital engagement through personalized marketing, they can intelligently reduce traditional ad flyer print and distribution spending, and even grow gross margin by eliminating wasted mass promotion.

Marketing personalization is transformative for retailers who really understand it. From sales gains to margin increases, in my experience, marketing personalization is the most powerful way to grow your business.