Customers have never had it so good. The choice of consumer goods is growing, retail is wooing them with zeal and competition is driving prices down. Retailers and Consumer Goods (CG) companies, unable to keep pace with changing customer behavior are seeking out new digital channels - channels that are helping them go global and expand their reach. They want to tap into new markets and new customers emerging across the world. Today, China is now seeing a boom in washing machines (up from 1% of rural households in 2000 to 16% in 2012) and is also witness to a growth in laundry detergents; India's growing middle class is pushing demand for food products, a segment that is forecasted to grow by 20% each year between 2013 and 2016; South Africa is demonstrating a growing taste in expensive beverages that are likely to see a 8.8% growth; Turkey is consuming more sun screen; and the UK wants more chocolates. How do you win these customers before the competition does? The key is to understand the customer and then deliver products and services based on individual needs. In the retail and CG industries, personalization and customization are the winning mantras for 2013.
How does the industry figure out its customers, what's on their minds and what will make them loosen their purse strings? And all this in an environment of increased customer expectations? One approach is based on segmenting customers and divining their needs using data. The data, a mix of personal profile, historic data, real-time events, loyalty programs, social interaction, online behavior and presence is leveraged to drive predictive analytics and customer insights. Using smart technology, retailers and CG companies are optimizing their marketing mix, driving channels and redefining customer relationships through a better, deeper and closer understanding of their customers.
The outcome of mixing and churning this vast ocean of data is showing results. Real time personalized offers based around events in the customer's life (graduation, marriage, parental responsibilities, promotions, change in work place, vacations, etc.), differential pricing, location based marketing (offers made over smart phones through deals and coupons driven by customer location using GPS data), increased rewards and so on have been improving conversions.
Personalization is not new. Retailers like Amazon have been nudging their customers for more than a decade towards positive purchase decisions by matching customer data to recommendations. It is almost as if Amazon knows its customers intimately, and is able to create a mom-and-pop store experience. Not surprisingly, the 11th Annual e-tailing group Merchant Survey showed that 48% of those surveyed planned to improve website performance through personalization. This can mean only one thing: the race to create deep customer memory is well and truly underway. To win the race, retailers and CG companies must hold hands with competent and experienced technology partners - that way, it gets easier to put your arms around the problem.