Consumers pay more when experiences are personalized—why can’t retailers deliver?

by | Nov 2, 2017 | Public Relations

With total retail sales in the United States set to hit $5.68 trillion by 2021, the competition for customers has never been more intense. Consumers expect highly personalized shopping experiences from retailers and are willing to spend more money when brands deliver targeted recommendations. But according to new research from customer data platform Segment, retailers just aren’t able to deliver the goods.

A majority of consumers are disappointed with the ongoing lack of personalization in their shopping experiences, and on average 71 percent express some level of frustration when their experience is impersonal, according to newly published The 2017 State of Personalization Report.

The proliferation of new devices and the rapidly evolving technology landscape has led to a “personalization gap” in the shopping experience, and as consumers’ expectations rise, brands are struggling to meet them. For example, 54 percent of people expect to receive a personalized discount within 24 hours of identifying themselves, and 32 percent expect a discount after just one hour. However, only 22 percent of consumers actually find their retail shopping experience to be highly personalized.

Consumers pay more when experiences are personalized—why can’t retailers deliver?

The brands who get personalization right have a lot to gain. Nearly half of shoppers surveyed (49 percent) have purchased a product they did not intend to buy after receiving a personalized recommendation from a brand. Twenty-three percent of them have spent more than $50 on a single purchase, with 7 percent spending more than $100. Notably, 85 percent of impulse buyers were happy with their purchase, and just 5 percent returned their products.

“Shoppers expect brands to remember who they are, whether they’re on a digital channel or in-store. However, very few companies can actually deliver on these tailored experiences,” says Peter Reinhardt, CEO and co-founder at Segment, in a news release. “This is a profound data and technology problem that needs to be solved. The brands who get this right will reap the rewards, as personalization and the customer experience will be the key differentiators for brands in the near future. Segment will help companies get there.”

Consumers pay more when experiences are personalized—why can’t retailers deliver?

The Personalization Gap: expectations vs. reality

The rise of multi-channel shopping has led to a “personalization gap” in the consumer experience. While small, niche retailers and grocers are in line with consumer expectations when it comes to personalization, larger, varied retailers are struggling to keep up. On average, only 22 percent of consumers find their shopping experiences to be highly personalized.

Consumers pay more when experiences are personalized—why can’t retailers deliver?

Personalization drives impulse purchases

The brands that get personalization right have a lot to gain. Whether digital or in-store, highly personalized recommendations often lead to impulse buys, and the most expensive impulse buying still happens in a brick and mortar store. Shoppers are generally happy with their impulse purchases, and only five percent will return their products.

  • 49 percent of shoppers have purchased a product they did not intend to buy after receiving a personalized recommendation from a brand. 63 percent of millennials made an impulsive purchase based on a personalized recommendation.
  • 40 percent of U.S. consumers say they have purchased something more expensive than planned because their experience was personalized. 23 percent have spent more than $50 on a single impulse purchase, and 22 percent of these purchases came from brick and mortar stores.
  • 85 percent of consumers are satisfied with their last-minute purchases. Only 5 percent will return their products.

Personalization leads to repeat shopping

Providing tailored, personalized shopping experiences will lead to happy, loyal customers. After a personalized experience:

  • 44 percent of consumers will likely become repeat buyers.
  • 39 percent will be likely to tell friends or family.
  • 32 percent will be like to leave a positive review.
  • 22 percent will be likely to post a positive comment on social media.

Retailers must act fast

Consumer expectations are at an all-time high, and to gain loyalty and capture revenue, brands must act quickly. Olive branches of all types, but especially discounts, are most important. After identifying themselves to a brand:

  • 54 percent of consumers expect to receive a relevant discount within 24 hours.
  • 32 percent of consumers expect to receive a relevant discount within one hour.
  • 63 percent of consumers say receiving a discount within an hour of interacting with a brand will drive loyalty.
  • 45 percent say a discount is the most compelling incentive to add another item to their cart.

Consumers pay more when experiences are personalized—why can’t retailers deliver?

Retailers must improve brick-and-mortar personalization

Despite the fact that consumers in brick-and-mortar stores are willing to spend more money on unplanned purchases than through any other channel, consumers also say brick-and-mortar stores need the most improvement. Brands that work on personalizing the in-person experience have the most to gain in the coming years. The opportunity to increase loyalty — and revenue — is huge. Brick-and-mortar is the channel most likely to drive last-minute purchases worth more than $50.

  • 17 percent of consumers think that retailers are customizing the in-store experience.
  • 41 percent of consumers say they expect representatives in a brand’s physical store to know what they have purchased online, yet only 19 percent have experienced this.
  • 24 percent of consumers think the in-store experience needs the most improvement when it comes to personalization.

The complete report detailing the findings is available here.

Segment surveyed 1,006 U.S. adults to analyze attitudes, expectations and experiences when it comes to personalized shopping, both online and in-store.

Daily PR Updates

Essential PR industry news, opinion, and analysis delivered to your inbox daily.

Richard Carufel
Richard Carufel is editor of Bulldog Reporter and the Daily ’Dog, one of the web’s leading sources of PR and marketing communications news and opinions. He has been reporting on the PR and communications industry for over 12 years, and has interviewed hundreds of journalists and PR industry leaders. Reach him at richardc@bulldogreporter.com; @BulldogReporter

RECENT ARTICLES

18 internal communications strategies for 2020

18 internal communications strategies for 2020

How you communicate a message is as important as the message itself. When it comes to internal communications, this certainly holds true. Company culture can give your organization a major strategic advantage in these changing times. But what your culture consists...

5 tips to strengthen your PR team for maximum results

5 tips to strengthen your PR team for maximum results

A good PR team is worth its weight in gold. By having an iron-clad PR strategy for any situation, your business will be able to overcome any adversity and come out of any situation with your reputation intact. There are many ways to improve your PR team, but the...