Personalized User Journeys By Kevin Jackson Global Sales Director Gravity R&D 12/15/14
Table of Contents Omnichannel and Retail 2.0... 3 Moments of Truth (MOTs)... 4 ibeacons, MOTs, and Big Data... 5 Personalized User Journeys... 7 Online Stores Plant Virtual Flags... 8 Brick & Mortar Areas of Influence... 8 Conclusion... 9 About Gravity R&D... 10 2
Omnichannel and Retail 2.0 Omnichannel can be defined as the seamless customer experience across all platforms. Today, these platforms include brick & mortar, PC, tablet, mobile, and now wearables. The importance and emergence of omnichannel is directly related to the dramatic rise of web impacted retail. Forrester Research has recently estimated that this year, 52% of all U.S. retail sales will be influenced by, or occur online. 1 Web impacted retail is forecasted to grow significantly not just in the U.S., but in markets all around the world as the lines between offline and online cease to exist. The fusion of online and offline activities is a big part of the transition from Retail 1.0 to Retail 2.0, which involves enhancing consumer engagement within brick and mortar, moving beyond simply blending in the online and the mobile experience, all driven at the heart by sophisticated big data tools that truly enable contextual, personalized and real-time conversations between brands, retailers and consumers. 2 Many people believe that retail stores fall victim to showrooming, where people view items in-store and then later buy them on-line. In reality, it is actually webrooming that is more prevalent as people research items online and then buy them offline. The truth is that the game has changed for brick & mortar and online stores, and both must adapt to meet the needs of the modern consumer. The personalized user journey is a strategy designed to help your business take advantage of the opportunities that our connected world is now offering. 1 Forrester Research Web-Influenced Retail Sales Forecast, 2012 to 2017 (US) 2 Retail 2.0: the convergence of wearables, ibeacons and big data: Gigaom Research mobile report, Aditya Kaul, 4/29/14. 3
Moments of Truth (MOTs) Procter & Gamble has done an enormous amount of research on how to influence MOTs. The explosion in the number of mobile devices in recent years has created both opportunities and challenges for companies like P&G. The expectations of younger demographics can no longer be met with flashy in-store signage. The creation of a loyal customer now require modern, real time solutions that are personalized and localized. In order to illustrate how MOTs work, let s now consider the example of Greg Perkins, who is 27 year old marketing manager looking to buy a new camera. MOT 0: This MOT was coined by Google and refers to how the consumer first goes online to collect information to support a possible purchase. Sure enough, Greg surfs around on the Internet and finds a few cameras that he likes using his ipad. MOT 1: Greg bought his ipad from the electronics store Social Digital, and was quite satisfied with the price and service. He goes to the Social Digital site using his laptop and starts looking at cameras. Suddenly, Greg gets a personalized recommendation for one of the cameras he is interested in. The offer is too good to pass up and Greg buys the camera based on the recommendation made by Social Digital. MOT1 was heavily influenced by the right offer at the right time to the right person. MOT 2: Social Digital is now promoting their new app and Greg has installed it on his phone. The app allows Greg to choose what products he would like to receive offers for, and Greg selects a few items that are on his wish list. As Greg is walking through a shopping mall, he receives a notification on his phone from a nearby ibeacon about a flash offer for a smart watch. Greg has been thinking about smart watches and buys it 4
online using his mobile phone. He then walks to the Social Digital store located in the shopping mall and picks up his new smart watch. MOT 3: Social Digital continues to learn more and more about Greg across all platforms and gets him to join their loyalty program as well. Greg is now a loyal customer and thinks of Social Digital first when considering buying any electronics products. ibeacons, MOTs, and Big Data Brands like P&G are taking notice of ibeacon technology and how it can be used to significantly affect MOTs. ibeacons are small devices that broadcast a BluetoothSmart radio signal to trigger alerts or messages on consumer phones. The key benefits of ibeacons include: 1. Accurate indoor location. Wifi and GPS are ineffective indoors. 2. Venue and application specific. 3. Users can choose what notifications to receive or none at all. 4. Passive, and not active approach. No scanning or tapping required. 5. Hardware is cheap and low maintenance. Once ibeacons are installed, they can also serve up useful data such as where customers enter and leave selected areas, how they found these areas, and how long they stay in these areas. Imagine a shopper standing in a shoe store. Suddenly, this shopper receives a personalized offer from his favorite sneaker brand. This offer was able to influence the Moment of Truth as the sneakers became instantly differentiated from the rest. 5
The microlocation data provided by the ibeacon is combined in real time with Big Data to: 1. Contextualize and personalize marketing campaigns using realtime data. 2. Enhance and enable omnichannel retail capabilities by integrating online and offline data sets. 3. Identify the most valuable customers and improve brand loyalty. 4. Provide intelligence on viability and success of online and offline retail channels. 5. Provide predictive analytics capabilities forecasting customer buying patterns. Delivering the right offer, to the right person, in the right place, at the right time, on the right device is also referred to as proximity marketing. The recent Forbes article entitled, How Proximity Marketing Is Driving Sales 3 3 How Proximity Marketing Is Driving Retail Sales, Forbes, Greg Petro, October 8 th, 2014 6
