Despite the US economy contracting 1.4% in the first quarter, consumer spending remains strong, growing 2.7% over the same timeframe. With inflation reaching a 40-year high of 8.6% in March, inflation-adjusted consumer spending still eked out positive gains at 0.2%.
Consumers are still opening their wallets even when it comes to discretionary spending. But with energy costs and a global supply chain crunch attributable to price hikes on necessities and everyday items such as food, gas, and clothing, consumers may need an extra push to respond to brands' traditional marketing approaches.
The way, then, for retailers to attract and retain cost-pressured consumers is to differentiate on a personalized customer experience, which is expressed through developing a personal understanding of an individual consumer.
Offering perceived added value that is sustainable over time can help when cost control is not an option. Consider, for example, a recent Dynata survey where 74% of consumers said brand loyalty is more about feeling understood and valued than it is discounts, loyalty perks or other offers that are available to every customer. Asked how a brand demonstrates a personal understanding, more than half (52%) of consumers said it was a brand sending relevant product and service recommendations.
Relevance in the cadence of a customer journey
Relevance that impacts brand loyalty may be greatly improved when a brand knows something about a customer so the brand can deliver content (an offer, message, image, etc.) that aligns with a customer's likes, preferences, or intent. Relevance in the context of a personalized customer experience also means that a brand provides content in the cadence of a customer journey, meaning that it is delivered at the exact moment and on the right channel optimized for the precise moment of engagement.
Knowing that a customer prefers blue, quarter-zip cotton sweatshirts in size medium is great. But if a brand automatically attaches those preferences to a specific device, a URL or even a known identity, and makes an offer on a product when that device or a logged-on customer visits the brand's website, it could introduce friction into the customer journey in many ways. The customer may have recently purchased the product in-store, someone in a household other than the customer may be using the device, or the customer may not even have an intent to purchase. Perhaps they want to start a return or reach customer service. Providing the level of relevance that drives loyalty means knowing everything there is to know about a known or unknown customer combined with an ability to provide a next-best action in real time on any channel.
Perfected data, a perfected experience
Applying data quality processes, including advanced identity resolution capabilities, the moment data is collected from every conceivable source is a prerequisite for demonstrating a deep, personal understanding of an individual customer. Probabilistic and deterministic matching using persistent keys ensures that a unified customer profile is updated every time there is a change in the underlying data.
Retailers often struggle with keeping up with entirety of a customer journey because they rely on outdated profiles. The problem is that a customer record that is days, hours, minutes or in some cases just seconds old may not accurately represent a customer — or what's important to a customer — at the moment of engagement. Brands try to overcome the problem of inaccurate or inconsistent data by hedging their bets, sending an offer impersonal or generic enough to perhaps suit a wider audience, but of course often falls flat.
In addition to perfected data, a personal understanding also requires a retailer to be consistent across every channel. For instance, an experience on the call center that contradicts an experience a customer receives through social media or on a chatbot has a high chance to introduce friction into the customer journey.
In McKinsey's Next in Personalization 2021 report that analyzed the value of personalization in customer experience, customers weighed in on what they consider a personal understanding. Nearly three-quarters of respondents (72%) said they expect a business they buy from to recognize them as individuals and know their interests. Examples of personalization touches included a brand having that familiarity whether a customer is online or in-store (72%), messages tailored to their needs (66%), and timely communications tied to key moments (59%). Consumers, the report states, associate a personal understanding "with positive experiences of being made to feel special. They respond positively when brands demonstrate their investment in the relationship, not just the transaction."
Other examples of consumers being made to feel special include when a brand follows up post-purchase or even sends a how-to video. As it relates to consumer worry about inflation, one thoughtful touchpoint could be a brand proactively reaching out to customers to show empathy, or even just to be transparent about a price increase.
But knowing the pitch perfect content for one customer vs. another customer comes back to having a single customer view, or golden record, that tells a brand everything there is to know about a customer. A golden record that combines perfected data from every source with a full transactional tail, and is updated in real time, is the key component for a brand to understand a customer beyond their purchases to also include an understanding of a customer's needs, attitudes, preferences, and intents.
Inflation is a concern for customers and retailers alike. But rising prices do not have to translate to fewer customers, not when customers are clear that they value the relationship they have with a brand, as reflected by a personal understanding, more than they do blanket discounts. In the Dynata survey referenced above, 64% of consumers would rather purchase a product from a brand that knows them, and 34% said they would spend more money on a product to do so.
Inflation is cause for concern, but with a personal understanding of an individual customer retailers can better weather the storm.