How Analytics, Marketing Automation, Artificial Intelligence and are Transforming the Luxury Retail Segment

The retail industry depends and thrives on relationships. Especially in the luxury segment, spending significant funds necessitates a process that is tailored to your needs and builds on past interactions. That’s why increasingly, as customer experience moves closer to the central selling point, data, analytics, marketing automation, and artificial intelligence are driving luxury retail sales across the world.

The Need for and Advantages of Customer Experience

Any great service-oriented business knows about the importance of a great customer experience. If a customer walks into your store, they expect to be treated the right way. As it turns out, the same expectations exist long before and after that in-store encounter.

Current and potential customers expect to be understood. They may not tell you everything about themselves, but they expect you to understand their needs nonetheless. If you can effectively follow their customer journey, and respectfully insert yourself into the conversation as they’re ready to buy, you’ll get loyal customers who maximize your long-term revenue.

That statement is especially true in luxury retail. As McKinsey points out,

The most successful luxury brands will be those that build a compelling mobile presence, engage and influence consumers through targeted use of social media, and focus on a carefully chosen set of digital-performance metrics. 

To get to that point, you have to gather extensive data about each individual customer. But perhaps even more important is how you use that data in order to effectively reach, convince, and convert your audience that your luxury brand is the right choice for them.

Behavioral Segmentation to Increase Message Relevance

Any marketing customization has to begin with behavioral and  market segmentation. The age of simply sending blast messages to all of your current and potential customers are over. Instead, use the data you’ve gathered about your audience to send targeted, relevant messages.

As CMS Wire suggests, you can segment your audience according to a variety of factors. Past purchase behavior, audience demographics, customer loyalty, and digital behavior are all potential variables that could become the base of targeted marketing outreach.

For example, you may seek to introduce a new product line within your luxury brand. To increase a sense of scarcity, a crucial marketing tactic for this segment, you can roll it out specifically to your most loyal customers first, who will share it with their friends. Before the full roll-out, you will have suggested a sense of exclusivity and wonder about the product that a simple mass roll-out could not have achieved.

That type of segmentation, of course, is only possible with effective data gathering tools. You need to be able to categorize your audience into various, relatively homogeneous segments to make sure that each marketing message they receive is relevant to their needs. Through machine learning, for example, you can recognize patterns in your customer data that allows you to more accurately segment your audience.

Using Analytics to Determine the right KPI

For the luxury retail industry, determining (and reaching) relevant Key Performance Indicators (KPI) are especially important to measure and improve the success of your digital marketing. You cannot afford to spend a significant portion of your budget on the off-chance that a large banner ad or remarketing campaign will or will not succeed.

Instead, you need to make sure that you have the metrics in place to help you show your results. Through thoughtful analytics, that goal is increasingly achievable.

If the goal is to connect your KPI to actual buying behavior, you need to find exactly what surface-level metrics are common predictors of that action. For example, you may find that clicks to your website from a digital ad actually don’t correlate with regular purchases. In that case, focusing on alternative metrics (such as website conversions or in-store visits) make more sense.

KPIs can range from the number of page views per visit to the percentage of ad clicks that lead to store visits. Find the right metrics, then spend your time optimizing your marketing strategy for these metrics.

Building the Customer Journey From Your Audience’s Perspective

Above all, data and analytics have allowed luxury retail brands to build a more comprehensive view of the customer journey. As mentioned in the beginning, customer experience is a crucial component to the emotional decision that tends to come with buying a luxury brand. Understanding the journey your audience took to get there, from their perspective, can help you speak to their needs and maximize your success.

Customer experience is a complex process. It begins with a series of marketing touch points, but quickly morphs into a more personalized conversation as a potential customer moves from awareness to decision. The key to understand that journey is to put yourself into your audience’s position.

That, of course, is easier said than done. Put simply, sending an email blast will do little to convince a real estate developer about your luxury shoe brand. That’s why, as McKinsey points out, you need to make sure that each touch point speaks to your audience’s needs, and presents itself as a precursor of a personal and mutually-beneficial two-way relationship.

That goal, in turn, is impossible without an efficient means of gathering, analyzing, and applying data insights. Find ways to collect information directly from your consumer, and gather behavioral data to determine actionable pattern. Then, turn these insights into a more powerful, convincing, and successful message.

Tailoring the Message to Achieve Self-Actualization

The goal of any luxury brand is to help their audience achieve self-esteem, social acceptance, and self-actualization. Rather than fulfilling basic needs, audiences who shop luxury tend to want a product that goes above and beyond its competition in terms of quality and reputation. Even more, they tend to prioritize experiences and takeaways that are easily shareable on social media to tangible benefits of the actual product.

