Reinventing Retail Personalization for Profit
Delivering on the promise of personalization calls for a 360-degree view of your consumers, products and in-store data.
Personalization seems to have replaced omnichannel as retailing’s hottest buzzword! At the Conext Connected Commerce Show, held last month in Lille, France, it seemed like every Retail exhibitor felt that personalization needed to be part of its message. There were multiple exhibits of personalized fit via 3D body images, personalized product design and printing, personalized magazines, and of course, that old standby personalized email messaging and promotions. It did not seem to matter what innovative new products or services were being offered as long as they were personalized.
But in reality, retail’s hottest new trend is actually its oldest. It’s all about going back to your neighborhood store where the store owner recognized you, helped you chose a bundle of ingredients for tonight’s recipe, priced it correctly, and offered you a promotional price for the weekend sale.
However, in today’s big-box retail environment, retailers are struggling to re-connect with consumers and personalization represents the best opportunity for leaders to differentiate themselves and stand out from the pack.
What Do Consumers Really Want From Personalization?
Today’s digital consumer is more vocal and demanding – and they expect a lot from branded manufacturers and retailers. Here’s the list of demands:
- Know who I am: Consumers want to be communicated with on their own terms, be that time, channel platform or message. Consumers seek to build thoughtful dialogue with brands in which their opinions are solicited and their responses are acted upon. Consumers dislike general and unsolicited push marketing, particularly through personal devices such as phones and tablets. They are also much less likely to respond to generic messages or mass media.
- Solutions not products: Consumers expect retailers to provide solutions and services that are specifically relevant to them as individuals. Practically speaking, this means customization and communications at the individual level.
- Omnichannel convenience: From a consumer’s perspective, omnichannel stands for clear and transparent access via multiple channels with a single and consistent proposition and treatment strategy, be it online, mobile or in-store.
How are Retailers Performing on Personalization?
Beyond the hype, personalization is really about knowing who your consumers are, designing customized products and solutions for them, and delivering on that promise regardless of channel. So how are retailers faring?
- Know who I am: Simply put, most retailers don’t know who their consumers are! Consumer loyalty data for the retail store may sit in one database while online-transaction data and calls into the contact center are kept in numerous others. Each of these three data types has a specific format. To illustrate a case-in-point, consider what happens when a drug store retailer’s loyalty program is not linked up to its pharmacy program nor patient visits to its in-store health clinic. If you don’t know who Jen Dough is, it’s difficult to understand why she buys, how frequently, what her preferences are and which promotions will capture her interest. And you certainly aren’t going to be able to offer her expert advice on nutritional information or potential drug interactions. Unfortunately for most retailers, Jen Dough expects and requires more consistent and meaningful interactions with you – or she’ll abandon your brand for another.
- Solutions not Products: Consumers really don’t buy products; they buy solutions. This may include recipes for dinner or a home entertainment system bought online, in-store or via a mobile device. A product is a complex mix that includes the physical product and accessories, digital images, videos, recommendations and ratings, specs, locations, pricing and promotions—all of which need to be linked and communicated to the consumer. Consumers would also like to be able to compare and make choices across products. Whether the choice is between steaks or lasagna for dinner or an Ultra HD and plasma TV set with the right service plan, the consumer’s path to purchase is individual and complex. They might research online, compare prices via mobile device and eventually purchase in-store. Regrettably, retailers are still stuck organizing category data around “products,” while limiting the attributes or facets a consumer can search upon. As a result, an online search for wireless sound systems may yield 1,300 results that are not linked logically to enable better purchasing decisions. Imagine an in-store sales associate struggling to find the right data while trying to close a deal for complex entertainment systems with multiple components as part of a bundle!
- Omnichannel convenience: Or simply, knowing where the product is in the supply chain and fulfilling the transaction seamlessly regardless of channel. Since this is retail, this process needs to be fully “live” or operational. If you can’t check availability; update inventory; price dynamically and suggest stocked, pick-up stores within driving distance from the consumer, you won’t succeed with omnichannel. Unfortunately for most retailers, omnichannel is very much a costly work-in-progress that involves integrating data across multiple systems with huge investments in ETL (extract, transform and load). In other words, omnichannel is great for systems integrators and ETL vendors – but with there is minimal payback for retailers.
