In today's rapidly evolving marketplace, where customer preferences and behaviours constantly change, retailers and brands face the challenge of effectively engaging and retaining their audience. A key strategy to overcome this, is the use of personalisation and targeting. In this article, we will explore the impact of effective personalisation, the different approaches and outputs when comparing personalisation versus a targeted approach, and share insights gained through our shopper insights and segmentation capabilities.
Personalisation: Tailoring Offers to Individual Customer Needs
Personalisation lies at the heart of creating highly relevant and impactful engagements that resonate with customers on a personal level. By leveraging data and insights about customer preferences, purchase history, and behaviour, retailers and brands can craft personalised engagements that speak directly to a customer's specific needs. At Catalina UK, a prime example of highly effective personalisation is our My Favourite Deals (MFD) program, where over 10,000 unique offers and promotions are assessed and simplified to provide each unique customer with a highly personalised communication, highlighting their most relevant combination of offers and promotions based on their past purchase history and preferences. This helps customers quickly and easily identify the products that are most relevant to them at the best value whilst driving incremental sales and repeat visits, which benefits both the retailer and the customer.
In our recent shopper survey, 72% of shoppers stated they were more likely to choose a supermarket that offered them personalised coupons or offers.
Targeting: Relevant Offers to Specific Customer Groups
While personalisation offers a highly individualised approach, targeted campaigns focus on delivering relevant content to specific customer segments. These targeted campaigns utilise business rules and customer segmentation to identify groups with similar characteristics or purchase patterns. For instance, a reactivation campaign targets customers whose visits have been decreasing, aiming to retain them by offering a generic yet enticing challenge with a substantial reward. The challenge in providing personalised offers to these customers lies in the limited availability of up-to-date information on their preferences due to their infrequent interactions with the retailer, so in this case a targeted approach fits the business and customers’ requirements.
With the ongoing cost of living crisis and other economic pressures, many customers are currently preferring offers that have more freedom on how the end user benefits from it:
Finding the Sweet Spot: Balancing Personalisation and Targeting in Offer Strategies
Between highly personalised content and targeted campaigns, there exists a sliding scale that allows retailers and brands to adapt their approach based on their specific objectives. At one end, personalised offers provide a one-to-one experience, tailoring content and offers to each customer's unique preferences. These personalised campaigns, such as MFD, have proven to drive incremental sales and boost customer loyalty. At the other end, targeted campaigns follow a one-to-many approach, offering a single offer to a broader audience, whilst still highly effective in driving business KPI’s, they appear to be more suited to addressing consumers where the retailer or brand has less data about them, however, still want to encourage them to re-engage and make additional purchases.
In the middle of the scale, we find the one-to-few approach. These campaigns typically have a few offers, maybe 10, and allow the design of the activity to have an increased level of customisation and can be essential to any test and learn plans. A notable example is Catalina’s product booster campaign, where the focus is on a specific product. By analysing the unique characteristics of the product and building customer segmentation around it, retailers and brands can tailor offers to address both new and existing customers, allowing you to cater to different levels of engagement and understanding the right level of investment for the return you are asking for.
Choosing the Right Mechanic for Success
There is no one-size-fits-all solution when it comes to personalisation and targeting. Instead, the choice of the right mechanic depends on the specific objectives and success factors of each activity. It is crucial to define clear goals and metrics before deciding on the level of personalisation or targeting to employ. By aligning the campaign mechanics with the desired outcomes, retailers and brands can optimize their marketing efforts and achieve the highest possible effectiveness, whilst delivering an engaging customer experience.
In a dynamic and competitive market, personalisation and targeting play pivotal roles in driving campaign effectiveness and customer engagement. The power of personalisation lies in its ability to create unique and relevant experiences for customers, fostering loyalty and driving incremental sales. Targeting, on the other hand, enables retailers to deliver relevant offers to specific customer segments, maximizing their reach and impact. By understanding the dynamic of personalisation and targeting, retailers can strategically deploy the right mechanic for each campaign objective, ultimately enhancing customer satisfaction and driving business success.
By harnessing the potential of personalisation and targeting, retailers and brands can unlock new opportunities, deepen customer relationships, and importantly, stay ahead in an increasingly customer-centric marketplace.
Written by Mitchell Townsend, Principal Analyst at Catalina UK - the leading global customer activation business working with some of the UK’s most prominent retailers and brands