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signals

Advanced data analytics are allowing retailers to forge a deeper customer connection

Personal

Traditionally, consumer data has been drawn from sources such as demographics, search queries, browsing behavior and purchase history, yielding broad, generic product recommendations and offers.

​Going forward, retail brands have the potential to use AI, machine learning and big data analytics to gain deeper insights into consumer preferences and behaviors by parsing much richer consumer information: social media posts and reviews, customer service sessions with smart chatbots, product interactions in AR/VR environments and even in-store product evaluations. 

With this intelligence, companies can gain a deeper, more granular understanding of consumer motivations, values and intent. Generative AI can then use these insights to predict emerging interests and unmet needs, informing customer-specific messaging, marketing, recommendations, pricing, promotions and incentives. These can be delivered precisely how, where and when each shopper prefers, creating a dynamic fit-for-me experience.

Personalization matters

40%

Indeed, companies that prioritize personalization see significant boosts in engagement, conversion and retention.27 Fast-growing companies generate 40% more revenue from personalization than their slower-growing counterparts.28

3/4

Three out of four consumers expect retail companies to understand their unique needs and expectations24 and deliver customized interactions25 — and they’ll stick with brands that do and abandon those that don’t.26

 

The emphasis on personalization has led to an increased focus on responsible data management. In light of sophisticated data breaches and reported misuse of data, trust has become a new currency for brands. Retailers that want to gain share of wallet will need to earn consumer trust by complying with regulations keeping pace with expectations for how data should be used responsibly.

(Read more in Mastercard’s Q1 Signals issue.)

Dynamic loyalty

Deeper consumer insights will enable retailers to shift brand loyalty programs from traditional points-based systems to dynamic, personalized, experience-driven touchpoints. Based on individual consumers’ habits and histories, technologies including AI and AR and new loyalty networks powered by blockchain will enable new customer-brand interactions, partnerships that create cross-brand loyalty platforms and hyper-personalized rewards.

Loyalty decoded

Top-performing programs can increase revenue from customers who redeem points as much as 25% by boosting the frequency and size of purchases.29

The average U.S. consumer is enrolled in about 15 loyalty programs but active in fewer than half of them.30

Two-thirds of consumers will change the brands they buy from for better rewards.31

Loyalty exploratios

Singapore Airlines launched a loyalty wallet built on blockchain technology that allows travelers to easily spend their air miles at numerous retail outlets.32 Emirates Skyward has a similar blockchain-based program.

Snow Peak, a Japanese outdoor equipment retailer, invites customers to participate in personalized workshops, community gatherings and exclusive camping experiences at locations in Japan and the U.S. The goal is to build brand affinity, glean insights and help customers “experience the rejuvenating power of the outdoors.”33 The company credits the program with increasing customer engagement and market share

Early adopters

Large retailers are leading the way. Amazon, Walmart, Nike, Starbucks and Target use AI, machine learning (ML) and advanced data tools to analyze consumer behaviors and preferences, allowing them to personalize marketing, shopping experiences and product recommendations.

Coach used deeper consumer segmentation to identify the Tabby bag as a key attractor for young shoppers.35 With insights from data analytics, the company leveraged direct consumer engagement, product iterations and marketing campaigns like "Courage to Be Real" with Lil Nas X and "In My Tabby." This approach led to a surge in searches and sales, with the Tabby becoming a significant success.

Startups are delivering innovative solutions, too. The biggest category in CB Insight’s latest report on retail tech startups is digital shopper engagement, which includes companies that help retailers “connect with shoppers across platforms and channels with a focus on personalization and loyalty.”36

Outook

Emerging use cases, such as virtual try-ons and home visualization apps, are expected to see widespread adoption due to their ability to enhance customer confidence and reduce returns. 

Ensuring accurate and user-friendly technology for body scanning and AR/VR experiences is challenging, and the current cost of MR devices is an impediment. However, as technology advances and costs decrease, retailers that can address privacy concerns and offer seamless, valuable and immersive experiences could lead the way in redefining the e-commerce landscape.

[24] https://www.salesforce.com/eu/blog/future-of-customer-service/

[25] https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-value-of-getting-personalization-right-or-wrong-is-multiplying

[26] https://blogs.perficient.com/2023/03/01/customer-experience-trends-in-2023/

[27] https://explodingtopics.com/blog/personalization-stats

[28] https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-value-of-getting-personalization-right-or-wrong-is-multiplying

[29] https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/next-in-loyalty-eight-levers-to-turn-customers-into-fans

[30] https://blog.accessdevelopment.com/2019-customer-loyalty-statistics

[31] https://info.bondbrandloyalty.com/the-2016-bond-loyalty-report-press-release-us

[32] https://www.ccn.com/singapore-airlines-will-launch-blockchain-loyalty-wallet-frequent-flyers/

[33] https://www.snowpeak.com/pages/campfield

[34] https://outdoorindustry.org/press-release/snow-peak-usa-announces-the-launch-of-its-global-loyalty-program/

[35] https://www.businessoffashion.com/articles/technology/how-coach-used-data-to-make-its-tabby-bag-a-hit/

[36] https://www.cbinsights.com/research/report/retail-technology-startups-2023/

[37] https://www.voguebusiness.com/technology/mapping-the-net-a-porters-of-nfts

[38] https://hypebeast.com/2021/5/virtual-gucci-bag-roblox-resale

[39] https://www.voguebusiness.com/consumers/new-era-ar-vr-pop-ups-enough-to-lure-customers-in

[40] https://www.voguebusiness.com/consumers/new-era-ar-vr-pop-ups-enough-to-lure-customers-in

[41] https://wwd.com/fashion-news/fashion-scoops/jacquemus-cafe-fleurs-seoul-1235882485/

[42] https://www.cnbc.com/advertorial/behind-the-vs-series-by-sk-ii-studio/

[43] https://www.retaildive.com/news/savage-x-fenty-delves-deeper-into-fitting-room-tech/643390/

[44] https://www.emarketer.com/content/retail-executives-worldwide-say-physical-stores-add-personal-element-customer-experience

[45] https://www.geekwire.com/2024/former-niantic-leaders-spatial-computing-startup-aims-to-help-retailers-track-shelf-inventory/

[46] https://www.salesforce.com/news/stories/loreal-salesforce-success-now/

[47] https://shop.lululemon.com/story/like-new

[48] https://www.alpinetrek.co.uk/blog/patagonia-worn-wear/