Real-time Personalization: A Game-changing Strategy for CPG Brands

By Deb Marotta

It’s all about the experience. The experience can define the brand and in a digital-first world, the brand needs to define the experience.  Driving that experience today is personalization— harnessing the power of data to deliver an individualized, real-time customer experience across all touch points. It’s emerging as one of the best ways for brands to differentiate themselves and stand out amongst competitors.

And customers expect personalized interaction with CPG brands and retailers with experiences, recommendations, and offers that cater to their specific needs. Yet many companies struggle to meet these expectations. In a recent Forrester survey, more than half of respondents said personalizing customer interactions is their biggest marketing challenge in the next two years.

How did we get here?

The days are gone when general, mass media advertisements successfully engaged a wide variety of customers. Rapid advancements in technology allow companies to collect, analyze, and use customer data in real time by taking advantage of sophisticated analytics tools, artificial intelligence (AI), machine learning (ML), and automation capabilities.

And leading brands are using these tools to understand customer preferences and behaviors and market to those customers at a very granular level. Thus, customers have become more accustomed to personalized experiences and their expectations have increased for all retail and brand interactions.

Personalization in real time

When personalization is part of a marketing strategy, a company is delivering highly targeted and tailored messages to its customers. If they’re doing it in real time, the personalized communication is kicked off when the customer takes a specific action for example, scanning a concert ticket or connecting to in-store Wi-Fi. The action can also be an event that is part of a larger segmentation, like the start of the school shopping season. The action triggers automation activities like emails, push notifications or text messages to reach the customer when it matters.

This segment-of-one, real-time approach has shown to resonate with customers, and create a sense of relevance and urgency that companies hope increases customer engagement and conversion rates. Consulting and research firms call it moments-based marketing and describe it as being quick, timely, and helpful in the precise instance of customer interaction at a time and in a channel of the customer’s choosing.

Personalization is a way to cut through the noise and provide customers with exactly what they are looking for, fostering deeper relationships that will keep them from seeking out competitors.

“Real-time marketing has been the most influential trend in marketing over the past few years,” said Hitachi Solutions’ Chief Technology Officer Luke McGrath. “If we can identify the signals that customers are sending in real time, it allows us to deliver a more targeted and relevant message.”

Loyalty and satisfaction drive revenue

When customers are presented with targeted recommendations, companies increase the chances of purchase and the potential for upsell which, in turn, translates into a higher average order value and increased revenue. Personalization can also generate empathy and good will—when consumers think a brand understands and accurately caters to their needs, they are more likely to have a positive perception of the brand and remain loyal to its products.

McKinsey, a global consulting and research firm, found that personalization at scale (when companies have personal interactions with all or a large segment of their customers) can have a  1 to 2 percent lift in total sales for grocery companies and an even higher lift for other retailers, driving up loyalty and revenue among already loyal customers.

In general, a positive loyalty-building customer experience is hugely meaningful to a retailer’s success: it yields 20 percent higher customer-satisfaction rates, a 10 to 15 percent boost in sales-conversion rates, and an increase in employee engagement of 20 to 30 percent, McKinsey found.

Real-life examples

What does real-time personalization look like in action? Actually, we see it all the time. Companies like Amazon, Facebook, and Google are leading the charge through their use of rich customer databases and recommendation solutions with extremely advanced levels of personalization. Here’s a few others:

Sephora

Sephora, the cosmetics retailer, uses customer data, such as skin type, color preferences, and purchase history, to provide tailored product recommendations and personalized beauty tips. Through its Beauty Insider program, Sephora has reported that customers who engage with personalized product recommendations are 8 times more likely to make a purchase compared to those who do not receive personalized recommendations. In total, 17 million people belong to Sephora’s Beauty Insider program in North America alone, and drive 80 percent of the company’s overall sales.

Uber

Uber employs data-driven personalization in its ride-hailing service. The app collects and analyzes user data, such as location, travel history, and preferences, to offer personalized ride recommendations, tailored promotions, and dynamic pricing based on demand and supply. For example, Uber uses rider data to set surge pricing, adjusting the price of a ride based on supply and demand. When demand is high, prices increase to encourage more drivers to come online and meet the demand.

Netflix

The streaming platform analyzes user viewing history, ratings, and interactions to suggest relevant TV shows and movies to each subscriber. Netflix’s recommendation algorithms continuously learn and adapt to user preferences, leading to a highly personalized user experience. Netflix estimates that its personalized recommendation system is responsible for saving the company over $1 billion per year in customer retention costs.

