Data & AI: The Game Changers For Retail Personalisation?

Data & AI: The Game Changers For Retail Personalisation?

Technology has transformed retailers’ ability to engage with their customers, with artificial intelligence (AI)-powered recommendations now set to drive even more rapid change.

However, many APAC retailers are still struggling to adapt. In fact, research has revealed that while 52 per cent of retailers in North America and 49 per cent of retailers in Europe personalise over half of the shopper journey, only 23 per cent of APAC retailers are meeting that goal.

In a competitive landscape where soaring inflation and sky-high mortgage rates are making consumers tighten their purse strings, the pressure is on for retailers to get personalisation right. Research commissioned by Google Cloud found that 75 per cent of shoppers prefer brands that personalise interactions and outreach to them, and 86 per cent want a brand that understands their interests and preferences.

At a recent Google event, Jonathan Reeve (pictured), vice president APAC of Eagle Eye, joined a panel with Cédric Chéreau, CEO and co-founder of Untie Nots and Sameer Dhingra, director of retail and consumer at Google Cloud APAC, to share how digital technology can transform retailers’ approach to customer engagement. They unpacked everything from one-to-one marketing capabilities, marketing in the moment and how AI and real-time technology are helping modern retailers get in on next-gen loyalty.

Moving from Reactive to Proactive Engagement with Technology

The shopper journey has dramatically changed. By the time the customer goes through discovery, awareness, consideration, purchase, the decision to buy from which outlet in which platform and which channel is purely a matter of convenience and choice, Dhingra explained.

Knowing this, the question then becomes: how do you get shoppers into your store? And if they are in your store, how can you then increase engagement conversions, basket value, basket size, etc in an efficient manner while balancing cost, risk and growth aspirations?

“Last year, we looked at the shopper journey and the retailers’ focus was largely on retention towards the end of the cycle. It was a bit reactive. Now, it’s shifted to real-time personalisation at the point of engagement – a more proactive way of engaging customers,” said Dhingra.

“This shift is causing retailers to look at where their innovation dollars are going. They want to know where they can spend to get the biggest bang for their buck. It’s interesting because technology is no longer the biggest obstacle to transformation – adoption and buy-in are. Innovation in hyper-personalisation and loyalty programs is spreading across the retail ecosystem. Retailers are becoming more proactive and less reactive thanks to advancements in technology.”

AI and Real-Time Technology for Marketing in the Moment

In retail, there’s nothing that generates as much data about customers as a loyalty program. There is a tremendous opportunity in the next few years to start using AI on the data generated by loyalty programs. For example, Eagle Eye together with Google Cloud gives retailers the ability to connect their customer data to a real-time platform in the cloud. This goes back to the DIAL methodology – enabling retailers to execute data-based insights in real-time to drive customer loyalty.

Currently, the majority of retailers are following a weekly cycle when it comes to issuing personalised offers to customers, but this can and will start to shift to a real-time model. Imagine customers walking near a Starbucks. Utilising real-time data, their favourite drink preference and the current weather conditions, the store can instantly create an offer tailored to the customers’ preferences to drive them into store.

This ability to execute real-time personalisation when a customer is most primed to make a purchasing decision is going to be a game-changer for retail, and is something we call “marketing in the moment”. Marketing in the moment takes historical customer understanding and blends that with real-time contextual data to determine the right content/message to send a customer at that exact moment in time. This, we believe, is the future of retail marketing.

The AI behind Personalisation

To help retailers create more fluid and intuitive online shopping experiences, Google Cloud introduced an AI-driven personalisation capability that customises the results a customer gets when they search and browse a retailer’s website.

The AI underpinning the new personalisation capability is a product-pattern recogniser that uses a customer’s behaviour on an ecommerce site, such as their clicks, cart, purchases and other information, to determine shopper taste and preferences. The AI then moves products that match those preferences up in search and browse rankings for a personalised result.

Shoppers’ personalised search and browse results are based solely on their interactions on that specific retailer’s ecommerce site and are not linked to their Google account activity. Shoppers are identified either through an account they have created with the retailer’s site or by a first-party cookie on the website. And as with all Google Cloud solutions, customers own and control their data – information on customer preferences stays with the retailer.

Personalised Promotions at Scale Made Possible

Shifting from mass promotions to personalised promotions is something worth investing in. According to BCG, reallocating just 25 per cent of the budget from mass promotions to personalised offers could increase retailers’ return on investment by a significant 200 per cent. However, this has been, historically, quite challenging for retailers, Chéreau pointed out.

“Personalised offers have been challenging to scale for retailers and CPGs. Traditionally, there have been two ways of doing personalised promotions. The first is the old targeting way. Say a brand is launching a product, it would target its competitor’s customers, incentivising them to choose its product. However, that breaks golden rule number one; you’re asking customers to do what they’re not willing to do – change their brand to something else. That’s why this method has a very small return rate,” Chéreau explained.

“And that’s why promotional funds are still quite limited because suppliers are not really happy to participate in that kind of approach unless we can guarantee incrementality, ensuring that every offer we put on the market is incremental by design. Now we have the tools and the tech to do this. We have all the data science and the IT infrastructure to make sure that we can run personalised promotions at scale.”

Untie Nots, a personalised promotions business acquired by Eagle Eye in January 2023, has developed a suite of algorithms to tackle the shift from mass promotion to personalised promotions. By analysing customer behaviour and preferences, Untie Nots can precisely identify the right products for individual customers.

With its diverse algorithm family, including the:

  • People Pleaser: The data science algorithm ensuring that we can identify the right products for each customer individually, looking at what they bought in the past.
  • Influencer: The algorithm identifying products that customers are not buying yet by using ‘look alikes’: customers that are very similar to them who are buying certain products.
  • Chef: The algorithm that is building the right mix between a product that the customer is already buying and a product that he/she should be interested in.
  • Diviner: The algorithm predicting how much money a customer would spend on a certain group of products over a period of time.
  • Coach: The algorithm motivating the customer to spend a little bit more to become more loyal to the retailer.
  • Moderator: The algorithm making sure that the coach is not asking too much out of the customer, ensuring that we define the right level of stretch in every offer put on the market.
  • Motivator: The algorithm at the end, ensuring that the retailer offers the right reward

Untie Nots can deliver precisely targeted offers that customers are genuinely interested in. The result? A highly rewarding ROI, with every dollar distributed as a reward generating at least $7 in incremental sales for the retailer.

“For the CPG, that figure is just slightly lower because the retailers benefit from what we call the ‘halo effect’ where you’re in-store buying the whole basket,” Chéreau said.

“The entire solution is completely automated in the cloud. It doesn’t need a huge army of analysts to do that level of personalisation, and it’s very customer-centric. This is where the market is moving.”

The Future of Retail begins Today

Over the past few years, significant disruptions have entirely transformed the retail industry, necessitating retailers to adopt more efficient, customer-centric and resilient approaches. Despite uncertainty, the retail industry has enormous opportunity.

The trailblazers of tomorrow will be those who tackle today’s most critical in-store and online challenges by harnessing the latest technological advancements. These cutting-edge tools hold the key to unlocking unprecedented customer engagement and loyalty, driving retailers towards a prosperous and thriving future. And the best part is, it doesn’t require an all-or-nothing mindset. Start small and improve the processes you’re already doing. Just start today because the future of next-gen loyalty is now.

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