By Graeme Grant

eMarketer recently released its “Next-Generation Product Recommendations: The Balance Between Data and Discovery” report, which takes a look at how U.S. retailers are going beyond today’s standard methods of personalization. You’ll notice that two of our favorite techniques – email and web recommendations – are right on top!

In the report, Krista Garcia, senior retail analyst for eMarketer, examines consumer sentiment around personalization, identifying 4 approaches that retailers are trying out to improve these efforts. These include:

  • more intelligent data
  • a visual social media approach to product merchandising
  • digital moving into the physical world, and
  • human intervention

Within these 4 approaches, Garcia notes there are 2 different paths these strategies can take: one is data driven, the other involves personal interaction.

There is no question in my mind that the data driven path is the only scalable way for retailers to make good on their goal of being relevant to every consumer, every time.

Here are my main takeaways from the report:

  • Personalization in retail is just beginning. Though today’s standard product recommendations do influence some shoppers’ behaviors, they primarily tend to blend in with the rest of a web page. It’s not surprising, then, that retailers want something more to improve the recommendations they provide. I am intimately familiar with the latest data-driven approaches and I can confidently say that you can expect a lot more innovation on this front in the future!
  • Privacy issues remain a concern, but not when consumers benefit. The prospect of retailers storing data on individuals may still cause some concern, but, as I describe in the article, consumers won’t mind sharing if a retailer can demonstrate a real benefit to them. Basic rule of thumb: if it’s valuable, it’s better customer service. If it isn’t valuable, then it quickly becomes creepy.
  • The right technology partner(s) matter. One of Garcia’s conclusions centers on the ongoing challenges retailers face with personalization and the consumer demand for “customized content – including recommendations – faster and in real time.” I totally agree. The full solution has to combine the right math to determine what will be most relevant for each customer (no easy task by itself!), the right business problem that can really move the revenue needle if it is improved, and the right technology approach (big data, cloud infrastructure, processing time, etc.) that is completely aligned with the first two elements. If you get any one of these critical elements wrong, the solution won’t work. No one said this was easy…

As I’ve discussed many times before, the consumer wants a relevant experience and will frequent those retailers who provide it. Personalization efforts that tailor the experience down to an individualized level will separate the retail leaders from the rest of the pack.

With the holidays upon us, are there any retailers you think will emerge as leaders when it comes to delivering effective product recommendations during this year’s holiday season?