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Up close and personal

Becoming familiar with customers builds lasting loyalty.

February 12, 2008

This article originally published in Retail Customer Experience magazine, Mar. 2008.Click hereto download a free PDF version.

 

When you walk into your favorite coffee shop, the cheery woman behind the counter greets you by name. "Do you want the regular?" she asks. "Sure," you say.

 

"I put in a shot of sugar-free hazelnut, the way you like it," she says.

 

That's every customer's dream of a retail transaction. The store knows your name, what you want and makes your life just a little bit easier.

 

While that level of personalized experience seems simple in a coffee shop, scaling it to a big-box retailer, with hundreds of employees and thousands of customers a day, is a different story.

 

Sure, technology can create the feeling of personalization through loyalty cards, couponing, gift registries and so on. But before technology can play an effective role, a strategy to personalize service must be developed and the right resources put in place.

 

Who are you?

 

Salespeople long have recognized that the sweetest sound to a person is her own name. However, a personalization strategy has to go beyond merely capturing and using a person's name.

 

In fact, a retailer can offer a deeply personal experience without ever using it.

 

"Ultimately, using a person's name is all about making them feel like they're known, that the retailer cares about them," said Zachary Conen, vice president of marketing for customer experience consultants LRA Worldwide Inc. "There's an understanding of who they are, what they need and that the company they're dealing with is equipped to deliver on that."

 

Various tools — from online shopping preference to customized direct mail — can help deliver a personalized experience. Some experiences, such as Amazon.com tracking the last items a viewer browsed, makes for useful personalization.

 

But in the physical world, it's tougher to capture and retrieve meaningful individual data. Face-to-face interaction is what tends to build true customer loyalty.

 

"The people interacting and engaging with the customers and how they're equipped to use the information to engage on a personal level is what's going to drive the experience and the ultimate quality of the relationship," Conen said. "Technology is only a means to an end."

 

Scaling up retail personalization is the hard part. In a single store or a small chain with a few locations in a single city, the owner can visit each one and shake hands with half the customers. Ensuring a consistent experience across a larger chain requires systems with rigorous attention to detail.

 

"The bigger a retailer gets, the more people they need to find to fill these roles that have that skill set to be able to engage with people on a personal level," Conen said.

 

A little help from technology

 

HP's Mohamed Dekhil inserts a loyalty card into the Retail Shopping Assistant. The kiosk allows card-holding shoppers to create a shopping list and print the list with coupons, specials and a store map. (Photo courtesy HP.)

The most effective — and welcome — personalization is the kind that provides a real benefit for the customer. HP Labs rolled out the Retail Store Assistant in 2007 as a technological way to personalize the shopping experience.

 

The RSA, an in-store kiosk, offers coupons based on a consumer's previous purchases, sends alerts of discounts and sales and even generates maps to item locations in the store. "The idea is to shift retailers' focus from trying to sell more product by massive ads, junk mail or big-screen TVs in the store," said Mohamed Dekhil, research project manager for HP Labs. Kiosks, in-store terminals and mobile devices can bridge the gap between online and in-store environments, giving customers and employees in-store access to product information and reviews.

 

"Technology can help consumers buy with greater confidence," Dekhil said.

 

A shopper can have a deeply personal experience without ever sharing his name with the knowledgeable, responsive employee who solves a problem, Dekhil said. For instance, when a frustrated homeowner walks into a home repair retailer, a sensitive employee is able to recognize the customer's need for help and guide him to what he needs. The customer will go home pleased with the personal attention he received.

 

"It's a blend of having the right information and the ability to connect with the customer," Conen said. "The homeowner doesn't care if the sales associate uses his name."

 

Satisfaction

 

Training customers to use new technology requires clear benefits before they're willing to jump through the hoops of registering for a program, using a loyalty card or taking on other procedural hassles. Retailers often embrace technologies whose usefulness consumers question.

 

In a retail technology study by the Indiana University Kelley School of Business, researchers found consumers are willing to embrace new technologies, both online and in-store, but only if those technologies enhance the shopping experience.

 

"Consumers didn't ask for barcode scanners, touchscreen kiosks, liquid-crystal displays, stereo glasses, Internet access or any other specific technology," said Theresa Williams, director of the Center for Education and Research in Retailing at the Kelly School. "They wanted more accurate price information, more complete and current product information, better selections of merchandise, fewer out-of-stocks and faster check-out."

 

To make it work, retailers have to identify and measure the aspects of the process that really matter to customers. It's easy to track whether shelves are stocked by a certain time of day, or the length of a customer-service call. Measuring customers' satisfaction and their intent to return is a bigger challenge.

 

"If a retailer can isolate the elements of the experience that bring them above the level of satisfaction into delight or a real sense of engagement, there's going to be a correlation with the financial outcomes," Conen said.

 

Knowing customers better pays in more ways than just improving customer satisfaction. Targeted communications, with the right message being delivered to the right people, make each promotion dollar more effective.

 

With technology such as HP Lab's Retail Store Assistant, retailers can tailor coupons and promotions to appeal to those most likely to use them. That cuts waste in printing and distribution and the potential for fraud. The redemption rate on personalized offers typically are orders of magnitude higher than on generic junk mail, Dekhil said.

 

"A more personal experience will certainly improve consumer perception of the service they are getting at the store and eventually engender their loyalty and increase their level of satisfaction."

 

The Dark Side of Personalization   Integrating personal information with the shopping experience is the Holy Grail for retailers, but it can go too far. Sears Holdings Corp. recently came under criticism from privacy advocates for gathering and storing customers' personal data.   Sears launched My SHC Community as a market research tool to gather browsing and purchasing data and to have members participate in surveys.   Ben Googins, a senior researcher in Computer Associates' antispyware division, criticized Sears for installing spyware on user's computers to collect a wide range of information on user habits, including online activities outside of Sears-controlled Web sites. The software acts as a proxy, routing every Web transaction to a monitoring company contracted by Sears. The software tracks all online activity, including banking logins and e-mail.   The computer security advocate took issue with the software installation sequence, saying it offered little mention of software or tracking and falls short of industry standards. Mention of software and tracking is buried in the legalese of the user agreement in a place where few users are likely to read it.   Googins wrote that the Sears application that was downloaded on his computer scored poorly in CA's assessment of harmful spyware. His concerns included that the software Sears is using is related to other monitoring software that CA considers malware and that, in Googins' experience with the site, there was no way to opt out of having the tracking software installed.   Sears' Rob Harles, vice president of the My SHC Community, responded to Googin's blog and defended Sears' practice, noting that the software is installed as a condition of higher level community participation and that clear disclosure about the monitoring was made to those people.   But Sears' practice may have run afoul of Federal Trade Commission standards requiring "express consent" before tracking programs can be installed. The FTC has not yet taken any action.   — GW

 

 

Gary Wollenhauptis a freelance writer and regular contributor to Retail Customer Experience magazine.