About The O Alliance
The O Alliance is a new consulting model that leverages a network of transformational practitioners with expertise in all of the critical areas that will unlock value and empower a retailer ― digital/technology, operations, change management, marketing and talent. Designed to align a retailer’s organizational practices with today’s digitally savvy consumer, The O Alliance’s holistic approach delivers customer focused strategy and solution driven execution that creates a circular shopping ecosystem.
For more information visit our Expertise page.
Machine-learning Disrupts Personalized Marketing
Advanced, scientific personalization tools already disrupted one business vertical and are moving quickly into retail. Is your organization ready for it? Your customers are.
Intelligence-driven customer engagement tools are merging Big Data and business intelligence to dynamically personalize email, mobile and website “storefronts” in real time, and for each individual visitor. They’re redefining personalized marketing for retailers, just as they’ve done in the consumer package goods advertising segment. Prepare to keep pace.
Real-time personalization created by machine-learning algorithms is changing how – and how simply, quickly and effectively – a customer’s wants and needs can be met. Sophisticated mathematical technologies slice customer-centric data into thousands of dynamic behavioral segments, right down to an individual – providing real-time, scientifically accurate and increasingly intelligent personalization.
Simply put, this means individual customers receive marketing messages specifically designed for them. Each hyper-personalized message cuts through the ever-growing digital clutter, and helps build The Circle of One. At long last, “Segment of One”1 marketing is a reality.
A Win-Win for the CMO
As low-cost, simple-to-implement machine technologies emerge, scientifically fuse and crunch data sources, CMOs can focus their creative marketing skills on innovative and ground-breaking campaigns – not on rules engines and execution. Today’s technologies actually surpass human capabilities on some dimensions to create this new freedom. Finally CMOs are positioned to balance creativity and automation to exceed their companies’ revenue and market share goals.
This white paper will examine the current and potential impact of revolutionary, real-time machine-learning personalization techniques on The Circle of One and lifetime customer value. It will shed light on new solutions so dierentiated, that their advanced approach to one-to-one digital marketing is ushering in a new era in retail marketing.
To validate the wave of marketing disruption already underway and now headed directly at retailers, this white paper reveals how intelligence-driven personalization solutions, within just a few years, completely transformed the consumer package goods (CPG) advertising segment – where experts predict 75 % of advertising will be automated by 2018. Apparel, footwear and accessory retailers, among others, must learn from this earlier disruption and proactively start adapting their business models now to gain competitive advantage.
Read on to learn how this new wave of adaptive and predictive, intelligence-driven customer engagement tools can – and are – delivering the elusive Circle of One.
“The idea that the future is unpredictable is undermined every day by the ease with which the past is explained.”
-Daniel Kahneman, psychologist, author and Nobel Prize winner in economic sciences
Moving at the Pace of Real Time
For years marketers have acknowledged the concept of the “Segment of One1” – but the execution was the killer! Massive amounts of data, multiple data sources, and much touted technology solutions which still required human intervention, made achieving the goal of “Segment of One1” impossible. Marketers still strive to cut through the clutter, maximize their marketing spend and get closer to the customer. But, until now, all approaches were either highly dependent on expensive platforms and/or large teams, and none could move at the pace of real time. The sheer amount of data; accumulation of databases; cost of enabling technologies and their integration; and day-to-day process management, requiring both speed and headcount, have been onerous.
In addition, most approaches to personalization address a linear path to purchase. But today that path is circular, and the end state is The Circle of One. Within this circle, the consumer is at the core: All marketing content is individually targeted, with oers that are relevant, timely and which provide value − because they fulfill personal desires and needs.
