The consumer goods landscape is undergoing a seismic shift, with changing consumer preferences, the rise of D2C brands, and meteoric growth in online shopping boosted by the pandemic. Personalized experiences (product interactions through immersive experiences, product recommendations, marketing efforts, or products themselves) are becoming key to driving strong consumer brand loyalty and paving a path for sustainable growth. 
 
Predictive personalization is defined as the process of leveraging customer data to create individualized, relevant, and unique interactions and shopping experiences for consumers by steering their experience through pertinent consumer journeys. And it has made huge inroads across the business, especially in the CPG and Retail industry.

New Enablers in Personalized Experience

Today, several factors are pushing brands to employ personalization strategies. The number of customer touchpoints has risen to almost six on average, with consumers expecting consistency across channels. A Neilsen study says that globally, around 30K new products are launched annually. Traditional differentiation tactics like strategic pricing, promotion, or product range are no longer significant, while unique tailored experiences are. 

D2C brands have added a new dimension to personalized experiences. The Bombay Shaving Company,  Mamaearth, SUGAR, The Mom’s Co., Boat, etc., are challenging established companies through better insights into customer consumption patterns using customized messaging and personalization, agile DNA, and rich troves of consumer data. 

Finally, tech behemoths like Amazon, backed by deep consumer insights and data, have redefined consumer shopping behavior. As the first touchpoint in the value chain, platforms hold much sway over brand visibility. A 2021 Statista survey highlighted that 38 percent of product searches happen via Amazon. 

New-Age Tech Driving Customer Experience

A highly tailored and customized personal experience, when scaled to millions of consumers, creates a sustainable competitive advantage for brands since it is difficult to mimic. And new-age technology will play a key role in driving the personalization experience in the future: 
 
Stores of the Future - AI is driving high levels of personalization through facial recognition, biometric sensors, virtual trial rooms, and product tryouts through AR/VR. The Corner Shop store in London offers the purposeful shopping guidance feature, where its mobile app, connected packaging, AR, and digital screens allow customers to share their preferences, intolerances, and sustainability goals, which the store uses to guide them towards desired products.

Machine Learning Personalization - This AI-driven method creates personalized interactions for customers at a granular level. CPG and retail brands are using analytical models, tools, and processes to make sense of their data and develop geographically relevant insights, as well as techniques like competitor product interaction such as predictive shopper behavior and cross-price elasticity. Schmidt’s Naturals (owned by Unilever) is a skincare brand that uses an AI platform Alexander to leverage first-party data to respond to customer needs.

Personalized Products and Experiences - Brands are now allowing consumers to personalize products and experiences to drive loyalty by creating a sense of ownership. Nike recently pushed this game further with the Nike by You initiative by allowing users to personalize products like shoes and clothes. It launched a 3D sneaker customization platform that allows consumers to generate real-time snapshots of what the end product would look like. 

Addressing Challenges in the Personalized Journey

Predictive personalization is here to stay. In a survey conducted by McKinsey in 2020, 95 percent of retail CEOs said personalizing CX is a strategic priority for them. However, the survey shows only 23 percent of consumers believe that retailers are doing a good job at personalization.

CPG and Retail brands can undertake the following steps to build on their personalization roadmap:

Build a Rich Pool of Consumer Data - Brands should capture and analyze data from multiple channels. This can be done through a centralized Customer Data Platform (CDP) which can collate data from disparate sources. For example, Brewing company ABInBev used its CDP to connect with consumers in Columbia during lockdown to direct them to beverage retail locations.

Build Agile and Cross-Functional Teams - Personalization requires cross-functionality across teams such as IT, analytics, marketing, product development, legal, etc. Each team needs to be agile, with the ability to test and validate hypotheses, develop use cases, run experiments to create meaningful solutions, track performance, and create a repository of hits and misses. 

Create an Effective Partner Ecosystem - To enable personalized experiences, brands should have the right technology partners to glean insights from data faster, deploy bespoke AI and ML solutions (chatbots, in-store automation, RPAs, visual recognition, voice, and natural language processing, supply chain automation), and have an array of tools and systems to drive a dynamic personalization experience.

Be Respectful of Consumer Data - A Reuters poll says, 80 percent of consumers are willing to share personal data, but 46 percent want increased governmental regulation to protect it. Therefore, brands need to develop their cybersecurity capabilities in tune with their aspiration of personalizing customer experiences.

Predictive Personalization: A Win-Win for All 

In an attention economy, businesses are vying relentlessly for consumer attention and retention. Research from a leading blog, ‘The Future of Commerce’, reveals brands that use advanced personalization strategies see an ROI of $20 on each dollar spent, and 95 percent of companies that implement personalization see three times the ROI in the first year itself. 

Predictive personalization can help brands stand out and create meaningful experiences while driving consumer engagement and loyalty. In the years to come, advanced personalization capabilities won’t just be a way for brands to win consumers, it will be essential for them to stay relevant. For brands, that will undoubtedly be the business roadmap for the future. 

(The article is written by Ajay Srivastava, Senior Director for Capgemini Invent in India, and Rasuka Kishore, part of the Capgemini ELITE program to develop future leaders.)