Digital Diamonds: Mining for Valuable Data to Drive Hyper-Personalized Experiences

Personalization is key to retail success, but what happens when the well of data that drives this initiative isn’t properly tapped? Consumers today are overloaded with various ways to shop. From online ordering and home delivery, to BOPIS and curbside pick-up — even differences in placing orders from a mobile phone vs. their desktop. Shopping has reached a level of complexity that can aggravate consumers if the process isn’t intuitive and streamlined. And a poor consumer experience can lead to brand irrelevance — and an unwillingness to share valuable data. Hear from industry insiders who know what it takes to gather customer data and infuse it into every process, from the supply chain to store operations to merchandising, and more. Because in today’s competitive environment, hyper-personalized experiences and a trove of data diamonds aren’t options, but imperatives. Learn how to overcome challenges in accruing valuable consumer insights to better inform business decisions across the enterprise. In RIS News latest webinar, “Increase Customer Trust and Personalization,” industry leaders show you the path toward personalized experiences that drive business growth. Read the transcript below. The digital maturation of consumers has resulted in unprecedented access to data “digital diamonds.” In this edited version of the webinar’s transcript, David Gruehn and Randy Evins of SAP, share insights into how to turn loyal customers into brand evangelists, as well as collect and mine the treasure trove of customer data to leverage insights and meet customers' experience expectations. Tim Denman: Welcome everyone to today’s “Increase Customer Trust and Personalization” webinar, the latest installment of our Customer Channel webinar series, which is hosted by RIS and presented in partnership with SAP. I'm Tim Denman, editor-in-chief of RIS, thank you for joining us today. Today's digitally mature customers want retailers to know them personally, delivering targeted experiences and promotions that meet their unique needs. As we all know, data is the key to creating this level of hyper-personalization, but what data sets are diamonds in the rough worthy of the mining effort and which are best left alone in the dirt? Once you have the right data points, how do you turn them into meaningful, actionable insights to turn a shopper into a loyal brand enthusiast? With us today to explore the keys to building customer trust through personalization, are SAP's David Gruehn and Randy Evins. Gentlemen, thank you for joining us today. I'm sure you're no stranger to past listeners of the Customer Channel series, but for those new to the discussion, can you each take a moment to introduce yourself to the audience? David Gruehn: Hi, my name is Dave Gruehn. I've been in retail for about 30 years, including about six years as a retail CIO. I've spent the last 20-some years at two major technology companies —Microsoft and SAP — harnessing, or helping retailers harness, emerging technologies to differentiate their business with customer experience. Randy Evins: I'm Randy Evins, it’s a pleasure to be here. I’ve been with SAP for 14 years, working exclusively in the food retailing business as an industry advisor. Prior to that, I spent 30 years in the grocery business working for companies like HEB in South Texas, American Stores, which is the parent of Jewel in Chicago, ACME Philadelphia, and the former Lucky Stores in California. Denman: Thank you, gentlemen. As mentioned, today's webinar is part of the Customer Channel webinar series, which features a treasure trove of information on how to succeed in today's customer-centric marketplace. You can check out the channel here. The Customer Channel is broken up into five key pillars, and we'll be exploring two of them today: customer trust and personalization. Customer experience is a huge focus area for retailers today. The term hyper-personalization is used often in the news and in discussion with retailers and analysts. David and Randy, what is your position on this hot topic and how can retailers best embrace it? Gruehn: No one will argue with the fact that customer experience has been top-of-mind in the retail industry for three or four years now. While retailers have been desperately trying to find ways to differentiate their business through customer experience for a long time, we're at a unique tipping point in terms of both the ability of retailers to connect personally with customers and the digital maturity or digital savvy nature today. It is truly retail's new battlefield for competition. Gartner says that 80% of organizations — and that's all businesses, most certainly retailers — expect to compete mainly based on customer experience. Companies like Accenture say that CX leaders are 24-26 times more likely to increase revenues, reduce costs, and grow strategically by focusing in this area. Forrester says, and this is critical, 82% of buyers have switched providers after just two or three bad experiences, with more than 50% doing so in the last year alone. When you look at how high customers’ expectations are today, it's obviously a critical focus for retailers. In fact, Oliver Wyman Group did a study about four and a half years ago, which predicted that businesses going forward would compete — again, this is a fit for retail — in six primary business model areas: product leadership, magnetic ecosystem (which Amazon's perfected), going to choice intermediaries, customer experience, fulfillment intermediaries, and key location players. Based on the nature of what the other five models entail, there has to be some type of niche benefit or already established strategic business strategy, and focus to compete in those areas. This leaves about 80% of all businesses — and again, most certainly retail — who are going to be competing on the battlefield of customer experience to try and win over customers. What does all this have to do with what we're talking about today? Customer trust and personalization. If customer experience is the future of success in retail, then personalization is the engine that's going to drive that success. Customer data is the fuel that's going to run that engine, and customer trust holds the keys to unlocking access to this critical customer data, which will enable you to have a personalized relationship with customers, catering experiences and promotions based on