A business student from Switzerland is conducting research into how small to medium businesses are coping with the need to deliver personalised experiences at scale. As part of the research gathering process, the student interviewed Greg Randall to get his views on this crucial business requirement for retail success.
Below are the questions and answers from this interview.
Generally, do you think there is a gap between what customers expect and what SME's (small to medium businesses) deliver? Are customers expecting more and more maybe because of the experiences they are used to from the leaders like Google, Amazon, Netflix and the like? How will this develop in the future?
There is a big gap between what customers expect and what SME’s deliver. To illustrate this further have a look at the two circles below....
The first circle “How Retailer Sells” represents….
- How retailers present products
- How the eCommerce technology behaves in every information gathering and buying scenario represented by a consumer
- How the content on the site influences (or not influences) decision making
- The level of support and support content that is available and aligned to consumer concerns
Essentially, this is how the retailer sells.
The second circle “How Consumers Buy” represents….
- How consumers engage with all forms of content
- The ease in which the technical tools (eCommerce functionality) support the actions the consumer wants to take
- The extent at which the journey is fragmented from beginning to end
- The manner in which a consumer resumes the journey on the same (or different device)
Essentially, this is how the consumer wants to buy.
The greater the alignment between how the retailer sells to how the consumer wants to buy, the greater the conversion rate.
The two circles above show an overlap. This overlap represents those times when the retailer meets the expectation of the consumer, this (of course) results in a purchase.
But as you can see, the global average conversion rate floats between 2.3% to 3%.
This is a symbol as to how far apart retailers are in delivering online experiences that meet the consumer’s expectation. This is also a reflection of the standard of personalisation that is occurring globally.
To ensure we are talking about the same thing, it’s important to unpack the term “personalisation” and delivering “personalised experiences”.
The term “personalisation” has been created by PR firms, Agencies, and marketing teams, the consumer does not sit in front of his/her screen and say, “I want a personalised experience”.
What does personalisation mean to a consumer?
- Consumers want content and eCommerce technology to elegantly work together to deliver all the information he/she needs to fulfill his/her needs and wants regardless of screen type.
- Consumers want to feel they are having a one to one (not one to many) experience with the retailer.
- Consumers want the right content presented to them at the right time in their journey. This is referred to as “value creation”.
- Consumers want to be in full control of their journey.
- Consumers want to be able to start and stop their journey at any given time, and restart their journey where they left off regardless of device type.
To see the detail behind the above 5 points and to learn more on what personalisation means to a consumer, read my research paper on "The 10 principles to creating amazing online experiences".
Point 2 above is important and comes back to your earlier comments on the ability for small retailers delivering personalisation at scale.
Most retailers have the mindset of communicating in a “one to many” approach, not “one to one”. Why? Because this has worked in traditional retail for decades.
Many retailers still do not understand the need to deliver one to one experiences because of their traditional background and more importantly, they don't know what one to one personalised experiences look like.
This is why retailers also utilise email marketing. They don’t realise the one to many approach is flawed.
Though your focus is on SMEs it’s important to have an awareness of the low standard of personalisation occurring with Tier 1 retailers, Banks, Finance, Telco’s and even Amazon to a certain extent.
It’s also important to be careful not to use Amazon as an example of a retailer delivering amazing online experiences. If you were to analyse what Amazon does very well, it’s more about their superior logistics, targeted email marketing, and site (voice) search capability.
In the US, 45% of all consumer’s buying journeys begin within Amazon with a keyword search. This makes Google very nervous.
When it comes to consumers navigating through the Amazon hierarchy, and stepping from one category through to another, the experience is average at best. This is not because Amazon is doing a poor job, but because they are catering to millions of products. It’s never going to be easy to get this right.
This is why Amazon is driving the voice activated search via Alexa so aggressively. With voice activated search comes prescriptive keyword phrases that accurately define intent.
Through leveraging Amazon’s powerful search engine, it takes consumers to a refined selection of products.
This is where Amazon is superior to everyone else and is why Google has created and is aggressively pushing their “Google Home” voice activated product.
Do you think many SMEs in Australia and NZ (and globally) are working towards providing hyper personalised experiences?
All retailers large and small talk a big game when it comes to delivering personalised experiences. They all say they want their business to change and evolve to deliver a high standard of personalisation.
Personalisation is part of every retailer's business strategy. The issue comes when defining the business activities to support this strategy.
It is by far the biggest buzzword in the boardroom and/or at the ownership level (for the SME’s) in this part of the world.
When you walk around the big online retail conferences, the exhibitors (software vendors) talk about how their software, in one way or another, contributes to delivering personalised experiences.
Though everyone is talking about personalisation, only a select few are actually investing and working towards achieving it.
At my best guess based on what I see, it would be less than 5% of retailers are moving in the right direction in building the foundation to deliver personalised experiences.
If retailers are not working towards delivering personalised experiences, what is stopping them? To what extent do SMEs knowledge and attitudes influence the state of implementation?
There are many reasons why retailers are not delivering personalised experiences. Below are the top 8 reasons as to why….
