ERP As a Personalization Tool

Aug 14, 2006 8:49 PM  By

I am too young to have ever shopped at a general store. But I’ve heard stories and seen them in old movies. From what I hear, this was personalized marketing at its finest. I can only imagine what it would be like to shop in one, but I imagine it would go something like this: I walk in the front door and the shopkeeper greets me with a warm “Hello, Holly! How’s the family? Did you enjoy those apples you bought last week? By the way, I just got in a fresh shipment of those oranges you like…Oh! And if little Fido needs some more kibble his favorite brand is on sale over in aisle six!”

While those days of one-on-one contact seem to be long gone, the underlying need for consumers to feel appreciated and recognized for their patronage never dies. Multichannel retailing allows consumers to purchase through many channels, which creates new challenges when it comes to personalized marketing. All the data coming from multiple sources must be analyzed, merged, and cross-referenced to enhance marketing campaigns, improve customer service, and streamline order fulfillment, all while providing control and integration of the various processes, systems, and marketing channels.

Because of greater competition in the market, there is a pronounced emphasis on building relationships with customers and having them feel that they are being personally addressed during the entire shopping experience, whether they order on the Web, through a contact center, or in the store. Personalizing your customer contacts is supposed to accomplish one thing for customers: make them feel appreciated. Customers who are appreciated are loyal customers, and it is less expensive to retain a customer than to convert a new one.

Many multichannel merchants have a wealth of data readily available to help them personalize their customer contacts. But a large number of these marketers simply do not realize it or are not using the data properly.

There are many powerful analytical software programs that can help you query your customer data. For example, you might be able to look at customers with similar profiles such as similar demographic information or RFM (recency/frequency/monetary value) or LTV (lifetime value) scores and glean insights into common trends regarding products or categories of products purchased. You can then select upsell or cross-sell products based on what other customers in that group have previously purchased. By using questionnaires and surveys, you can also cross-reference and offer products complementary to customers’ preferences based on the answers they have given.

Even simple data such as name and address, which every customer must provide when purchasing from a catalog or online, can be a powerful marketing tool if analyzed properly. For years, catalog companies had the advantage of having the most fundamental personal data in their databases. This gives catalogers the advantage of being able to interact effectively with their customers. Purchase habits matched against demographic information is a powerful tool.

Personalizing the customer shopping experience by analyzing past purchases and demographic data will help build customer loyalty. A customer is more likely to order from a merchant who remembers him. E-commerce channels are particularly susceptible to customer loss. Internet shoppers are savvy, and with the advent of comparison pricing engines to help them easily locate the merchant with the lowest price, it is even more imperative to develop techniques to keep your customers loyal. Price competition is a fact of retail, but if the customer has had previous experience with your company and is loyal to your site or brand due to effective marketing, you run a lower risk of losing him to price competition.

In the past, brick-and-mortar retailers had difficulty identifying who their customers were. That changed with the prevalence of loyalty programs. These programs allow store retailers to gather the same information as their catalog and online and reap the associated benefits. As with everything else, however this information needs to be used properly. Multichannel retailers cannot afford to simply offer a generic reward program that doesn’t take into account past purchases or other factors. As soon as a competitor comes up with a more attractive loyalty program, the customer is going to leave. Personalization, again, is the key to retaining customer loyalty.

In addition to analytic software, enterprise resource planning (ERP) systems specifically geared for multichannel merchants can help you deliver a personalized experience to your customers. Some of these packages offer not only order management and fulfillment systems but also sophisticated analytitcs to help you analyze your data. ERP systems can allow for flexible campaign planning with market segmentation and list management embedded in the system. Currently available ERP features provide the ability to strategically manage promotions, and personalize marketing, item pricing, discounts, and shipping. After you’ve executed a campaign, an ERP system can provide deep visibility and analysis so that you can work to reduce costs, increase profit, and improve conversion rates.

What does this mean for personalization? Once he logs into your Website (or comes in from a strategically defined URL or through use of cookies) you will know exactly who the customer is and can offer upsell or cross-sell products based on demographics and previous purchases. In the contact center, the same rules-based matching logic applies: The customer service representative would be prompted to offer certain products at the time of the order.

Some grocery stores are testing an application whereby customers swipe their loyalty card through a reader attached to the shopping cart before they put anything in it. The retailer can then identify that customer at the beginning of the shopping experience rather than at the end, which has always been the biggest challenge in the brick-and-mortar channel. Using various other technologies such as wireless, RFID tags, and global position systems, the retailer is able to target that customer with cross-selling and upselling opportunities via a cart-mounted screen as the shopper moves around the store. Specialty stores can benefit from this technology using handheld devices that are presented to the customer or used by the sales representative as he assists the customer with his purchases.

Being able to know who your customer is as soon as he makes contact is a great advantage, and I hope we will see a lot more developments in technology to make this process more efficient for merchants. This technology adds further value to loyalty programs and encourages marketers to make optimum use of data. Generations X and Y have grown up with technology; if these are your customers, it is only fitting to speak their language and incorporate technology into the shopping experience..

We are a long way from the days of the general store, but when technology is used properly, consumers can still get an extremely personalized shopping experience.

Holly Haines is a product manager for Lincolnshire, IL-based Junction Solutions (www.junctionsolutions.com) who is responsible for the company’s multichannel retail ERP solution. She can be reached at hhaines@junctionsolutions.com