individual, unique needs. SAP’s go-to-market strategy is called the Customer Channel. It's really based on this evolution of customer experience maturity that's taken place over the last 20-25 years. We began with multi-channel retail, which primarily came about when the internet hit and more and more retailers realized, “I’ve got brick-and-mortar stores, but now I've got to have this prominent presence in this new channel called online,” and then, of course, mobile hit. Consumers quickly realize they don’t like getting different experiences — prices are different; people are different in all these channels. Some of the savvier retailers in the 2000s began to realize they needed to wrap the channels around the customer. The focus switched from being product-focused and brand-focused to focusing on customers and the experiences migrated. They transformed from a transactional-based experience to a seamless experience across these channels. Fast forward to today, the leading edge retailers and visionaries in the industry have begun to realize that there's a transformation outside of omnichannel. It's a transformation from omnichannel to a single myopic focus, it's adaptive and predictive on the customer — it's truly an adaptive experience now. Regardless of the channel a customer may be interacting with — these continue to expand almost every year — we are now trying to adapt to them and emerging technologies are enabling us to do that by being able to sense their moods, see them, and have voice and facial recognition. The focus has gone from focusing on the customer to predicting the customer's needs. At the end of the day, this transformation is going to challenge retailers in several ways. First and foremost, retailers need to abandon the legacy approach of thinking in terms of retail channels and acknowledge there's only one channel in retail now — the customer. They want you to transform their channel and be relevant on that channel, or you’ll run the risk of being irrelevant. What's interesting about this transformation is that it's created a challenge for retailers. Randy, why don't you walk us through the gap that's existing today as we begin to see retailers transitioning from omnichannel to customer-adaptive retailing. Evins: It's a great conversation, David. If you think back 20 years, before the multichannel concept arrived, customer service, customer experience, anything that had to do with the customer was embedded in store operations. The total reliance on the store to provide exceptional customer service created this lingering gap because you didn't know if the customer was getting what they wanted from you. I used it because I was in the business: Shapiro studies customer intercepts, techniques to define how well retailers are doing and how good the customer experience is. A lot of retailers are in that multi-channel world where there is a digital experience, but it's not related to the store experience at all — it's completely separate. The shoppers are saying, "I don't want two experiences with you. I want to have one methodology for shopping with you and I don't care whether I'm in-store with a device in my hand, or at home or wherever. I want one experience, one relationship. I want to be able to understand your opinion of me and reactions to my needs, desires, and wants in a singular way. I don't want separate experiences." It's tough to do because often retailers have wrapped technologies around these processes. They use one set of technology for the in-store experience, one set of technology for the online experience — the two don't talk to each other and if they do, it's not synchronized. Gruehn: Lastly, on customer experience and why it's critical. It’s important retailers acknowledge this transformation is happening. Leaders are already pushing down this path, but this takes two focused, intentional activities to ensure that it’s going to be successful in the future customer experience: 1. Digitally transform the business. There’s never been the momentum behind digital transformation like there has been since the pandemic hit us globally. 2. The ability or necessity to transform culture to become more customer-centric. This is important because digital transformation will enable retailers to execute their vision. Evins: Also, don't confuse conversation about customer-centric culture with customer centricity, or a lack of desire to please customers. I worked in the grocery business for 30 years before coming to SAP. We spent a lot of time trying to figure out how to make customers happy, but we still didn't have visibility to the effect we were having on their experience. This is not about customer satisfaction. This is about adding customers and infusing customer data into every process — whether it's supply chain, store ops, merchandising, marketing, even accounting — to have visibility to the shopper data and understand how what you are doing influences their experience with your company. It's not an option these days — it's an imperative. Denman: The experience is key and keeping the customer at the center of everything that we do. How does trust play into all of this? A big part of the customer channel is this customer trust idea. Why is it so important from a personalized customer experience perspective and how can retailers best establish this kind of trust with consumers? Gruehn: We're acknowledging the customer experience is the competitive landscape now. The difference is this isn't about trying to please all the males in their '50s and those who like working with tools. This is about how to cater to Dave Gruehn and Randy Evins' unique needs, values, and aspirations as an individual customer. Customer trust is a linchpin to being able to access the types of data that are needed to truly create personalized types of experiences. The key to personalization is creating a relationship with the most valuable customers. It’s a daunting challenge and you don't want to try and create personal relationships with every single customer. Some of them aren't worth the investment. However, you know who your best customers are. The goal is to take loyal customers and turn them into customer evangelists. One thing I love about retail is that whether you’re an executive or working in retail, everybody's a customer. Think about what it means to have a relationship. Anyone who's been in a long-term relationship or married knows that you've got to build these relationships around