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Context Wins Out Over Personalization?

My thought at the time was that retailers focused too much on personalization and not nearly enough on relevancy, which they would understand not from knowing more about their customers, but from having a better view into patterns of customer behavior.

RSR has benchmarked retailers on their customer intelligence and marketing programs, going back to 2007. Over those last seven years, we’ve found that retailers have moved from being completely flummoxed by customer behavior – particularly during the economic downturn and exacerbated by the rapid adoption of smartphones – to, I think, generally understanding large patterns of shopping behavior. An individual shopping for a gift shops differently than someone shopping for themselves. A habitual reviews reader navigates product pages differently than someone who needs to know the nth degree of product technical specs. And every category of product has different requirements for presenting product information to consumers, based on the attributes that customers find important to them.

The battle between personalization and relevancy rages on. Since I wrote my article in 2011, Target has been publicly embarrassed by “knowing” that a teen in a household was pregnant before she (or her parents) did. They knew this from her shopping behaviors – from her shopping context. And yet other industry analysts have declared that context is in and personalization is out.

And that leads me to what I might have titled this article, which is “Context vs. Relevancy – Watch Out”. Just because you understand context, doesn’t mean that you’re relevant. These two words are not interchangeable, just as personalized and relevant are not interchangeable. I like the term relevant so much more than either context or personalization, because it combines the best of both – the unique attributes of the shopper, married with what that shopper is trying to achieve in their shopping objectives.

When it comes to understanding customers, and most importantly, acting on that information, I see a world made up of push and pull. Push is personalization – it’s using what I know about you to personalize my interactions with you. If you’re male, I probably don’t want to lead with women’s clothing in my communications with you. If you’re not a millennial, I might want to be a little more conservative in the fashions I promote, or maybe a little more health-conscious in the food choices I promote (we don’t live forever, but that awareness doesn’t seem to kick in until the body’s warranties start to expire). And of course, if I know your name, I should use it.

Pull is context – it’s what the consumer shows she wants from you by how she interacts with you. If a known customer who, no matter your best efforts, only shops you once a year, this year browses the new Gifts tab on your site, but then leaves without buying anything, maybe it’s worth an email with a reminder about your gift cards. If shoppers come to your site off a category level search term, and then bounce, maybe you need to consider what kind of category information you’re providing on your site. Maybe the amount of information is overwhelming, or maybe it’s at too low a level for what they’re looking for. You don’t need to know who the shopper is, whether they’re male or female or old or young. You look at their behavior, and it helps you understand what they’re trying to do. Buy a gift. Research products. Narrow a selection of product choices. Understand your shipping charges and timing. Find a store. These are all online behavior patterns that are very easy to recognize. Join that behavior with personal information, like an email address, and you’ve got an opportunity to start a conversation with a customer.

The caveat is, it’s a continuous feedback loop, and the more you engage with a customer, the more you need to listen carefully to what that specific customer is telling you. This is where relevancy becomes much more important. This is where unique behaviors override the assumptions you’ve made based off of demographics or behavior. Just because this shopper is male doesn’t always mean he wants you to lead with men’s clothing – maybe he only shops you for his wife. That shopper is going to judge you not by your understanding of his context, but by your understanding of what’s relevant to him.

Vendors, consultants, retailers themselves try to declare that one is better than the other, but the reality is, you need both push and pull. And you need to use both well. In the end, I can see a future where context is the main driver, and personalization is the icing on the cake. But right now I think the retail industry is good at the airplane-level understanding of customer behavior, and the day is going to come when that understanding needs to be ground-level. Is that one-to-one marketing?

It just may be.

This article originally appeared on RSR Research website http://www.rsrresearch.com and is reproduced with their kind permission.