Personalization Must be in Play
It’s a given: Personalization is critical across every touch point and “must be in play,” according to e-tailing group’s 7 th Annual Consumer Personalization Survey Report2, released February 2015. The study revealed that today’s consumers are not just more comfortable with personalization – they expect it. More specifically, the company’s recent survey of more than 1,000 consumers found that:
• 82% of those in the 25-34 age segment said onsite or mobile product recommendationswere “extremely influential”;
• 80% of all respondents said personalized product recommendations drive them to visit a retailer’s website;
• 79% want to receive personalized advertising on a retailer’s website;
• 78% would allow retailers to utilize information gleaned from in-store purchases in order to provide a more personalized shopping experience wherever they shop;
• 74% of all respondents said personalized product recommendations drive them to visit a retailer’s physical store;
• 53% said it was “important” that, when shopping online, retailers recognize them as the same person, regardless of the device they are using, so that they receive personalized and consistent shopping experiences;
• 53% purchase more from retailers who suggest products based on browsing or buying behavior;
• 50% want their personal information used to coordinate a better overall shopping experience;
• 49% want retailers to take into account their in-store purchases when marketing to them;
• 39% expressed frustration when retailers don’t offer personalized website
recommendations;
• 38% expressed frustration when retailers don’t send personalized email offers;
• 37% expressed frustration when retailers don’t consider online purchases when sending out subsequent marketing offers; and
• 34% expressed frustration when retailers don’t consider in-store purchases when
sending out subsequent marketing offers
“The pressure is on for retailers to meet these evolving expectations,” the report noted. “As has always been the case, consumer information is central to facilitating a sophisticated level of personalization.”
Imagine a spherical powerhouse of dynamic data that is analyzed in real time, with content and offers delivered by smart technologies, all revolving around one consumer’s preferences. Only this customer-centric approach to personalization can deliver the hyper-targeted offers and communications that shoppers crave, and which definitively maximize value.
Data Currency and Personalization Diagram
When executed by powerful new algorithms, truly customer-centered personalization now can be achieved, in real time and with little human intervention – because machines are driving the process. A consumer’s every search, inquiry, purchase, post and myriad other data points can be seamlessly fed into machine-learning algorithms that surpass current solutions, by unchaining the underlying power of customization. New tools that are quick-start, low cost, adaptive and predictive, make easy execution of this new level of customer intimacy a reality.
This is changing everything about retail marketing, and the customer’s expectation of a good and valued marketer.
Marketing experts using machine-driven personalization techniques are able, at long last, to concentrate on meeting revenue, profit and sales goals – not on rules, analytical reports and other execution details that restrain the art of marketing. Marketers that trust machine performance can better leverage their historic strength in creative functions, such as content creation, and media which excites customers, particularly those in trend-driven areas such as fashion, beauty, footwear, home accessories and the luxury space.
Sound too good to be true? For years this approach to scientific personalization has been changing the consumer packaged goods segment, where the vast majority of targeted advertising is automated by machine-learning algorithms that deliver spot-on results.
Outmoded Path to Purchase
The consumer’s retail path to purchase is no longer linear, with communications flowing from the top down, as depicted in the graph below.
Outmoded Path-to-Purchase
The entire customer communication pipeline has changed. Today’s consumers access information where, when and how they want it, with personalized content and oers received across multiple devices. The new path-to-purchase is depicted here:
Current Retail Path-to-Purchase
In this new purchasing scenario let’s image a customer like Sarah. Sarah is at home with her laptop, searching for a new handbag. Later she’s on her desktop where she’s narrowing the search, as targeted ads are delivered automatically. Later she uses her mobile to ask her Facebook friends about various styles, then searches user reviews. Later she clicks to brand sites to view product videos, as increasingly targeted ads continue to be served. She buys her selection digitally or in store. Later she’s back on her tablet to tell her friends, provide a review and post pictures on Instagram using her mobile phone. Sarah’s path-to-purchase has come full circle with its multiple touch points, as depicted above.
The Evolution of Consumer Package Goods Personalization
Consumer Package Goods marketers once flocked to the mass-impression banner ad, supporting it with a majority of their digital ad spend. As this manually directed initiative grew, consumers became distracted and irritated by irrelevant banners popping into their digital workspaces. As shoppers began demanding customized communications, the effectiveness of mass impressions waned.
Today most CPG companies plan, buy and deliver super-customized digital promotions based on machine-learning algorithms that scientifically drive personalization and advertising redirection. Algorithms mechanically determine if the right ad was served to the right segment and, if not – when promotions do not meet performance metrics – automatically redirect ad funding to alternatives predicted to deliver higher ROI.
Known as programmatic advertising, marked by machine-learning algorithms at its core, this disruption in the CPG segment has significantly reduced the amount of human intervention required to decide where and how to advertise, and has forced less advanced ad services out of business. This rapid change took place in less than just five years. Why? Because it produced astonishing results.
