We’ve been told that we are special ever since we're little, but how special are we?
I challenge you to find another person in the world that is exactly like you. That person probably doesn’t exist.
So then why are our brand experiences often identical? Somehow, in the eyes of big brands, we are just like everyone else.
The Look-Alike Illusion
Let’s try to understand why that’s the case. If you were to find your double, how would you do it? You may start the search based on some personal attributes like, gender, age, ethnicity, etc.
However, as you include more of these demographic dimensions (e.g. religion, education level, political orientation, etc.), you will discover fewer people like you (i.e. matches you in every one of these dimension).
So the apparent similarity among consumers is merely an illusion that arises from the lack of data. We only look alike because brands don’t have enough data to distinguish us uniquely. With more data, brands can see us in 3-D and recognize our uniqueness.
Every one of your customers are unique, just like you. They all have different needs, limitations and preferences. They all deserve a unique brand experience. The question is, how?
In order to personalize the experiences of your customers, brands must overcome two major challenges:
- Brands must understand their customers at a personal level. This requires huge amounts of personal and behavior data about their customers to uniquely distinguish them, which can be difficult to obtain.
- Brands must deliver a unique experience for each customer based on the understanding of their individual preferences. This is even more challenging, because most brands operate at scale for efficiency (due to the economy of scale). Such individualized offerings are very difficult to scale.
The Digital Advantage of Big Data
Personalization is hard, because traditionally many brands don’t have enough data to understand their customers at a personal level, let alone deliver a unique experience.
Big data changes this.
For the first time, brands have enough data to distinguish one customer from another. Beyond the demographic dimensions on which traditional segmentation is based, brand now have access to hundreds and thousands of social and behavior dimensions. So brands have enough data to overcome the first personalization challenge.
This is why brands like Amazon and Netflix are able to hyper-personalize (i.e. personalize to one single individual) and offer a truly unique experience to each customer. However, many brick-and-mortar retail brands lag behind in their personalization efforts. This is not surprising, and there for good reason. Digital-native brands have a huge advantage in overcoming both challenges of personalization:
- In the digital world, it is much easier to collect lots of behavior data from the consumers. Digital-native brands can easily track what product you searched, browsed, bought; what movies you rated well, what movies you watched, how much time you spent on researching a particular product and other behavior. It is much more difficult for brick-and-mortar shops to obtain data on who visited the store and what items they browsed, tried on or other actions.
- Unsurprisingly, it is also much easier to deliver a unique experience in the digital world. Software controls most of the digital environment and can be customized by data learned from a consumer’s behaviors. Everything — from which product you see, to what background color the e-store uses— can be customized by a customer’s preferences and few lines of codes. That kind of customization is impossible in the physical world.
This is one reason why so many companies are talking about digital transformation today.
Because the digital-native enterprises can give their customers a much more personalized experience, they will win the long-term engagement with their customers. This not only enables them to acquire customers faster, but also retain them much more effectively — vital factors in an increasingly competitive market for people’s limited attention.
Ubiquitous Sensing via IoT
Due to the digital advantage, brick and mortar retail brands face serious challenges from their digital competitors.
But this is all about to change. The Internet of Things (IoT) will enable a whole new level of behavior data collection like never before. When physical “things” in this world are able to communicate with each other, it offsets the advantages that digital brands have in understanding their customers. A pair of jeans on the shelf may one day know which mobile device is looking at them, which picked them up and which actually tried them on.
Not only does IoT enable the collection of behavior data in the physical world, it also enables the collection of rich environmental metadata, which gives the context and meaning to the behavior. The metadata gives contextual cues that help brands understand why a consumer behaved the way he or she did, rather than just the fact that he or she did something.
For example, knowing that I bought a GoPro is one level of understanding, but knowing that I bought it with my niece for her birthday should completely change the way brands market future product to me. I wouldn’t see any irrelevant ads on GoPro accessories for a camera that I don’t own. Instead, an annual reminder of my niece’s upcoming birthday, and potential accessories for young women as birthday present can go much further.
Merging the digital behavior data with the physical gives us a more complete 3-D view of our customers. This will help us further personalize the experience of our customers at every touchpoint along their consumer journey.
The Retail Strikes Back with Augmented Reality
The ability to measure, track and understand customers at a personal level is only half of the battle. The other half is even more challenging for brick-and-mortar retail brands: delivering a unique experience based on their understanding of the customer’s preference.
Clearly manipulating physical spaces and environment to meet any individual’s preference is nearly impossible. That is, until augmented reality (AR), which Pokemon Go recently popularized.
Tomorrow’s consumers do not have to see the physical world as-is, they can overlay it with digital layers.
Although it’s impossible to customize the items on a physical shelf to suit everyone’s preference, it is possible for AR to recognize items that are relevant to consumers and direct their attention to them. While it is unrealistic to paint the wall of the retail space with everyone’s favorite color, AR can overlay the walls with any color or background a customer chooses.
AR provides brick-and-mortar brands with a digital layer on top of the physical world. This offsets the advantages that digital brands have in delivering a unique experience. Just as in the purely-digital world, this digital layer is controlled by software and can be customized by code and as much preference data as consumers are comfortable providing.
Personalization Spreads to Brick and Mortar
Although the digital-native brands have a head start in personalization, technological innovations such as IoT and AR will level the playing field. Eventually, every brand will have the capability to hyper-personalize everyone's experience.
Personalization is not merely a set of technologies, it is a customer-centric business strategy that recognizes the unique context of every individual customer.
Brands — digital or not — must learn to consider individual preferences in order to win customers’ long-term engagement. Brands no longer have any excuses not to provide us a personalized experience. All the required technologies exist, for brands in both the digital and physical world. With this, perhaps one day we may have a personalized shopping experience wherever we go.