Tailoring your message to these needs is a crucial part of succeeding long term. You don’t want to be the faux-luxury brand that is really available anywhere. As mentioned above, exclusivity is and should be a vital part of your marketing message. Tailoring your message to each individual audience member is a perfect way to achieve that goal.

Think of the difference between parking your own car and getting valet service. The personal attention you receive immediately make you feel more valuable. With the right message, a luxury retail brand can have the same effect.

That degree of personalization, of course, is only possible if you can not just gather the data you need about your customers, but also find ways to apply it to your marketing messaging in real-time. That, at last, is where artificial intelligence enters the equation.

Using Artifical Experience to Custom-Build Experiences

When customers shop for luggage at BlueSmart, they will soon encounter a live-chat agent looking to make their experience as personable and pleasant as possible. That agent, as it turns out, is not actually a real person; it’s an AI ChatBot applying data insights into valuable advice in real time.

Real-time, personalized customer service, especially for international luxury brands, can be difficult 24 hours per day. Artificial intelligence, on the other hand, can ease that process.

Of course, artificial intelligence does not have to be that complicated. In fact, as a Forbes article from last year points out, 70% of US millennials would appreciate retail brands using more artificial intelligence in order to recommend more interesting products based on their personal preferences.

In short, the possibilities of the luxury retail segment using data, analytics, and AI are endless. Through the new technology, luxury brands in all niches can finally build a marketing strategy at scale that personalizes messages and experiences for each audience member.

The resulting improvement in customer journeys and messaging effectiveness has the chance to propel luxury brands who are leaders in these areas toward the front of the pack. It’s no longer difficult to imagine a future in which each potential luxury customer gets a 100% custom buyer’s experience, specifically built to help that customer convert.

 

Digital Transformation: The Impact of AI on Brand, Customer Experience, and Marketing Strategy

Artificial intelligence is rapidly changing both marketing and business processes. Through machine learning and other creative mechanisms, we can begin to tap into possibilities in creating a personalized and unique customer experience that were unheard of just a few years ago.

Of course, AI also brings with it challenges that are difficult ignore. How will this digital transformation impact your brand, customer experience, and marketing strategy? That’s what this article will explore.

The Data Revolution at the Core of Digital Transformation

Marketing, especially in the digital realm, does not stand still. Seemingly every day, new innovations disrupt the existing space to offer new possibilities of branding your company and reaching your audience. From social media network to new, interactive possibilities, businesses have to content with (and take advantage of) a constantly changing set of rules and environments.

But the core of digital transformation goes beyond innovative marketing channels. In fact, I’d argue that the driving force behind our new environment has been data. As John Roughley, head of strategy at credit services Experian, details:

Today, ‘digital’ and huge amounts of data exist in a symbiotic relationship. The smart use of data is already improving customer experience. Consider online commerce, where digitalisation has changed everything. Personalisation of digital experiences is no longer an extra, but an expectation.

His message is simple: new marketing channels and forms of interaction have enabled us to gather more data about our potential and current customers than ever before. But your audience is aware of that fact, and expects a personalized experience based on that expectation and the conscious sharing of data.

The Role of AI in Digital Transformation

Increasingly, businesses across industries are becoming aware of these rising audience expectations, and are adjusting accordingly. They are becoming increasingly aware of the necessity for digital transformation of business and marketing processes; in fact, one survey found that 73% of c-suite executives expect to increase their digital transformation budget in 2017.

Accomplishing a better symbiosis between business practices and data, of course, can be difficult. After the past few years of emphasizing data collection, many organizations now suffer from data overload, with full databases but little room for systemic analysis and interpretation.

Digital transformation, as CMS Wire points out, requires trusted data above all. You cannot optimize and adjust your entire business or even your marketing efforts based on data you cannot trust. Mechanisms to analyze and learn from that data are crucial. That’s where AI enters the equation.

The thought process behind involving AI with data interpretation and digital transformation is both simple and logical: if machine learning processes can better interpret the data available to most businesses today, these businesses can use the same data to personalize customer and brand experience and improve their marketing strategy.

Personalizing Customer Experiences With Smart Data

Let’s start with a simple truth: your customers don’t care about the processes behind getting them relevant information about your brand, and improving their experience as a result. If I shop on Amazon, I don’t need to know about the algorithm that determines which products I may also be interested in after buying a Bluetooth speaker. And yet, these exact processes are what can transform your marketing strategy into a powerful machine of growth.