trust and communication to be successful in a relationship. If you get the trust established, then the communication will begin to reveal the types of data points that translate into invaluable information that continues to perpetuate the strength of the relationship. Especially Gen Zs today — the millennials and Gen Zs — customers haven't expressed a desire to build relationships with preferred retailers. Accenture did a study for RILA that revealed customers are looking to retailers to become trusted advisors. My personal example is that I love Stitch Fix. I suck at buying clothes, but I like looking good in them. Stitch Fix is my trusted advisor that added value to my life because they spent time getting to know me and asking, do you like this or this? The first box I got, I put it on and a woman I didn't even know said, "Ah, wow, you look pretty nice." This has not happened before, no wonder. That's the real value. Looking at Gen Zs in particular. My youngest daughter, for example, is a Gen Z. She won't shop at retailers that don't support her values, such as sustainability and upcycling. Customers will do this, but there are three levers or conditions that must exist for this relationship to begin prospering: Transparency. The customer wants to know what data you're collecting and what you're doing with it. God help you if you're collecting it and selling it — they'll sniff that out in a second. Control. They are in complete control of adding, modifying, and deleting this data at any time. When they say delete it, it's not that they remove it from being viewable, but you still have it and are selling it. It's gone. Trust comes back into play. There’s also control, as a retailer, to protect this intimate data against data breaches, etc. or for use that wasn’t agreed to when the relationship was established. The security and the privacy of that information. Perceived value. A lot of studies have been done to show customers are willing to share information, but expect to get something — a return on investment so to speak. How does this transparency enrich their lives, add convenience and enhance the shopping experience? Grocery in particular has an amazing amount of potential in this area to add value to people's lives. Think about what customers buy at a grocery store. It's stunning when I sat down and made the list. By buying groceries, retailers have insight into nutrition habits, health habits, hygiene habits, relationships. Are they buying candles or diapers? Your life stage, emotions, hobbies, how you entertain others or yourself, the good habits, and the bad habits. If there is a trusted relationship with a grocer and you say, “I aspire to lose weight, to be healthy,” or any of the things that are possible given those combinations of things that are going on in life. How much value could a grocer in a trusted relationship to an individual consumer's life provide? The potential is absolutely mind blowing. Evins: To further that, think about the perception of that relationship that doesn't exist today. For that customer to provide that level of information and give permissions, the retailer better come back with something that makes sense. How many times have you gotten an offer — from anybody, but I'll say food retailer — you look at it and you go, “this is ridiculous, it doesn't make any sense, it doesn't fit me,” versus an offer that's going to enhance and entrench that food retailer in the mind of the consumer. This retailer gets me, they care about my business and are improving my life. They're adding value to my life and I'm willing to provide more information to get more value. Gruehn: Customer trust is table stakes if retailers want to be able to build those types of personalized experiences that customers aspire to have, as well as have a holistic view of that customer. Denman: It makes sense that once you establish trust with customers, you'll be able to gather more information. They'll be more willing to provide personal data about themselves. Can you dive a little deeper into the types of data retailers need and why it's a critical component of the personalized experience? Gruehn: All retailers have been collecting large amounts of information on customers since we went from the keyboards, or the cash registers that had keys you had to pound on with a hammer, to the computer age. In a nutshell, retailers are used to collecting and harnessing items such as identity, descriptive, and behavioral data. Identity data includes customer's name, contact information, demographics, and links to social media profiles. Descriptive data is a bit more in-depth to complete the picture of that customer, including things like family and marital status, career details, education, and lifestyle. Then, behavioral data comes in with social media and the web encompassing the ways a customer interacts with the company, such as past purchases, service tickets, data collected from retail associates, client telling apps, and how often they open and respond to emails, etc. This data is hard to get, but without it, there's no personal relationship. There are two sources for attitudinal and qualitative data. The first — and by far the best one — is the customer. Build a relationship based on trust that motivates a customer to share information based on perceived value. As was the case with Stitch Fix and I. The better they did at adding value to my life because of how they harnessed, utilized, and customized the byproduct of the personal relationship we had, the more willing I was to share with them. It was awesome. So that continued to grow, as most long-term relationships do. The other source, and this is unprecedented in history, is what I call the perfect storm. This explosion of emerging technologies, the digital maturation of consumers, and the speed with which they assimilate emerging technologies into their lives is creating a sea of digital diamonds — information strewn all over the floor of the internet, left willingly by customers as they engage in social communities, mobile apps, anything that quenches the desire for value and to be heard in numerous ways. Think about how rapidly those sources are collecting that information — the apps and the TikToks of the world. How rapidly are growing? There's tons of digital diamonds just lying out there. It's critical that retailers begin to evaluate their customer data platform strategy. If they’re building trust and asking the customer for data, then they