“We don’t make money when we sell things. We make money when we help customers make purchase decisions.” – Jeff Bezos in The Everything Store

Ask any retail executive what keeps them up at night and, chances are, you’ll hear that Amazon.com is near the top of their list. The retailer has become the most talked about company in the business today. In fact, popular conferences such as IRCE and Shop.org Annual Summit (which is being held in Amazon’s back yard this year, by the way) now have entire tracks dedicated to working  and competing with the behemoth.

America’s Love Affair with Amazon

Just last month, the company was once again named as having the best consumer perception of any brand by YouGov BrandIndex. Sure, you can argue that shoppers love Amazon’s efficiency and pricing, but they also love Amazon’s consumer-centric approach to retailing.

As part of its own written promise to be ‘Earth’s most customer-centric company,’ Amazon has been using big data approaches to better understand their customers for years. Take, for instance, the May 2012 Fast Company Design article, “How Companies Like Amazon Use Big Data To Make You Love Them.” The author, Sean Madden, shares his interaction with an Amazon Kindle customer service representative. Madden writes, “Amazon has been collecting my information for years – not just addresses and payment information, but the identity of everything I’ve ever bought or even looked at. And while dozens of other companies do that, too, Amazon’s doing something remarkable with theirs. They’re using that data to build our relationship.”

Madden points out that, at the time (2012), “the only business and marketing topic that’s been talked about more than Big Data recently is the evolution of brand relationships into two-way conversations. Now that consumers have seen what social media and mass customization are capable of, they increasingly expect this kind of personalization in their communication with favored brands, not just a passive role absorbing marketing messages. Combine this insight with the rise of Big Data, and you have a clear mandate: In order for interactions to feel individualized and human, they must be well informed. That makes data about the customer you’re talking to right now the most useful data of all.” [Emphasis added]

That was more than two years ago and since then the amount data available has more than doubled. Today, consumers know that retailers have the capability to understand them based on the data they collect across channels, and expect them to tailor experiences accordingly. For consumers, it’s no longer about what data you’re collecting about them; it’s what you’re going to do with that data. And to compete with Amazon effectively this holiday season, what you need to do is use that data to help customers make purchase decisions.

Personalized Holiday Marketing Strategies for 2014

Jeff Bezos recognized in the very early days of the Internet the power that this channel would give to retailers. In Brad Stone’s book, The Everything Store: Jeff Bezos and the Age of Amazon, the author quotes Bezos as saying, “Great merchants have never had the opportunity to understand their customers in a truly individualize way. E-commerce is going to make that possible.” Bezos understood that winning loyal customers would come down to being relevant to the individual shopper. Companies like Amazon leverage big data to collect information on shoppers to better understand their unique tastes, behaviors and preferences. Relevant messages – at every touchpoint – build trust with the customer and keep the retailer top of mind for when the customer is ready to shop again.

As retailers plan their holiday marketing strategies, they should take a page from Bezos’ book and look to personalize communications to help shoppers at each point in their journey – regardless of the channel they prefer to use. This isn’t easy and requires sophisticated technology to pull off. Here are a few recommendations for getting started:

– Think about how well you really know your customers. Without a complete understanding, you are guaranteed to waste money and time on marketing efforts that will inevitably fall on deaf ears.

– Break down internal silos. Omnichannel inherently touches a number of channels that were once managed by completely separate departments. Retailers must join these once-segregated departments to present a single face to the consumer.

– Find partners that are channel agnostic. You don’t want one technology for your website, another for email, another for direct mail, and another for your POS system. It is the same customer in each place, and the term “omnichannel” means that you recognize them as the same customer where they interact with you. By the way, this list of channels is no longer static. New technology will pop up unexpectedly, like in-store beacons. Retailers should work with technology providers that are forward-thinking and flexible so as new shopping channels enter the ring, they are ready to include them in their omnichannel strategies.

– Tailor marketing to the individual, not segments. Retailers that don’t speak to individual customers will be left for the competition.

Like Bezos said – the real money is made not when a sale is made but when they help a customer with a purchase decision. This has been a challenge for many omnichannel retailers, who built their brands through the in-store experience, where the interaction is far more personal. In order to personalize the online experience, retailers need to take a look at their big data strategy and determine how to leverage all that data within their digital marketing efforts. If you can use both your digital and offline data to become more relevant to your shoppers, then it will give you a leg up on the competition, including Amazon.

What are your biggest challenges as a retailer, and how are you planning to effectively compete with Amazon this holiday season? We want to hear from you in the comments section below.