Boots has made a great, if long-overdue decision to digitise its famous advantage card.
The discount points earned with each Boots purchase are usually lost along with the card, at the bottom of handbags and wallets, never to be seen again. This is proof of one thing more than anything else - that Boots did not know its customers well enough.
Today’s battle for survival of the fittest in the retail space has highlighted that knowing what your customers want requires far more than simply knowing their buying behaviours and patterns. Customers today need to be recognised as individuals with a unique sense of brand affinities, understanding of technology, and buying intent.
Boots’ initiative shows a willingness to adapt in order to survive. Up until now Boots has been relegated to the position of a fast follower, scrambling to mimic the model of prescription subscription services like Pharmacy2U, by offering home delivery on its prescriptions, instead of paving the way as it once did, by using its market advantage to give customers what they really want,
So, what brought us to this?
Not a lack of trying, of course. In the past, brands and retailers devised hundreds of creative schemes designed to attract and keep consumers, all based on the premise that personalising their offering would lead to a better shopping experience and increased customer satisfaction and loyalty. After years of trying to improve on the same, classic personalisation tactics, today the signs are pointing towards a shift.
Consumers in 2019 are savvier and more educated than ever before on their shopping options. A single click will order anything you need to your door. Five minutes online will show you the best prices and most convenient locations to do your shopping. The latest ONS Retail Sales Index figures confirm that shoppers find the online experience increasingly attractive in comparison to the physical one: the overall trend over the last years points firmly upwards.
In the increasingly desolate brick-and-mortar retail landscape, it’s no wonder that Boots saw the need to get ahead by ditching the paper-only discount coupon that was getting them nowhere. It has instead opted to meet its customers on their own terms, online.
Within the marketing sector, there is no doubt that this will prove to be a great advantage for Boots. After all, its 17 million active members are, like every other brand’s customers, tired of being seen as a more or less well-defined part of a marketing-created segment – a rough aggregation of households or individuals with RFM scores– that they hope will behave similarly. These marketing tactics used in the 90s and early 2000s will not work anymore on the discerning, options-rich shoppers of today - and brands and retailers are becoming increasingly aware of that.
But what is the shift that brands and retailers need to make in order to continue attracting and maintaining their customers? We are seeing a trend towards “hyper-personalisation” – the ability to use the latest advancements in computing power, big data and artificial intelligence in a potent mix that can help customers at an individual level craft their own, unique personalised flow. Unlike prior segment-based approaches, hyper-personalisation knows that Prince Charles and Ozzy Osbourne may be of the same age, but they both are most definitely interested in different things.
Hyper-personalisation means that brands and retailers need to develop three ways of looking at their customers:
Recognise the customer as an individual.
Use previously unlinked, but invaluable, unstructured data points that paint a picture of each shopper’s online shopping journey. Using NLP (Natural Language Processing, a part of Deep Learning AI applied to product recommendations), ingests product descriptions, user reviews, partner data, user generated content, shopper activity and behavioural data, and creates a more relevant shopping experience, driving conversion and engagement rates. For Boots, this can mean that with each use, the new advantage card will allow the retailer to know each shopper’s context better and offer discounts and benefits that they can really use (no more makeup for children!)
Understand the reasons behind consumer choices in real-time.
Marketers put a lot of effort into manually creating segments based on demographic and psychographic models, which help them understand and target their customer base and attract new shoppers. With the latest tech for retail, the AI can discover new segments on its own, to bring forward potential customers that would have otherwise remained unseen. This helps in both fine tuning the "macro” segments into finer micro-segments that are clustered based on actual spend patterns and deal-seeking propensity, as well as freeing marketers to go back to the part of the job they love, the creative side of marketing.
Inspire customers with personally tailored products and content.
It’s all well and good, but brand loyalty is not built in a day. A perfectly targeted recommendation might work once or twice, but not for much longer. In order to choose one brand among all the others competing for their attention, shoppers need to feel inspired by its offering in a more meaningful way.
Boots itself acknowledges that the digital card will “give customers more opportunities to tailor and personalise offers” granting a rewarding shopping experience that they will want to repeat, creating a long-term, personal and meaningful relationships with each customer instead of an intermittent (and unreliable) series of occasional transactions.
If one brand offers the product alone, and the other provides individually relevant content as well, shoppers will be drawn to the second, as they see the potential of their purchase. They feel that they, their tastes and likes are seen and catered to, in a fulfilling experience that is worth repeating.
In conclusion, personalisation, like everything else, needs to evolve. Today, hyper-personalisation is here, which uses AI to really know customers as individuals, not just as part of a digital loyalty program that captures purchases and discounts, but is able to truly enable customers to define their own journey and be assured of a personal experience.
Raj Badarintath is the vice president marketing and ecosystems at Rich Relevance