need to be able to round that information out by going out and collecting it from a variety of digital diamond sources in order to be ahead of the pack. It's less about focusing on how to get the data and more about how you harness it. Evins: I love the term digital diamonds, Dave. In fact, I have to admit, I plagiarize it from you every chance I get because it's such a great way to describe what we're after. I was in the grocery business 30 years prior to SAP, and was a part of some of the original conversations about loyalty cards. That's the first step into personalization, but we all know those loyalty cards are not what we're talking about now. We're talking about specific information that provides extreme value to the shopper when the retailer shows up with the right things. Gruehn: Data is the fuel that will drive this personalization engine, which enables retailers to effectively compete in this customer experience battlefield. Denman: The big challenge when trying to create personal relationships with individual customers, from a small SMB perspective, is it could be overwhelming to turn these relationships into experiences. It seems a lot of people think only the big guys can do it — the Walmarts and Targets. What about the SMBs? How could they make this a reality for every retailer, regardless of size? Gruehn: The cool part is the customers want to establish relationships with any retailer, regardless of size to your segment, that can add value to their lives. There's a tremendous amount of opportunity to go around for everybody. SAP's approach is to bridge the gap between what we call customer freedom and real business outcomes. We view our customer experience solutions as enterprise gray solutions because, unlike a lot of our competitors, we believe we have the ability to not just enable customer experience and make it a reality with individual customers, but to be able to measure the impact of that and how it's impacting the top or bottom line to help retailers adjust strategies. I challenge retailers to think of customer experience, not as a noun, but as a verb — didn't get that lesson in when they were talking about love and relationships. Using the word as a noun, it took me a while to figure out it's about action, otherwise it's not worth it. This isn't about digitally transforming your business. There must be a cultural transform, which means putting the customer at the center of everything that you do. Once that is figured out, begin to build this infrastructure. We build upon the customer layer with a data layer, and this establishes an intelligent foundation, enhancing it via customer trust in which you aggregate the most critical customer data types. We talked about the diamonds that enable everyone in your business — everyone — to see the customer holistically in real-time for who they are and how they feel when they engage with you at every touch point, every time. This layer holds the keys that unlock the opportunity to establish a personal relationship with the most valued customers. Building upon that layer, then there is the customer insight layer, which utilizes the insight and analysis of the intelligent foundation to convert data into powerful and relevant information. You need to convert the data into information. This layer holds the keys that unlock the opportunity to identify compelling, personalized customer experiences and relevant promotions that will differentiate the business in this new battlefield of customer experience. Finally, the customer engagement layer builds upon the previous layers, which harnesses customer insight to deliver compelling, personalized experiences and relevant promotions that are going to strengthen the customer relationship by adding value to their lives. If you add value to your customer's lives, you can't help but increase lifetime customer value and create customers for life. This layer holds the keys that unlock the opportunity to bridge this gap between customer freedom and business outcomes, in order to reap the benefits and ROI of investments and customer experience to be a strong and profitable business. Evins: Earlier, we mentioned how a small company entertains this in light of the investment they see the bigger companies making. Smaller companies have a chance to play big because it's not scalability that's the issue, it's the willingness to culturally change your company to see the shopper, react to the shopper, and ensure the shopper has absolutely first place in all aspects of your business. Gruehn: The ramifications of not weaving this into every business strategy that you have are significant. As Accenture pointed out in the RILA study, “if customer trust is violated, be prepared to suffer the consequences.” The survey revealed that 92% of respondents would change their relationship with a brand, with many of them willing to simply take their business elsewhere after 2-3 bad customer experiences. Here's what's fascinating. In a study by Stella Connect “The Customer Service Trends of 2022”, 90% of consumers across the U.S. and UK said that if a brand turned a poor experience into a positive one by solving the problem quickly, they would continue to do business with that brand. Furthermore, they would not only do business with that brand and feel excited about it, but also tell all their friends about it. That is pretty compelling motivation to look further into this path. Denman: We're almost out of time. As we stated, this was the third episode in the series, and there will be another episode launching next month with David and Randy. For now, David and Randy, do you have any last thoughts for today? Gruehn: This is an exciting, compelling time to be in retail. I love working with retailers, it’s been in my DNA for most of my life — let's go change the game together. Evins: In my personal experience of doing things the old school way, it’s incredible, exciting, even enriching to know that there exists the ability to talk directly to your shopper and add value. No one ever said customers aren't the center of the universe, but now we can pull that off, develop that relationship, and provide value to shoppers in ways we never could before. I’d love to have some more conversations that go deeper into that. Denman: Absolutely. For now, thanks to everyone for joining us. Thank you, David and Randy, for sharing and thank you SAP for sponsoring this webinar series.

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