The Challenge

It all sounds great, but retailers and brands still struggle with siloed, underutilized, and poorly aligned technologies that increase the gap between the experience customers expect and the experience organizations can provide.

In modern marketing, siloed data is the Achilles’ heel. The traditional lines drawn among marketing, sales, customer service, finance and other departments result in disparate customer data and disjointed information.  It prevents the efficient and prompt sharing of customer data and promotion decisions (for example, difficulty in aligning the marketing, sales and product teams).

 “The consolidation piece has gotten easier to manage with the maturation of the tools on the market, but it still requires a solid understanding of how to massage the data to get it to a state where we can answer questions that cross marketing channels,” McGrath notes.

Bringing in the Technology

Many technologies are available to collect, manage, and analyze data into a usable format for personalization purposes. A customer data platform (CDP) gathers both first and third-party data to create comprehensive customer profiles. Sources of that data include marketing and point-of-sale systems, websites, social media, and more. The CDP unifies and cleans the data and makes it available to AI and ML modeling systems to provide predictive analytics and more.

The key to the entire process is the unification of customer data, pulling data from differing formats, and eliminating data isolation. A reliable CDP, such as Microsoft Dynamics 365 Customer Insights is a good tool for enriching segmented customer data.

It’s a prepackaged solution, but it’s more than just a view. Using the Common Data Model, you can create relationships between ingested data sources using what Microsoft calls ‘map, match and merge’ technology — which is simply mapping the data, matching it with another data source and merging it into a customer profile.

These unified profiles can provide valuable data insights based on a range of customer-defining data points such as behavior, experience, and demographics. When AI is added to analyze customer profiles, companies can, for example, dynamically create segments to take the guess work out who to target with what message. As well, marketers can dynamically generate content based on the interests of the segment.

Customer Insights can be directly integrated with Azure Synapse relieving the burden of needing an extra ETL process or the additional overhead for data storage. Synapse also takes Customer Insights one step further into the AI and machine learning realm, so you can apply modelling and perform complex queries for output into Power BI and other data visualization tools. In the future, Microsoft’s new data and AI platform solution, Fabric, will take advantage of Synapse’s features and also enable exciting next-generation data and analytics capabilities.

Keep in mind that overall, CPG firms need a CDP that is capable of:

• Automatically building out detailed consumer profiles for granular segmentation and behavioral analysis
• Helping companies develop personalized and targeted experiences, product recommendations, cross-channel marketing campaigns, and customer service
• Supporting companies in efforts to deliver consistent (and seamless) brand experiences across all touchpoints
• Offering integration to other internal and external services and products that contain valuable customer data and points for analysis

Best Practices for Getting Started

Real-time personalized marketing is only successful when retail and brand business decision-makers begin to treat the following areas as organizational priorities:

Data strategy: Establish a comprehensive data strategy that encompasses data collection, integration, and analysis. Determine the types of data you need to collect, the sources of data, and how to ensure data quality and accuracy. Without accurate and consistent data, any personalization program will undoubtedly fail— if the data can’t be trusted, the output of that data can’t be trusted either.

Technology and infrastructure: Implement the necessary technology and infrastructure to support real-time personalization. This may include customer data platforms, AI-powered recommendation engines, analytics tools, and marketing automation systems. Ensure these systems integrate seamlessly with each other and with your existing infrastructure.

Governance and privacy: To truly unlock the value of data, organizations need to adopt more agile, flexible, and collaborative approaches to data governance, while at the same time being mindful of the ethical and privacy concerns around protecting customer data. While privacy regulations and controls seem like obstacles to accruing data, consumers are willing to share personal information if there is value to be gained.

We can help

Finding the right partner to help develop a real-time personalization program is critical to accelerating results that help you build reputation, revenue and loyalty. Hitachi Solutions can help pave the way to personalized, intelligent customer experiences.

With more than a decade of experience serving brands in the CPG industry and nearly 20 years working with the full Microsoft stack, we have the right combination of industry and technical expertise using next-generation emerging technologies like conversational AI, machine learning, and advanced customer analytics. For a more immersive read, check out our recent whitepaper: How Marketers Can Implement Real-Time Technology to Optimize Marketing Spend and Improve Conversions.

When you’re ready to talk, reach out, we’d love to share our insights on the future of marketing personalization in an AI world.  The future is clear: successful companies will be those that get to know and engage with their customers one-to-one. Hitachi Solutions can help make that happen.