Which Big-Box Retailers Lead and Lag With Personalization?

ICLP, global loyalty marketing agency and part of the Collinson Group, surveyed 1,000+ U.S. consumers to learn their top-six preferred big-box retailers – Amazon, Walmart, Target, Nike, Macy's and Kohl's – and then analyzed how each is performing when it comes to personalizing the customer experience. Personalization, the act of tailoring the shopping journey through three key facets – proper communications, understanding of preferences, and relevant rewards – is paramount for attaining and maintaining customer loyalty.

Findings indicate that while Amazon overall provides a more individualized shopping experience than Walmart, Target, Nike, Macy's or Kohl's, each brand is still falling short of where they should be considering the massive amount of resources they have behind them.
ICLP research indicates that 53 percent of U.S. consumers would buy more if brands better communicated with them. The right balance of brand-to-consumer communication is paramount, particularly in terms of finding the appropriate frequency of communication, the tone in which it's delivered, and the mode of contact (i.e., text, email, standard mail, etc.).
Based on the findings, just 50 percent of consumers believe that Amazon, Nike and Kohl's communicate in a tone that is personally appropriate for them. Similarly, more than 40 percent report the same about Target and Macy's, and 37 percent about Walmart. All brands are also underperforming when it comes to asking their customers their preferred method of communication, with Amazon leading at just 42 percent and Walmart on the low end at 29 percent.
In terms of communication via social media engagement, findings from the Sprout Social Index demonstrate the power of this medium on the bottom line. The index reveals that 7 in 10 Gen Xers will likely purchase something from a brand they follow, 30 percent of Millennials engage with a brand on social media at least once a month, and 60 percent of Baby Boomers look for deals and promotions on social media. However, despite social media's economical and reputational influence, ICLP's findings indicate that on average, consumers feel that the major brands analyzed only respond to their posts and messages 27 percent of the time. In terms of scale, Amazon leads at 33 percent and Kohl's lags at 16 percent.
Customer understanding
According to the report, 59 percent of U.S. consumers would buy more if retailers understood their individual needs and requirements better. These consumers place an emphasis on brands that provide them with relevant recommendations for products and services that interest them based on their shopping/browsing patterns – which can be gleaned from Big Data insights using online and mobile sites and apps. When retailers demonstrate this depth of individual understanding, customers feel more valued and in turn, become more devoted to a brand and are less inclined to stray to competitors.
Nearly two thirds (63 percent) of consumers report that Amazon makes relevant recommendations for products and services that individually interest them, which can likely be attributed to being the only one of these retailers that started as an online-only marketplace. Following Amazon is Nike at 42 percent, Walmart at 33 percent, Target at 32 percent, Macy's at 28 percent, and Kohl's at 25 percent. In terms of proving that they know their customer base and understand what they really want, Amazon and Nike lead but only at 40 percent and 38 percent respectively, with Kohl's placing last at 13 percent. As less than half of consumers feel that they are paid attention to on an individual level, major retailers must use Big Data to achieve a greater level of understanding, which is vital to fostering feelings of customer loyalty. 
Nearly three quarters (74 percent) of U.S. consumers report that they would buy more if they were rewarded with more relevant and timely offers. However, less than 50 percent of respondents feel that their customer loyalty is adequately rewarded at these retailers. Specifically, Nike ranks the highest in this area at 47 percent, followed by Kohl's at 41 percent, Amazon at 39 percent, Macy's at 31 percent, Walmart at 32 percent and Target at 30 percent. Consumers desire personalized rewards that surprise and delight them, and go beyond traditional points or coupons. For instance, send them a gift or even a message on their birthday, or create a program that rewards them if they recommend someone else to the brand.
"What we're seeing is that big-box retailers are still not putting sufficient resources behind personalizing the customer experience, and as a result, are losing out on valuable opportunities to generate more repeat customers – a key aspect of a strong bottom line," said Phil Seward, regional director, Americas at ICLP. "By failing to excel at the three tenets of customer loyalty – communication, customer understanding and rewards – even the largest and most powerful brands are at risk of losing business to smaller competitors that make their customers feel valued. Whether it's promptly responding to them on social media, providing relevant recommendations based on individual insights, or even giving them a surprise reward on special occasions, US consumers won't be as loyal to brands if they feel like they're just one in a million. For the big guys, it's about giving customers the feeling of shopping at their local neighborhood store, except with more choice, convenience and better perks."
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