“Programmatically planned, delivered and optimized advertising has demonstrated remarkable success in targeting advertising to specific customers, based on the shopper’s demographic profile and purchase behavior across desktops, tablets and mobile,” stated Greg Murtagh, president of the Seismic Group5.
Many algorithmic-based ad platforms take in data from several sources to help inform the ad buy, and “know what you’ve browsed and clicked on, which content sites you visited and what products you buy,” explained Murtagh. “Brands now have the tools to know what ad to serve you, when to serve it and what the creative should be, resulting in complete shopper personalization.”
As recently as four years ago, little CPG advertising was planned and purchased programmatically. “Today roughly 50% of all digital display advertising is programmatically planned and purchased,” added Murtagh. “In another year it will rise to over 60% and in three years I predict it will exceed 75% of all display advertising – because it works.”
In late October 2014, eMarketer reported6 that U.S. programmable ad spending was expected to “increase another 47.9% [in 2015] and to double this year’s total by 2016, when it will reach $20.41 billion, or 63.0% of US digital display ad spending.”
What Does This Mean For Retailers?
The evolution of marketing capabilities has a direct correlation to the world of retail. As programmatically automated technologies and algorithms press into the retail marketing space, “they will drive personalization at every media touch point,” said Murtagh. “Their differentiated ability to merge Big Data and business intelligence then automatically personalize the advertising message has ushered in a new era of adaptive and predictive marketing.”
For years one-to-one marketing has paid o online; as the concepts envelop the physical store, they will significantly impact how retail store productivity is measured, according to a May 2013 “Kurt Salmon Insight”, titled: 1:1 Retailing —The Future of In-Store Retailing7. “The conversion rate of non-organic traffic delivered to a site without personalization hovers at just 2% to 3.5%,” “Kurt Salmon” reported. “But give that customer personalized recommendations based on their personal history and products he or she is browsing, and watch those conversion rates climb tenfold.”
Just as past technologies allowed the strategy of one-to-one marketing to be applied to digital retailing, “it is now inviting us to begin applying it to physical retailing: one-to-one retailing,” stated Kurt Salmon. “In the very near future, retailers will provide pervasive, personalized customer relationships and experiences which extend across all of their customers’ visits, channels and locations. These personalized experiences will boost customer engagement, traffic, conversion rate, basket size and long-term customer loyalty, ultimately fueling a fundamental change in acceptable retail store productivity.”
Furthermore, the Insight disclosed that “given the rapid transformation facing retail store experiences, it is critical that retailers develop a rapid innovation strategy. Successful retail innovators will identify one owner of the customer experience across channels, build a continuous innovation process, evolve how they measure success and dedicate ongoing funding specifically to customer experience innovation.”
Just For You?
Personalization may not sound cutting edge to consumers who browse for a cocktail dress, only to have ads for that same cocktail dress chase them around the Internet for days, noted an April 1, 2015, article in The Washington Post8. “But the technology retailers are using now is much more sophisticated….[Retailers recognize] that, more than likely, a customer doesn’t want two red cocktail dresses – she’d be more likely to spring for a gold clutch and a sultry lipstick to complete the look.” Even so, “experts say that many of the personalization eorts seen across the industry so far do not fully unlock the potential of [personalization] technology.”
The Yin and Yang of Today’s CMO
New adaptive and predictive marketing technologies merge execution channels (websites, stores, mobile, email, advertising) “with veritable one-to-one personalized messaging to enable genuine ‘omnichannel’ execution,” stated Brian Andersen, a partner with LUMA Partners9, a strategic advisory firm focused on digital media. “And because one-to-one targeting is essential for e-commerce today, we see adaptive and predictive marketing platforms emerging as the core data management and personalization system to coordinate interactions with consumers across various channels.”
As programmatically automated technologies and algorithms press into the retail marketing space, “they will drive personalization at every touch point. Their differentiated ability to merge Big Data and business intelligence then automatically personalize the storefront has ushered in a new retail category – adaptive and predictive marketing.” -Greg Murtagh, president of the Seismic Group and founder of Triad Retail Media
Several predictive solutions have moved the needle on retail personalization. But none, until now, have flung it off the gauge.