provides analysis and evidence regarding how proximity marketing will close the last gap between the customer and the register. According to Ninth Decimal, a mobile audience intelligence company, targeted, personalized offers are strongly correlated to higher conversion rates: 53% of consumers are willing to share their current location to receive more relevant advertising. 57% of consumers are more likely to engage with location-based advertising. 62% of consumers share local deals with friends. 63% of consumers feel a coupon is the most valuable form of mobile marketing. The Chief Marketing Officer of MyBuys, Daniel Druker, commented in a recent interview, Our data shows that marketers who fully implement a customer centric strategy can generate 15%-25% higher sales and improve customer lifetime by up to 500%. 4 Omnichannel, Retail 2.0, Moments of Truth, and proximity marketing all point to the same thing: UX = ROI. Enhancing a user s experience with more personalization and relevance is strongly correlated to higher conversion (ROI). Personalized User Journeys In this paper, we have established that due to the rapidly changing habits of consumers, a seamless experience across all platforms is critical to success. We have also shown that the Internet has a huge influence over the entire retail industry, both online and offline. Microlocation data from ibeacons now allow personalised offers and content to be delivered to the right person, in the right place, at the right time, on the right device. 4 22 Retail Executives Share Technology Predictions for 2014, Retail Touch Points 7
One-size-fits all, mass marketing is still used in markets all over the world. It is commonplace to see the same advertisement slapped on every available outdoor and indoor advertising space with little regard to what is actually happening in these areas. The strategy of mass advertising is to create an overall brand awareness so that people will see so much of the brand that they will feel compelled to buy it. The world has changed, however, since the days where the Marlboro cowboy was a part of almost every city s landscape. Younger demographics now demand a different dialogue; one that is interactive, relevant, and personalized. Now, with the help of microlocation data, we can deliver these recommendations to people at precise times and locations. Online Stores Plant Virtual Flags In addition to personalizing content for specific people, what about customizing content for individual microlocations? For example, an online retailer might place ibeacons around athletic stadiums or crowded public areas that host sports activities. For these microlocations, they would broadcast personalized offers for items related to sports. ibeacons placed in areas where lots of young people hang out would broadcast offers for products that have proven to be popular with these demographics. Finally, ibeacons can be placed in the areas outside of brick & mortar stores to alert people about online deals before they even reach an offline store. Personalizing content for locations and then for the people in those areas leads to higher degrees of relevance, conversion, and customer loyalty. Brick & Mortar Areas of Influence Physical stores can no longer be satisfied with controlling the real estate under their rooftops. As we have just described, competition for consumer dialogues is happening well before consumers are able to reach the front 8
door. Deploying ibeacons in areas around bricks & mortar stores is one way to establish a personalized communication with consumers and take advantage of impulse buying habits. In our fast moving world, people have less time for shopping and value convenience highly. Due to the rise of m- commerce and the desire to receive products quickly, ibeacon notifications can be used to allow people to see an offer, purchase it with their mobile phone, and then go to the nearby store directly to pick it up. No more check out lines, just the right product in the shortest time possible. This is a decided advantage that brick & mortar stores have over online retailers and the reason why Amazon recently signed the lease for opening a store in Manhattan. Conclusion We are living in extraordinary times where our world is changing faster than many of us are able to realize. Businesses in all industries must adapt themselves to a world where people are empowered with real-time information and require personalized user experiences in exchange for their loyalty. Omnichannel is no longer a choice and delivering seamless experiences across all available platforms is mandatory. While all of this may sound like bad news for businesses, this is far from the truth. Enabling personalized user journeys may be a challenge, but it is also a huge opportunity and one that can lead to substantial financial rewards. Since Gravity is one of the world s leaders in machine learning and recommendation engines, we can help clients to realize the opportunities of omnichannel and proximity marketing activities and avoid the pain points. While the omnichannel can build a loyal customer base, a poorly executed omnichannel plan can send customers running into the arms of competitors. The transition to Retail 2.0, however, is well under way and consumers are not giving businesses a choice in the matter. The customer 9
is king and their expectations are high. The personalized user journey is not about how consumers behave online, but rather about how online affects the entire lives of consumers. About Gravity R&D Gravity R&D was founded by a team of data scientists who entered the Netflix open competition in 2006 to create the best collaborative filtering algorithm to predict user ratings for films. In 2009, Gravity was a part of the group that tied for first place. This was quite an achievement given that there were more than 44,000 submissions from more than 5,000 groups. Gravity has gone on to become one of the world s leaders in machine learning and recommendation engines and currently provides services to clients like Dailymotion, P&G, RCI (part of the Wyndham Group), Schibsted and Naspers. About the Author Kevin Jackson is the Global Sales and Marketing Director for Gravity R&D and can be reached at kevin.jackson@gravityrd.com. Contact Us To learn more about how Gravity R&D can help your organization harness the power of personalized user journeys, please go to www.gravityrd.com. 12/15/14 10