Personalization in retail: 8 steps to get it right

One-size-fits all shopping experiences no longer meet customer expectations. Today’s consumer craves customization. Personalization in retail is changing how people shop, and it’s helping companies target customers more effectively. 

While personalized services and recommendations were once reserved for luxury retailers, customers now expect a tailored experience wherever and however they shop. Retail personalization is part of the omnichannel revolution.

But what exactly is personalization in retail, and how can you ensure you get it right? We have the scoop on how to give shoppers a bespoke experience, featuring McKinsey & Company’s eight components of successful retail personalization.

What is personalization in retail?

Personalization in retail means offering a customized customer experience at every touchpoint. Here’s how that can play out through the different aspects of your business:

  • Ecommerce retail: Instead of everyone seeing the same content, online shoppers see targeted messaging and “curated for you” recommendations based on their browsing and purchase history.
  • Brick-and-mortar retail: With retail personalization, customers can do things like browse garment samples on the floor, then log into their loyalty accounts through a digital catalog to add items to a fitting room. An associate can use the customer’s account details to put the requested items into their fitting room in the right size, and add some suggestions based on past purchases and style preferences.
  • Marketing: Customers are on the receiving end of highly-targeted omnichannel marketing campaigns that tailor messaging, products, and offers to their behavior.
  • Customer service: As soon as a customer reaches out with an inquiry, the support team already knows the customer’s name, their past interactions with the business, and the products they’re considering or reaching out about.

Why is retail personalization important?

Retail personalization is becoming essential to running a competitive, modern business. A bespoke customer experience is critical for several reasons.

Customers expect individualized experiences

First, shoppers have grown to expect personalization. According to a survey by Epsilon, nine in 10 consumers enjoy personalization in retail, while four in five consumers say they’re more likely to shop with a company if it offers a customized experience. 

What does that mean for retailers? Shoppers have seen it all: BOGO promotions are old hat, mass marketing is considered spam, and unenthused sales associates won’t cut it. You need to individualize every customer touchpoint to stand out. 

Personalization in retail makes people spend more

That brings us to point number two: not only does customization get shoppers excited, it also gets them to shop more. According to a report by McKinsey & Company, personalization in retail increases conversion rates by 10-15%. A unique experience makes shoppers more likely to add items to their physical or digital carts.

Targeting reduces marketing costs

According to the same report, retail personalization reduces marketing costs by 10-20%. How is that possible? Through personalization efforts, retailers learn their customers’ habits, behaviors, and preferences. When companies know their customers, they can save money by precisely targeting those who are the most likely to interact with the company or make a purchase. 

For example, rather than casting a wide net and sending a high-cost promotional postcard to any address they can get a hold of, a company can send postcards only to loyal customers who respond well to direct mail, while potential customers who may not yet be ready to make a purchase receive email newsletters.

Easy access to customer data

Worried that your customers won’t tell you what you need to know to create a bespoke experience? Don’t sweat it. According to a report by Accenture, 83% of shoppers are happy to share their personal information if it means they’ll get a customized experience.

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