Reason #1 – Retailers don’t know what personalised experiences look like:
This one reason causes a ripple effect that leads to all the other reasons listed below. Retailers do not know what meaningful “one to one” personalised experiences are meant to look like for individual consumers with buying intent.
Even though they can deliver solid in store experiences, they do not know how to translate this into the digital context.
Reason #2 – Retailers trust software solutions:
There are software companies around the world preaching their platform/software delivers “personalised experiences”. Because personalisation is such a scary and unknown thing for a retailer, they trust the software can do it, turn it on and leave it to do its job.
Retailers are constantly looking for the “personalisation silver bullet”. This mystical software or AI that will do all the personalisation heavy lifting for them.
There is no such thing and is why conversion rates remain so low.
In fact the ideal marriage is a mix of software and retailer business intervention working together to create accurate one to one personalised experiences that can scale.
Reason #3 – Retailers put too much trust into “UX Experts”:
Retailers rely heavily on so-called “UX-experts”. These self-proclaimed specialists in user experience may be able to create some nice page layouts, but the issue comes with the retailer philosophy. The business thinks because they employ a "UX Expert" the creation of personalised experiences is being executed.
The retailer then empowers this individual (or individuals) with too much control on this business function. The issue is, to deliver amazing personalised experiences requires many moving parts working in harmony together of which UX is only one.
If you read my research on “The 10 Principles” you will understand UX is merely one piece of the puzzle in creating amazing experiences.
Reason #4 - They don’t know their customer:
For personalised experiences to be effective the retailer must first understand their customer. While this may sound obvious, a large percentage of SME’s have no view of their existing customer and/or their target consumer.
When taking on new clients, the first piece of work I undertake is a series of comprehensive processes to understand their consumer. This is the only way I can repair underperforming digital channels.
Reason #5 – Retailers have insufficient feedback loops:
Retailers are either intentionally or unintentionally blocking the consumers ability to provide feedback on their products and online experiences.
Retailers also make it hard for consumers to reach out to employees when they are “in the buying moment” (online) and have questions needing answers before purchasing.
Employee accessibility is one of the reasons physical retail converts higher than digital retail and is why online chat (or live chat) if used properly, can be a very powerful tool to enhance experiences and provide a sense of personalisation.
Reason #6 - Site analytics is poorly configured:
To truly analyse behavioural data that adds value, requires the site analytics to be configured in a manner that specifically monitors consumer paths and buying/non-buying behaviours. This requires customization of analytical tools.
It is very common to see a poorly configured analytics tool that only captures a superficial layer of consumer behaviour.
This issue is partly due to the lack of knowledge from technology vendors who install Google Analytics (for example), but more importantly, the retailer does not understand their customer, their buying behaviours and motivations.
If retailers had an awareness of these behaviours, they would know what to monitor.
Reason #7 - Absence of individuals who can interpret data:
One of my core competencies is being able to analyse behavioural data, gather insights and use this to drive decision making that leads to improvements to the online channel.
This ability has come from working alongside the top customer experience practitioners in the world plus 15 years’ experience of working with hundreds of retailers around the world, driving change, and measuring the impacts of the change.
The above experiences makes me very unique and sadly for retailers, there are not many individuals like me available in the market.
And because the data can be interpreted in so many ways, it becomes dangerous if left in the wrong hands. The wrong insights lead to the wrong decisions, leading to the wrong activities, leading to poor investment, leading to a poorly performing channel.
Reason #8 - Retailers don’t know how to change:
The act of moving a retailer’s business vision, business culture, business operations and business ways of working (processes) to a business entity that embraces customer centricity is commonly known as a “digital transformation”.
More “digital transformations” fail than succeed for the following reasons:
A. Lack of support from the executive team:
Though “digital transformation” is a very sexy buzzword, in its simplest form, its change. All change management requires support from the top down. If the executive team (or ownership team in SME’s) do not fully embrace and support the change, it will fail.
B. Legacy business architecture:
Older businesses have established business architecture that has been constructed over decades of building a bricks and mortar empower. This has been undertaken without any consideration of digital channels. In fact, these legacy business systems were not built to elegantly interact with consumer facing software such as enterprise eCommerce technology.
The cost and disruption to business operations to either change or update these legacy systems is substantial.
This is why new businesses quickly surpass their more established traditional competitors. There enhanced capability to exchange information from one business system to another gives them advantage and enables them to deliver a higher standard of personalised experiences because they can configure the data more efficiently and effectively.
C. The absence of internal skill sets to lead the change:
“Digital transformation” as mentioned earlier is another term for “change management” but in the digital context. Extensive business studies have shown successful change is more successful when lead by specialist external individuals.
Not only do internal employees become influenced by existing business culture, they don’t have the digital/eCommerce expertise to drive the organisation to the right direction.
D. Engaging with the wrong agency to lead the change:
The danger organisations face is, while they may realise they need an external resource (or vendor) to lead change, they don’t know what good change leaders in digital look like.
Due to this lack of understanding they revert to existing trusted relationships, typically their advertising agency. Due to the agency skill set being shallow and ill-equipped to do this job, a low standard of digital change management results.
The problems, barriers, issues, listed above are common around the world. Though there will be different market dynamics in Australia, I have seen the same issues in the US and UK.
Everyone has the same problems.