Personalization in Retail: Key Trends and Challenges

Sep 20, 2016 | Personalized Marketing

In April 2016 the VP of Marketing for (who has since left) shared that leveraging the power of personalization marketing had taken the company’s average of 55 million unique visitors to 85 million and grown sales by billions of dollars?

Brian Monahan pronounced “I’ve witnessed first-hand the power of personalized marketing to really drive a business at scale. We grew sales by a couple of billion dollars powered by personalized marketing. It works.”

Retailers are seeing some great commercial returns from personalization, with higher response and engagement rates and strong conversion. So it’s no surprise that it’s a strategic priority for many of them. However, despite retailers like Amazon pioneering e-commerce personalization features more than a decade ago, the potential of personalized customer experiences across channels remains in its infancy.

This blog article highlights five key challenges retailers face in the race to meet the rapidly evolving expectations of digital consumers:

1. Varying Definitions of ‘Personalization’

A recent survey of 100 C-level retail executives (source: Timetrade) identified that the personalization of customer experience is a major priority and strategic initiative for 93% of respondents.

However, the word ‘personalization’ is a bit like the word ‘strategy’ … it’s open to widely differing interpretations of meaning. In Timetrade’s survey, four key definitions of personalization emerged…

“Having a consistent customer experience across all channels” (64%) Tweet:

“The interaction between the associate and the customer” (61%) Tweet:

“Having a 360 degree of the customer and being able to make more personal offers” (39%) Tweet:

“Offering a more personalized experience through digital capability and digital channels” (35%) Tweet:

The disparity between retailers, many of whom are confident they are delivering a personalized experience for customers, and consumers who bemoan inadequate customer experiences across channels and poorly targeted content, highlights the industry is still finding its way with personalization.

2. Consumer Trust

In today’s world where consumers are inundated with digital marketing, mobile ads and emails, they increasingly reject irrelevant or mistimed content from brands and expect a more personalized retail experience. However, they are divided on the types of personal information they are comfortable disclosing and which personalization tactics from retailers’ are acceptable.

A survey by Accenture last year found that nearly 60 percent of consumers want real-time promotions and offers, yet only 20 percent want retailers to know their current location and only 14 percent want to share their browsing history.

Surveys consistently indicate that a majority of consumers are willing to share some personal details with retailers but are concerned about how much, what types of data, whether that data gets shared with third parties and whether the data is accurate.

Consumers are more willing to share data such as demographic information, gender, age and contact information, whilst financial, medical and social media contacts information are considered much more sensitive.

Consumers also expect a clear payback for sharing data, such as access to exclusive deals, loyalty points, discounts or special offers.

When it comes to personalization, customers differ widely in their view of what is acceptable or inappropriate, these views are evolving and the customers themselves are unsure of the trade off in value versus intrusion. This means that retailers have to be sensitive and highly responsive ongoing, testing new personalization approaches carefully and operating in an agile fashion to maintain trust.

3. Technology Complexity

A study of marketers in the US undertaken in Feb 2016 found 59% said they do not personalize content because they don’t have the technology. In previous Knexus blogs, we’ve reviewed at length the challenges retailers and others face in breaking down silos. Businesses that have for years and decades prioritized the ability to deliver products and services efficiently are now racing to re-orientate around a focus on the customer experience. In technology terms, this means legacy systems, disparate databases, and applications that cannot speak to one another. The consumer expects a joined up experience of the brand across digital and physical touchpoints, but too often the brand simply can’t yet integrate its technology closely enough to support this.

Plenty of work is underway to unify these systems in support of seamless experiences across customer touch points, but the complexity makes this transformation both expensive and time consuming. Retailers also need to ensure that the custodian of the customer experience, a chief customer officer or similar, leads the initiative to ensure the outcome is fit for purpose.

4. Data Proliferation Content

Retailers today have unprecedented access to data that can potentially enhance customer experiences. Data from devices (from smartphones and tablets), ecommerce and point-of-sale systems, loyalty programs, inventory systems, contact centers, geographic, demographic, social behavioural … the list goes on. The more data points a retailer can collect and interrogate, the greater the potential to deliver highly relevant, omnichannel experiences.

personalizing marketing - knexus blog

Tantalising, and yet for many still quite elusive. Knowing where you want to be and the value creation potential still leaves the tricky question of how to get there. Retailers are addressing a variety of data-related challenges such as too much data, not enough data, data in the wrong places or formats, effective data integration and synchronization, appropriate systems to manage and interrogate data effectively.

5. Building Stronger Customer Experiences and Relationships as a Defensive Strategy

Gartner has predicted that by 2017, 89% of marketing leaders expect customer experience to be their primary basis for competitive differentiation. Creating focused direct-to-customer relationships is considered to be a key activity, both to protect profits and raise the barriers to new market entries.

A key driver for this change has been the onrush of innovative digital start ups leveraging mobile and social media to create highly targeted, niche offerings, is driving up competition and represents a growing threat to the profitability of incumbent retailers.


Retailers are in a race to align their brand and customer experiences with today’s digital consumer. At stake is billions of dollars in sales growth, protecting profit margins and fending off competitive threats. The road to success is challenging and requires retailers to be agile and innovate.

Knexus’ Experience Personalization solution helps retailers deliver optimum, personalized content experiences using a powerful content matching engine. The engine searches a brand’s relevant content (across multiple systems) to match with user data (eg CRM, transaction history, social behaviour) collected from a variety of sources. Delivery can be fully automated or manual.

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