Beauty Store Business magazine - January, 2020

The Personal Touch

Discover what personalization looks like for the new, digitally savvy customer.

From greeting a customer by name–which science shows lights up a different cortex of the brain than hearing the sound of any other word–to presenting products tailor-made to his or her specific taste, it’s hard to overestimate the importance of a personal connection to successful retailing. In fact, research by marketing agency Medallion Retail shows that 46 percent of consumers will buy more from a vendor who personalizes their shopping experience. “In simple terms, personalization is when patrons experience services that are uniquely relevant to them, thus prompting their loyalty,” says Jeff Wakefield, vice president of sales enablement at Verifone, a California-based company that’s revolutionizing sales technology. Moreover, a 2014 survey by American Express found that 68 percent of consumers will pay more for a better customer experience, while 74 percent said they have spent more in such a situation.

It’s clear that in our current market, clients are calling the shots. And sellers who fail to keep up with these soaring new standards run the risk of getting left in the sales slump dust.

In many ways, the concept of personalization isn’t revolutionary. Heritage haute-couture clothiers once made to measure every gown, shirt and pair of trousers for each individual client. Merchandise was universally bespoke and tasked to meet rigorous service requirements, until the innovation of factory-line manufacturing ushered in the era of mass- produced prêt-à-porter products. But trends are cyclical, and everything that once was old tends to swing back in vogue again. Recent improvements in technology have led to a shift in purchasing demands–namely, shoppers’ heightened expectations for sellers are keeping pace with their increasingly tech-savvy acumen. Today’s retail climate challenges merchants to craft an individualized experience for every prospective patron.

“It’s essential to operate wholly on the notion that every consumer is unique and, in addition, a brand never engages the same consumer twice,” notes Jason Grunberg, vice president of marketing at Sailthru, a company that personalizes individual customer experiences across digital communication channels. “Following each engagement, that individual’s circumstances have changed–he or she may have read or learned or experienced something new.” While this might at first sound overwhelming, the practice of personalization need not intimidate. A few key changes in behavior can result in a large, lasting impact.

No two shoppers are created equal. Personalization equates to providing all patrons the unique retail experience that’s right for them–and only them. But to do so, one must first learn about the individuals browsing online or walking through the front door of a store.

Start by collecting consumer data. Advanced point of sale (POS) software now makes it possible to automatically generate a customer profile with each new order. Organize contact info and track spending habits to compile a detailed history, including buying behaviors, preferred purchases and email addresses.

Or turn for assistance to companies like Sailthru, which were founded to help vendors connect across email, web and mobile via the science of data collection and management.

Customer information, once acquired, is of little value if not used correctly. Today’s successful brands employ innovative predictive intelligence tools to recommend products and experiences for online shoppers. Information such as browsing behavior, purchase history and tracking other websites used to search for similar products help to inform these predictive tools. And when combined with motivations to convert, retailers are pulling every lever to capture a sale. Industry reports indicate that a staggering 41 percent of consumers currently expect offers that are personalized and relevant when they enter a store, either physical or virtual.

NYX Cosmetics, the self-described “digital-first brand,” has led the charge on this customization front. Once dubbed a cult beauty group, the company’s Instagram account now boasts an impressive 12 million followers, placing it squarely among the ranks of other beauty giants like MAC Cosmetics, Anastasia Beverly Hills and Sephora, with 16, 14 and 13 million followers, respectively. Customer selfies representing a diverse array of genders and races get proudly featured in lieu of traditional celeb-focused ads. Recently the brand also launched an app that utilizes advanced algorithms to let viewers watch video tutorials by beauty bloggers, then add items to their carts as artists demonstrate their use. Buyers can further construct personalized beauty profiles of preferred cosmetics by swiping left or right on eye-popping product shots.

Prestige beauty market-leader Sephora likewise recorded stunning growth in 2016 profits and revenue by continuing to redefine skin care’s highly personal nature. “This [retail] brand stands out from its peers with a robust digital personal shopper that specifically tailors product recommendations to a customer’s exact skin type and tone, as well as her eye and hair color,” marvels Grunberg. This means that one woman’s view of her Sephora homepage will drastically differ from that seen by her bestie, and all discounts and promotional offer- ings are likewise customized dynamically.

The brand has even auspiciously experimented with augmented reality (AR) technology, wherein real-world environmental elements are enhanced by computer-generated graphics to devise a more immersive–and thrilling–overall experience. “Sephora’s technology allows you to take a picture of yourself, then use your mobile device to virtually ‘try on’ various hues of eye shadow or lipstick to see which item best suits your skin tone or determine how a shade will transition from day to night,” Grunberg explains.

The third and arguably most advanced layer of personalization dabbles in prophesying. “Data-science driven approaches help us predict what a person may do next, in terms of likelihood of purchasing a specific product,” Grunberg says. Website homepages subsequently feature images of that must-have item you didn’t even know you wanted, or a brand may send an email with a discount coupon valid for only a few hours or days as shopping bait.

