Bart Mroz, founder and CEO, Sumo Heavy

Thanks to the internet, today’s customers are more savvy, informed, and discerning in their shopping habits. Having been exposed to world-class user experiences like Amazon, consumers demand equally compelling experiences from other brands. To win their business,   retailers must provide exceptional customer experiences and personalized engagement.

Retailers can provide personalized engagement and increase their profitability by employing data and analytics in a variety of ways—to optimize the user experience, personalize offers, identify customer preferences, minimize cart abandonment, capitalize on real-time opportunities, and manage pricing and inventory.

Unfortunately, many retailers are failing to gather and utilize the data available to them. As Retail Systems Research (RSR) reports,“the processes and technologies retailers are employing to optimize profitability across channels are far away from being truly enabled, let alone optimized.”

Indifference Loses Deals

Customers tune out retailers that present impersonal and irrelevant offers. In an Accenture study,66 percent of consumerssaid they were likely to switch brands if they were treated as a number instead of an individual. Similarly,75 percent of consumersin a Salesforce survey said they were more likely to buy from a retailer that recognizes them by name, recommends options based on past purchases, and knows their purchase history.

To meet customers’ demands, retailers must put in place an omnichannel infrastructure that enables them to deliver personalized and compelling content to consumers at each stage of the customer journey, across each channel and device—web, mobile, and in-store.

Data Makes the Difference

For retailers to present personalized offers to consumers requires gathering and leveraging data effectively. The same online marketplace that is enabling consumers to be more discriminating is enabling retailers to track their movements, monitor their social interactions, and gather a wealth of data that can be used to create comprehensive customer profiles that are the heart of personalization.

Personalization is best achieved by creating a centralized database that contains 360-degree customer profiles. The profile data can include customer attributes such as age, gender, occupation, location, online activities and behaviors, and historical data. To fill any holes, retailers can supplement the customer data they collect with demographic and behavioral data from third-party data brokers like Acxiom, Datalogix, Epsilon, and BlueKai.

Rather than making assumptions about what customers want, retailers can employ modern market research methods, such as establishing communities and deploying chatbots to query consumers and elicit more accurate information.

Analytics and Action

Once comprehensive customer profiles have been created, the data must be analyzed and acted on to yield the benefits of personalization. Easy-to-deploy business analytics based on AI and machine learning are now available in the cloud from IBM, Microsoft, Google, Amazon, Salesforce, Adobe, and other sources.

As the National Retail Federation reports, advanced analytics based on machine learning will revolutionize retail. Likewise, Forrester Researchsees advanced analytics as a key element in optimizing next-generation customer experiences.

Advanced analytics can be employed by retailers to understand customer behavior in order to deliver the most relevant messages and offers. Retailers can analyze campaign performance data to determine what factors produced the most sales.

Real-time event processing systems can analyze consumer clickstreams to determine whether an action should be triggered when a particular interest is detected. For example, customers who indicate they are involved in weddings, graduations, or buying new cars or houses can be offered special deals.

Personalized emails can be triggered in response to website and shopping-cart abandonment, and sales losses can be minimized through retargeting techniques.

Managing Inventory and Pricing

Data can be leveraged in a number of ways to yield major advantages, including inventory and pricing management. Customers who are able to see what is in stock are more likely to do business with a retailer. Because of the value that can be gained by managing inventory, said RSR,retail supply chain management will be the next big thing.

Pricing is another area in which data management can make a big difference. As Accenture notes, there are few data-driven approaches that can have such a direct and significant impact on a retailer’s profitability as dynamic pricing. Until recently, the systems that enable dynamic pricing have been expensive and complex, but retailers today can employ third-party re-pricers that make it easy to update prices with the click of a button.

Data also can be leveraged by retailers to optimize user experiences. User sessions can be captured by solutions such as Glassbox and IBM TeaLeaf, enabling retailers to analyze the way users interact with mobile interfaces. Any poorly designed feature or navigational bottleneck can be identified and corrected.

Among the data-driven technologies retailers can employ to increase conversions are the new breed of personalization, recommendation, and negotiating engines like Personali, Dynamic Yield, Segmentify, Chaordic, and Nosto. These solutions detect when a consumer is leaving and engage them with offers and dialogues. Retailers also can present pop-ups to collect emails from shoppers using software such as MaxTraffic, OptiMonk, Sleeknote, Sumome, and OptinMonster.

Embrace New Opportunities

The fast-evolving market continues to spawn new technologies and data sources that retailers can embrace to obtain competitive advantages. A McKinsey studyfound that the Internet of Things (IoT) will offer big opportunities for retailers. The data emitted by IoT sensors, for example, will enable retailers to track real-time shopping behaviors and send tailored offers to customers.

The prospects for a big payoff are real for retailers that embrace the data-driven personalization tools and techniques that are available. Forrester Research found that customer experience leaders enjoyed a 14 percent higher compound average revenue growth than customer experience laggards over a five-year period. Retailers that are able to capitalize on the data-driven opportunities will be able to delight their customers and outpace their competitors.

Sumo Heavy is a digital commerce consulting and strategy firm.