Some earlier-stage decision tools still used today in e-commerce and retail marketing have made inroads by leveraging parameters and algorithms to analyze customer behaviors. They utilize primarily internal databases and increasingly external Big Data to:
• Scientifically determine how a customer interacts with a brand;
• Identify an individual’s buying and browsing history across the web;
• Isolate behavioral segments;
• Create and build segmentation; and
• Customize the storefront
But none of these tools – including those from well-known personalization vendors – has allowed marketers to blend the art of creative marketing with the science of programmatic, machine-learning algorithms and automated real-time adaptive personalization capabilities. All earlier-stage tools require human interface, and not one has delivered enough innovation to generate a new category of digital retail marketing. Why? Because they require human intervention to determine how, where, when and what to personalize, based on yesterday’s data. Conversely, revolutionary new digital, adaptive marketing tools rely on scientifically accurate machine algorithms using real-time data to accurately conduct the personalization process. These intelligence-driven solutions leverage thousands of parameters and hundreds of algorithms to scientifically make marketing decisions based on real-time customer attributes and behaviors – and create The Circle of One.
The impact? Real-time marketing is disrupting the retail segment.
“Retailers will experience significant changes in most major areas of digital marketing,” explained Andersen. “Among those changes, if I had to select the most important advancement, I’d say it was having the capability to enable real-time decisioning of consumer data.”
Thus the “Yin and Yang:” As retail marketing increasingly relies on technology, some CMOs fear the loss of creativity. With over 1,000 marketing software companies from which to choose, just finding the right tool is massive. Then there’s the long-term implementation, and justifying of the technology spend.
MEET AIMEE
She’s revolutionary. Why? Because she’s:
• Implemented quickly, within weeks
• Low-cost, requiring no license fees
• A pay-for-performance model
“Aimee Soft is an SaaS-based provider of innovative, automated solutions for B2C websites. The Tel Aviv-based company was founded in 2011 to bridge the gap between Big Data, Business Iintelligence and online storefronts. Aimee Soft has helped intelligence verticals such as hospitality, banking and airlines maximize the value of every online visitor, in real time.
The company now offers its technology solution to the retail segment.
In response, marketing lines are becoming further blurred by the creation of new positions such as Chief Marketing Technology Officer, created to deal with growing retail IT complexity.
But there is an alternative view: Imagine if the role of CMO could lean into the best of the art and science of marketing through innovative advancements in technology. For example, envision an advanced machine-learning digital marketing platform that scientifically evaluates the interests, of each digital storefront visitor, predicts that consumer’s interests then unleashes the most appropriate campaign and personalized message. Could these revolutionary solutions change the world of retail marketing? They can. And are.
Consider the innovative new tools – such as AIMEE, from Aimee Soft10 — which automatically create marketing offers with a specific customer in mind. Designed for easy, low-cost adoption, which significantly boosts overall customer lifetime value, Aimee Soft’s precision allows marketers to spend more time on creative content – not deciding on offers, discounting schemes and test procedures – thereby enhancing marketing creativity. When machines are trusted to do what they do best (deliver the right targeted offer) and talented merchants and brand marketers can focus on what they do best (create the right product, offers and brand story), the business starts growing significantly.
How Does Machine-learning Digital Marketing Work?
Unlike any personalization tool offered to date, advanced machine-learning digital marketing platforms scientifically evaluate the interests of each visitor to a digital storefront…. then, for highest productivity, predict what offer that visitor will see.
For example, AIMEE starts creating lifestyle clusters based on IP address, which reveals location (county, city, postal code) as well as local time, weather and ISP organization (company, individual, college, government). All AIMEE requires is a few lines of JavaScript activated on a retailer’s execution channel.
Machine-based algorithms then create thousands of clusters of personalities with similar attributes and behaviors. Other systems have accomplished this before, but AIMEE now steps up the game. Rather than simply select from a narrow group of pre-determined offers to display to clusters, or await human interpretation of offer results, AIMEE recommends the offers then continues to learn, refine and deliver increasingly targeted marketing offers. With the competitive ability to deliver individualized offers across digital storefronts, specialty retailers save time as well as improve ROI and customer lifetime value.
“Marketers today deal directly with characterizing customers and clusters, a gigantic, time-consuming effort supported by expensive services that’s set to fail because the job is beyond human reach,” stated Yossi Boker, CEO of Aimee Soft. “AIMEE outperforms any other service in creating real-time effective clusters and instantly amending them to coincide with market shifts. Surprisingly, there’s no need for expensive tools, staff members and IT contractors, because AIMEE eliminates these marketing expenses.”