A recent study showed that most marketers struggle with even defining artificial intelligence. For many, its meaning is reduced to the obvious: 59% consider predictive analytics as part of the concept, and only 42% include machine learning processes. But in fact, both are part of the same category, and can make a significant impact in personalizing your customer experience.

Consider a marketing automation strategy that dynamically organizes your lead data into patterns, and inserts personalized text and offers into your emails based on these patterns. Or consider automated emails, sent dynamically based on the favored open times of your audience. Especially on a large scale, this degree of mass customization has long been impossible. Thanks to machine learning, it’s only the tip of the iceberg.

If 84% of marketers believe that personalization drives both customer acquisition and retention, providing relevant communication rather than formulaic, promotional message is absolutely crucial to a positive customer experience. A system that can automatically recognize data pattern and improve your marketing as a result is becoming immensely valuable.

Marketing Uses for Artificial Intelligence

Of course, the potential uses of AI go far beyond emails or marketing automation. As Skyword points out, its applications can permeate every aspect of your marketing strategy:

Writing marketing content. No, your computer won’t soon surpass your own abilities to write. It can, however, generate natural language that is both readable and relevant. The benefits include content customized for each member of your target audience, adding to the relevance factor mentioned above.

Recommending content. We already mentioned Amazon’s capabilities above. Based on your previous reading and behavioral patterns, AI systems can recommend additional content you may be interested in. Execute it right, and your brand will both increase its credibility and keep the attention span of customers for longer.

Using chatbots. The technology has yet to fully catch on, operating at the edge of mainstream within social networks like Facebook. But user preferences and behavioral patterns suggest that could soon change; with an intelligent chatbot, your business could be available to user feedback and dialogue every second of the day.

Improving customer targeting. If customer experience is tied to relevance, strategic audience segmentation and targeting has to play a crucial role. Target’s ability to deduce whether a customer was pregnant based on her shopping habits was an early example of this technology, and the possibilities continue to expand.

Forecasting. For the time being, predictive analytics might be the holy grail of digital transformation. Forrester found that businesses who use forecasting technology grow significantly more than those who don’t. Predicting your audience’s NPS, likelihood to buy, and lifetime value can play a crucial role in finding your ideal target audience.

In other words, the potential uses for AI technology within your marketing and personalization efforts range far and wide. If your goal is to create a better customer experience, anything from personalizing your email to building a chatbot for 24/7 access can help in the process.

Building Your Marketing Strategy For an AI-Enabled World

Over the past few years, data-based marketing and decision making has turned from an enticing strategy to fear of data overload. Sorting out quality data, and finding patterns, has become close to impossible considering the number of data points we now collect about each of our current and potential customers. With the help of artificial intelligence, businesses can sort through that data and turn it from an data swamp into streamlined river.

That step is crucial for any type of digital transformation efforts. If you are looking to personalize your branding and customer experience, you better do it based on the data that is most relevant. If you cannot find that data, working with AI technology might help.

Collecting your audience’s data should be an advantage, not a challenge. Your customers have come to expect that if you follow them around the web, you better put that information to good use. Through predictive analytics, machine learning, and other AI processes, you can do just that – building a marketing strategy designed to enhance customer experience.

Customer Personalization: Building Relevancy, Loyalty, and Revenue

Personalization is more than just putting your recipients’ first name in the subject line of an email address. Truly personalized customer experiences can set you apart from your competition, and help your business develop fruitful long-term relationships with your audience.

True customer personalization is not easy. But executed correctly, and built on tangible audience intelligence and research, it can help you build and improve brand relevancy, loyalty, and revenue.

The Essence of Customer Personalization

We’re long removed from mass markets in which brands simply produce a one-size-fits-all product and surround it with a compelling marketing message. Going in 2017, personalization is key to success.

Every member of your target audience has unique needs, wants, and preferences. They may fit into overarching themes, but still diverge in significant ways. A single stay-at-home person will look for very different features in a new vehicle than a business professional will need for their daily commute.

Naturally, only personalized product development and messaging can equally address both of these needs. Do it right, and you’ll build a loyal customer base through relevant messaging and product development that brings in consistent revenue.

Building Message and Product Relevancy

The more you know about your audience, the better you can personalize your strategy. Account-based marketing is built on the fact that each potential client needs and deserves a customized promotional and sales strategy optimized for their unique buyer’s journey. True customization embraces the same concept.

Brands are beginning to recognize the importance of placing potential customers at the center of your messaging strategy. Caveat emptor is no longer a popular phrase; in fact, in 2017, it’s a sure way to failure.