A 2013 survey conducted by technology market research group Dimensional Research found that 90 percent of customers are influenced in their buying decisions by positive online reviews. Bottom line: Social media still has a monumental influence on shoppers’ buying decisions, thus maintaining a vibrant presence on channels such as Snapchat, Instagram and Facebook continues to register as essential. Recruiting Instagram influencers or top bloggers with scores of followers are among today’s top ways to boost social reach.

It’s no longer enough to open a beautifully organized brick-and-mortar store, and then launch its accompanying website. Retailers wishing to remain competitive must establish a vigorously active presence across all web and mobile channels, and this experience must be interactive. After all, the platform where a customer is first exposed to a product (i.e., online) may not necessarily be the one from which he or she makes a purchase (i.e., in the physical store). “Consumers have grown accustomed to the convenience and simplicity of the online experience, and they want similar features in-store, which is where nearly 90 percent of sales are still generated,” Wakefield informs. “It’s clear that the shop is a valuable part of the buying process, but retailers are still searching for ways to enrich it with some of the features associated with e-commerce.”

Research additionally proves that for younger patrons, the procuring act itself often resonates as more significant than the items acquired. “By 2020, millennials will represent more than 40 percent of consumers in the United States, and their view of the shopping occurrence tends to supersede the actual purchase,” Wakefield reveals. “Drawn to digitally connected, hyper-personalized experiences, millennials write home (aka, blog or post) about merchants who integrate their in-store environment with their online world.” Based on findings from PricewaterhouseCoopers 2016 Retail and Consumer Report, “As retailers transform into true multichannel organizations, constantly refocusing on the customer experience and improving, enhancing and integrating all elements of the customer shopping journey will be an important part of their long-term success.”

The 2015 Shopper Experience Study conducted by Retail Info Systems News magazine revealed that 80 percent of shoppers belong to at least one loyalty program, while 32 percent said strong loyalty programs trump lowest price when deciding where to buy.

But just as patrons may suffer decision fatigue when faced with an array of too many shelf choices, so too do they lose patience with one-size-fits-all loyalty schemes that fail to consider specific wants and needs. Whether it’s automatic discounts, points given per dollar spent or perks attained according to status level, vendors are well advised to get personal with their brand super-spenders.

“In today’s boutiques and restaurants, consumers increasingly have their smartphones at the ready to aid purchasing decisions, compare items or find deals and locate products as they walk the aisles,” Wakefield says. Retailers, take heed: Now’s the time to hop aboard the avant-garde payment bandwagon growing in popularity. Research by consultancy giant Capgemini and BNP Paribas bank revealed that globally, people are expected to make 726 billion transactions using digital payment technologies by 2020.

“The proliferation of new technologies and payment methods is fueling a faster pace of life, as these solutions help simplify the transactional moment while–bonus–improving security,” Wakefield discloses. “Technologies like Bluetooth Low Energy, 3G/4G and WiFi connectivity combined with mobile or portable POS devices allow merchants to extend the POS beyond the counter and throughout the store, plus reduce the time customers spend in check- out lines while forging a more one-on-one shopping experience.”

“The 21st-century retail environment is a jungle,” Wakefield says. Various forms of personalization technology are ushering in an exciting new shopping era, but are there drawbacks to consider? Grunberg lends one note of caution: “Brands that focus solely on performance marketing and automation will still fail if they forget to honor the age-old tenet of successful salesmanship: customer service.” Hire sales staff who love and care about your brand, and can be empathetic to customer complaints. After all, personal is the key word in personalization.

Verifone’s Jeff Wakefield shares exciting customization trends we can look forward to in the coming months.

Security: Breaches and hacks are ever-prevalent. To answer this growing threat and ease concerns, authentication will move away from simple PIN numbers and codes to individualized biometric info including fingerprints, facial recognition and iris scans. “Additional perks like tokenization enable merchants to provide a safe way for consumers to buy and return anywhere without having to present their card again, creating a seamless experience regardless of where a purchase was made,” Wakefield says.

Alternative Payment Options: Apple Pay reports over one million new users a week, while lifestyle apps like Alipay are gaining traction in Europe. “As the tech and security behind mobile-payment apps increase, user adoption will grow with it, pushing providers and businesses to keep pace with the trend,” Wakefield predicts.

Frictionless Experience: Accepting any kind of payment, anywhere, at any time will be key to future retail. Wakefield says, “Expect to see more merchants try different kinds of concept stores to drive online to in-store traffic, and vice versa.”

Ordering at Kiosks: Quick kiosk ordering is proving invaluable at many fast-food restaurants and retail chains. “Here’s a solution designed to decrease long lines by offering self-service to expedite orders, while lowering overhead,” he notes.