With AIMEE, as each customer reaches an engagement point, “the behavioral prediction algorithms scan, analyze and infuse internal and external Big Data, crunching it in milliseconds with thousands of parameters that build and tailor existing clusters, and create new ones,” explained Noam Zeigerson, CTO of Aimee Soft. “The more customers interact with a retailer, the more the machine learns, becoming increasingly granular in its content, delivery and customization.”
Before AIMEE, retail marketers could present only a few landing page images to every visitor, or order product images by best selling, newest, etc. “Now marketers can use digital, adaptive marketing dashboards to unleash the fixed order of product carousels,” said Zeigerson. “Machine algorithms instantly recognize customers based on information scientifically pulled from thousands of clusters and myriad data sources, then automatically order the images and tailor the campaign – in real time – to each specific visitor. The technology replaces human intervention by dynamically engineering the lifetime value of each visitor based on specific business metrics and content served.”
“Marketers today deal directly with characterizing customers and clusters, a gigantic, time-consuming effort supported by expensive services that’s set to fail because the job is beyond human reach. AIMEE outperforms any other service in creating real-time effective clusters and instantly amending them to coincide with market shifts. Surprisingly, there’s no need for expensive tools, staff members and IT contractors, because AIMEE eliminates these marketing expenses.”
-Yossi Boker, CEO of Aimee Soft
Personalization Improves Revenue by More than 30%
StyleRiver, an Isreali online retailer of men’s, women’s and kids’ apparel and accessories, implemented an adaptive and predictive marketing solution on just two category pages, resulting in decreased cost-per-impression and increased click-through rate. The bottom line was a 30% revenue improvement.
AIMEE’s unique characteristics are revolutionizing retail marketing.
• Speed of Implementation. AIMEE’s friendly, intuitive nature allows marketers to start unleashing advanced adaptive and predictive campaigns in a matter of weeks – not months, as required by other personalization tools. Speed to market is unprecedented. Since she’s “plug-and-play,” you don’t need costly integrators.
• Low cost. AIMEE requires no monthly license fees, no new software packages and no interruption to existing workflows and IT infrastructures.
• Pay for Performance Guarantee. AIMEE won’t ask you to pay unless sales increase.
In real time, AIMEE determines the best content to place in each digital storefront area for millions of individual customers − without human interaction. She does this in less than 200 milliseconds! AIMEE gives you an intuitive and flexible KPI dashboard and unifies personalized messages across both owned and paid channels.
With AIMEE’s adaptive email templates, targeted email content is created in real time − the moment an email recipient clicks to open. The inclusion of machine-powered email in any digital adaptive marketing tool is key: “Targeted email consistently has been the highest ROI marketing channel available,” stated Andersen. “It’s also become the ‘connective tissue’ for linking online advertising to offline purchases to derive attribution.”
With tools such as AIMEE coming to the market, digital marketing campaigns can only get better.
Specialty retail marketers also can adjust campaign delivery based on business goal, whether it’s increased revenues, orders, conversions or other target. With a quick glance at AIMEE’s performance dashboard, marketers can modify images, campaigns and offers to best meet specific goals.
Let’s face it: Adaptive and predictive marketing – fueled by a customer’s wants and needs then coupled with technologies and algorithms that address those desires, in milliseconds – is only possible with machine-driven solutions. And unlocking true enterprise value requires a customer-centric ecosystem speaking directly to The Circle of One.
Industry Thought Leaders Predict New Levels of Individualized Personalization in 2015
In January 2015, an SAP blog11 highlighted customer experience predictions for 2015, gathered from industry thought leaders around the Internet. Of the 10 “spot on” predictions highlighted, four pointed to increased investments in technologies that allow retailers to individually personalize their customer interactions:
• “In 2015, we’ll see…an increase in investments in technology that will help companies create personalized and individualized marketing communications. Companies will strive to create one-to-one relationships with their customers integrated across all their favorite channels – email, social media, phone, in store and on desktops, mobiles and tablets. Through the use of technology, I see companies being able to centralize their customer data and being able to tailor experiences to each customer’s individual needs and wants….The companies that can bring all this data together and treat customers like individuals will be the ones that quickly create customer advocates, see growth in revenue and create sticky, strong competitive advantages.” Ross Beard, Customer Experience, October 28, 2014.