Personalization, on the other hand, can accomplish increased relevance for each of your customers. And the results, especially as they relate to creating a more relevant messaging and product strategy, are both tangible and significant.

A 2015 survey among marketers found that personalized marketing plays a significant part in driving brand engagement and conversions. Similarly, 94% of businesses in a 2013 survey considered website personalization to be crucial to their business success.

Especially in e-commerce, but ultimately across industries, personalization is key. A 2015 survey of 500 online shoppers found that 3 out of 4 retail emails are irrelevant to consumers’ current needs and preferences. Simply blasting out a promotional email to your entire contact database, in other words, will not lead to success.

Improving Brand Loyalty

Not surprisingly, personalization after the sale can also make a difference in engaging your customers and increasing brand loyalty. In the end, driving repeat purchases depends on two variables: satisfaction with the product, and a perceived brand relationship. Effective personalization can play a significant part in influencing both.

Personalization and Product Satisfaction

As this Forbes article points out, allowing your audience to customize their products speaks directly to their preference:

A Bain survey of more than 1,000 online shoppers found that while less than 10% have tried customization options, 25% to 30% are interested in doing so. While it is hard to gauge the overall potential of customization, if 25% of online sales of footwear were customized, that would equate to a market of $2 billion per year.

It’s a natural effect. If you allow your audience to customize their product, they’ll be more likely to appreciate the result. Because they take ownership in the final product they purchase, they have a stake in seeing it succeed.

In addition, product customization allows your customers to build products specifically designed for their needs. No brand, especially on a larger scale, can reliably offer customized product options for every single potential customer. Customization at the point of sale, then, adds an extra element of personalization that would otherwise be impossible to achieve.

Personalization and Brand Relationship

Whereas product customization is at the core of customer satisfaction, message personalization is the driving force in building a sustainable relationship between brand and customers. The more effectively you can speak to individual customers, the more likely you will be to gain their appreciation and drive them toward a repeat sale.

Numerous studies have shown that personalized messaging results in an uptick in metrics that range from email to app installs. Again, it’s a common sense conclusion: the more relevant you can make your message, the more likely your audience is to respond to it.

After the sale, of course, the impact of that type of message personalization is magnified. Now, you have a large scale of information about each customer that you can use for your messaging relevancy. The type of product bought can result in follow-ups relevant to that product, while the personal information like a birthday can be used for customer-specific promotions.

The result, naturally, is a relationship between customer and brand that ultimately drives loyalty.

Driving Sustainable Revenue

Providing a more relevant customer experience drives loyalty. Repeat purchases, in turn, increase your sales significantly. In fact, 82% of companies agree that it’s cheaper to convince an existing customer to buy from you again than it is to acquire a new customer.

It’s not a stretch, then, to conclude that customer personalization can be a significant tool in helping you build and improve your revenue in a sustainable way.

A 2015 report by VentureBeat provides evidence for that point. A 2014 article by Adobe confirmed as much: if 9 of 10 consumers state that personalization has an impact on their purchasing decision, it’s no surprise that 8 of 10 brands embracing the concept have seen their revenue rise as a result.

Personalization matters, both for first-time customers and repeat purchases. Shared values build brand relationships, and it’s on the brand to both find out what values you share with each customer, and communicate these values in an effective, sustainable, personalized manner.

How to Build Personalization Through Actionable Analytics

Why should you personalize and customize your marketing and product strategy? Given the strategy’s impact on your messaging relevance, brand loyalty, and revenue, the answer is clear. That leaves one, final question: how can you build an effective customer personalization strategy?

The short answer: effective, actionable analytics. To be successful, personalization requires an effective method to not just collect data about your audience, but organize and prioritize that data in a way that can help you gain actual, valuable insights about your audience’s needs and desires.

It’s no surprise that brands who excel in customer personalization also embrace big data. At the same time, the second step – data analysis – is just as important. Without it, you risk ending up in a swamp full of irrelevant data. In that case, finding the data points that actually allow you to personalize your strategy and speak to your audience is akin to the proverbial needle in a haystack.

Find the insights that make your potential and current customers tick, and you have a starting point. Then, design a messaging strategy around these insights to ensure positive, sustainable customer personalization.

For example, you may find that in your industry, customers express very different needs and desires around a general ‘improve my life’ pain point. The more you can narrow down these needs, the better marketing strategy you can build to ensure that each of these needs is adequately addressed in personal communication with your audience.