Retail Systems Aren’t Designed to Advance Personalization
Retail systems today largely utilize Relational Database Management Systems (RDBMSs) that were first developed in the 1970s and driven by Oracle, IBM DB2 and Microsoft. Using SQL (Structured Query Language) as the programming language for managing the data, structure is actually the primary challenge of using an RDBMS to store and manage content. Because in order for RDBMS to perform well, the data must first be mapped with a predefined schema or set of constraints that define how it is structured and organized for analysis. Unfortunately for industry users of RDBMS, consumer and product data is not just vast and variable, it is also largely unstructured and doesn’t fit neatly into the rigid rows and columns of RDBMS. This is a problem because today’s consumers need to be responded to individually with personalized solutions “live” at the point of purchase. Take the case of Jen Dough and Joanne Doe, both women are 30 years old and living in the same apartment building. Joanne is single while Jen is married and a new mother. If your loyalty database was not updated to capture Jen’s new status as a parent, the women are likely to be offered the same, impersonal, undifferentiated promotions at the point of purchase – and you are missing out on a valuable opportunity to offer additional promotions that might resonate with Jen’s new identity as a mother. Agility and the ability to ingest and make sense of all types of data is a crucial aspect to any effective, enabling technology for today’s consumer data. Designing the perfect schema with rows and columns for a billion consumers with the goal of responding to each of them as individuals just won’t work with RDBMS technology!
Also, note that if all of your data sits in a Hadoop data lake with batch processing – you lack the real-time operational analytics required to close the deal with a consumer.
Ultimately consumer and retail companies need a 360-degree view of their consumers, products and stores to make personalization work. Existing RDBMS technology isn’t cut out for this and Hadoop data is just not operational or real time.
MarkLogic Provides an Integrated 360° View of Data
Based on NoSQL technology, MarkLogic’s new generation database represents a transformational change in perspective. Instead of getting the schema just right before doing anything else, NoSQL advocates loading up the data first and then seeing where the problems lie. This problem-oriented approach focuses on how the data will be used (queried) rather than how the data must be structured to fit within a traditional RDBMS. For personalization, this shift means you would not have to spend a year trying to figure out the right data model and perfect schema to analyze and store data on a billion consumers and thousands of products. Instead, you can load the data, have it indexed automatically and then search and query it for emerging trends and demand signals.
What makes Mark Logic’s the Best Solution for Retail Personalization?
In a nutshell, there are four key value differentiators that MarkLogic brings to retail and consumer companies when they approach personalization, including:
- An Operational Data Warehouse Leader
Personalization calls for real-time, operational capabilities. You need to recognize and respond correctly and accurately to Jen Dough the moment she enters your store or online. Making the right product and promotional recommendations to her is what will close the deal. Simply put, your data warehouse must be transactional and operational to enable websites, e-commerce and other applications in-store while at the same time, enabling analytics and storage of terabytes and potentially petabytes of data. MarkLogic was the only NoSQL database that was appointed to Gartner Leaders Quadrant for Operational Database Management Systems. Also, in the 2014 Gartner Report Critical Capabilities for Data Warehouse Database Management Systems, MarkLogic came out ahead of all other vendors in the customer rating for operational data warehouses.
- Enterprise Grade Performance
Firstly, and perhaps most critically, we’re talking about consumer and product data in your database. This is all about handling huge volumes of data while ensuring transaction integrity and security. Most open-source vendors fail at just this crucial requirement. MarkLogic’s platform was designed to be enterprise-ready from day one,which means that you have all of the government-grade security, high availability, disaster recovery and transactional consistency you need for your consumer applications.
- Search Capabilities
MarkLogic has a built-in search engine that no other database has. You can fine-tune searches across structured or unstructured data—including full text, large binary and geospatial data—getting lightning-fast results and advanced features such as alerting. From a consumer or business user’s perspective, this makes your website and e-commerce business much more appealing because they can finally find the products they seek. MarkLogic’s semantic capabilities also enable storage and search for logical product linkages (e.g., ingredient linkages for dinner recipes or the right toner for my HP Printer). With semantics, you can store and query billions of facts and relationships and infer new facts, making your data and your database much more intelligent.
- Analytics that enable a 360-degree view of your business
For personalization to work, you want to build the right applications on top of your product and consumer data. MarkLogic’s integrated HTTP server has full-featured Java and REST APIs, among many others, to make managing data and building two- and three-tiered applications easy, giving your developers faster access in the language that they’re most comfortable using.
The consumer and retail industries are at a critical crossroads when it comes to listening, analyzing and responding to consumer needs for personalization. Sure, part of the problem has been internal organizational-structure and change-management issues. But the biggest issue has been the lack of credible technology solutions to deal with the problem. MarkLogic represents a transformational approach to this technology challenge, and the business case has never been clearer.