• “In 2015, marketers will prioritize personalized experiences for individual customers. As they connect and collect customer data across channels, they’ll use that information to inform authentic conversations. Those who do this well will manage to rebalance the art and science of marketing.” Nate Barad, Product Marketing Director at Sitecore.
• “2015 will bring personalization to a new level with the advent of hyper-personalization in customer interactions. Every interaction, whether in general online or specifically with your brand, will be captured and compiled. Algorithms will comb through all of that data to provide customized, tailored information for each customer. Each interaction will be an opportunity for brands to fine-tune these algorithms to determine the wants and needs of each individual, and not just the collective demographic.” Keith R. McFarlane, Liveops, 2015 Prediction: Hyper Personalization Will Be The New Normal, December 8, 2014.
• “In 2015, exceptional customer experience will differentiate brands. Online pricing comparisons and same-day shipping have neutralized factors like cost and availability that once offered a competitive edge. In this democratized landscape, organizations need to use all the data at their disposal to create personalized, relevant experiences…While it’s easier said than done, the technology exists to accomplish this kind of personalization at scale. Experience platforms allow marketers to harness data and more easily engage customers at every stage in their life cycle.” Nate Barad, Product Marketing Director, 5 Predictions for Customer Experience Management in 2015, Sitecore.
Claim Your Future
Decades ago mass marketers recognized the “customer segment.” Specifically, in 1989, Boston Consulting Group touted the “Segment of One.” In 2013, Kurt Salmon forecasted “one-to-one retailing.” Myriad retail professionals have been nodding their heads.
Yet here we are in 2015 – with customers demanding to be addressed individually – and few retailers
have achieved segmentation with notable success. Why have most retailers been so slow to innovate?
Can you afford to wait another decade – especially if your competitors aren’t – before enabling new processes and technologies? The pace of change in retail is now at record speed: Is your organization ready to keep pace? Companies that don’t move forward, or at least experiment – perhaps because of the mistaken view that all technology solutions are a multi-year, multi-million dollar investment or that the organization has all the internal resources required to execute – are risking insignificance. Retailers incapable of delivering a personal customer experience face more than low return on marketing spend or banishment to the trash file with a left swipe…..their very future viability is at risk.
Today’s advanced personalization technologies are not only scalable, easy to implement and cost less than you’d ever imagine, they’ll directly impact your bottom line.
Will you leverage the advantages of this disruption? Or, like the less advanced CPG ad services, be forced out of business?
Fundamental changes in organizational design, process and collaboration are required to unlock value, even with the best of point to point solutions, The O Alliance12 network of consultants, providers and affiliates can help you claim your future. Are you ready to take a chance on trading human intervention for highly accurate, machine-learned, behavioral-based and data-rich personalization tools? Your customers are waiting.
About The O Alliance
The O Alliance is a new consulting model that leverages a network of transformational practitioners with expertise in all critical areas that unlock value and empower a retailer, including digital/technology, operations, change management, marketing and talent. Designed to align a retailer’s organizational practices with today’s digitally savvy consumer, The O Alliance’s holistic approach delivers a customer-focused strategy and solution-driven execution that creates a circular shopping ecosystem.
The O Alliance’s proprietary Seamless Circular Commerce model, and its organization alignment process, “The O MethodTM,” places all customer behaviors and preferences at the center of commerce creation. The Circle of One is at the heart of this proprietary process, which replaces – rather, disrupts – outdated organizational structures, information siloes and omnichannel attitudes to maximize the value of customer data. “The O MethodTM” condenses massive amounts of customer-centric retail datacurrency into commerce creators across the entire retail ecosystem: Information is leveraged from myriad domains to drive lifetime customer value and increase wallet share. With customers at the core, all retail processes and customer touch points are seamlessly interrelated.
Customer-centric Seamless Circular Commerce allows retailers to create deeply personalized customer experiences that drive organization revenues and profitability.
Footnotes:
1 http ://www.bcg.com/documents/file13895.pdf
7 http://www.kurtsalmon.com/en-us/Retail/vertical-insight/807/1%3A1-Retailing
9 http://www.lumapartners.com/
11 http://blogs.sap.com/innovation/sales-marketing/10-customer-experience-predictions-2015-02147220