Through modern analytics and marketing solutions, you can build this type of personalization on a mass scale while still ensuring enough human touches to encourage sustainable brand relationships. Customer personalization, at its heart, is just that: a relationship with your brand that, when successful, builds relevancy, loyalty, and revenue.

Neural Networks in AI: Contextual Personalization for Enhanced Business Value

Artificial intelligence grows incredibly more sophisticated every year, and one of the most interesting developments is Neural Network Intelligence. If you thought AI has already turned a corner on mimicking human intelligence, Artificial Neural Networks (or ANN’s) might soon make this happen faster. The point is to imitate more rational thinking and deductive reasoning capabilities.

Up until recently, trying to replicate complex functions of a human brain wasn’t possible in AI programs. Things have started to advance quickly, and it’s time to learn about what this means in AI to enhance your business’s value.

In many cases, it can lead to more personalized experiences for your customers to help them and help you make smarter business decisions.

Overall, this progresses your ability to streamline your business’s commerce structure, hence leading to improved business aspects that bring higher revenue.

Before you get there, though, you need to learn about the technological and scientific aspects behind Neural Network Intelligence. It look more and more like a human, including learning through continued user interactions. In this case, it works similar to machine learning where it builds up superior intelligence over time.

Let’s look at how neural networks work and how you can apply this to bring more contextual personalization to customer experiences.

The Science Behind Artificial Neural Networks

When you delve into the science behind “ANNs”, the intention is to recreate brain connections using silicon and wires. Thanks to new advancements, AI recently transformed enough to build something resembling neurons and dendrites.

This occurs by creating multiple nodes, mimicking how neurons work. Just like neuron links, nodes have output as well, otherwise known as node values. Each of these connections have a weight, or an integer number controlling the signal. The weight in each connection can become adjusted based on the node output’s quality.

The topology behind this fall into two basic categories: FreeForward and FeedBack. For the former, it’s used strictly for pattern generation, recognition, or classification. In the latter, you’re creating feedback loops. In other words, it’s where you get into neural patterns to help you make better business decisions.

Since you’re bringing machine learning into this concept, you’ll frequently see neural networks use several different learning strategies. Supervised learning is more for pattern recognition, but unsupervised learning uses clusters to help find hidden patterns.

Reinforcement learning goes on observation, and that’s where Neural Networks truly shine to change how you create personalized experiences.

Processing Information in Real-Time

You’ve likely read a lot about real-time tools and how incredibly useful they are to make faster business decisions. AI now plays a major part in this thanks to Neural Networks. The latter uses human brain functions to learn through processing information in real-time so it becomes “smarter” with more user interaction.

This continues to improve and adjusts to any changes based on what a user prefers. For instance, if a user has specific preferences, the AI program is going to alter itself to suit a customer’s buying habits and whims. Any volatile behavior allows adjustments based on sudden changes in customer preferences.

What this does is bring recommendations on how you should approach communication with your customers. In metaphorical terms, it’s AI acting as an all-thinking oracle giving real-time results on how to personalize the marketing and buying experience.

In all, this replicates the feel of customers interacting with a well-trained sales associate. Instead, it’s done entirely online to give a customer the ultimate buying experience tailored just for them.

The problem is, many companies continue to use outdated forms of AI that don’t completely look at the customer as an individual.

AI Platforms Looking at Population and Probability

To show how fast AI changes, many businesses still use an older version of AI using recommendations via study of populations and probability. A couple of years ago, this was the best choice to personalize customer relationships. While better than no personalization at all, it still didn’t dig deep enough into analyzing individual buyers.

The focus was more on past behaviors as a whole, which was a good introduction for what AI could do for businesses. Also going by probability, it only gave a partial picture of what a customer might or might not do.

Having AI think like a human brain allows it to think more abstractly and fully understand consumer complexity. No one person is alike, and each customer is going to have their own pain points to integrate into your personal approaches.

Another weakness of older AI is it didn’t effectively accommodate new product lines in your business. Cutting this out of the recommendation schema created mass blind spots to product catalog performance. The only solution was to add it manually, and this led to downtime and lost revenue.

The Business Value Impact of Neural Networks in AI

You’ll find significant evidence showing personal one-on-one experiences are a vital part of today’s commerce structure. Regardless, many marketing analysts note that personalizing experiences can backfire if you don’t make it relevant to a customer’s life.

This is where Neural Network AI is going to help bring major business value by further understanding customer likes, dislikes, and intentions.

In the end, you’ll be able to increase more sales per customer, increase customer retention, create more loyalty, help your shopping cart conversions, and improve customer retention value.