Monday Jul 02, 2012

How far is too far?

Previously I've talked about Safeway's personalized pricing as well as Target's use of analytics to learn about customers.  Then last week I read about Orbitz tailoring their hotel offers based on the browser used.  (Orbitz claims that Mac users are 40% more likely than PC users to book four- or five-star hotels.)  So just how far is too far when tailoring the retail experience?

When most consumers read about these types of tactics, they tend to feel violated, as if someone was reading their personal diary.  Nobody wants to be tricked into buying things.  Walking into a grocery store and seeing crates of apples stacked high looks enticing, but the crates are just for display and the apples may be over a year old.  Even though its much cheaper to print markdown tags, many retailers manually write the price tags because consumers think they deal is better if the price is hand-written.

The technology already exists to personalize prices and experiences for consumers.  People get upset thinking they paid more for something than a neighbor, but it already happens all the time with cars, flights, and the use of loyalty programs and coupons. There are many variables at play for any purchase.  They only difference is that the customer segments are getting smaller, sometimes reaching a size of one.

There's two ways to look at this.  Retailers have always manipulated the environment to get consumers to buy more -- or -- Retailers are getting better at tuning the shopping experience for consumers.  I choose the latter, and so do most consumers by spending their money in the stores they like.  Consumers like to see fresh flowers at the entrance to the grocery store, and they like to see specials scrawled on chalkboards.

The key is making sure that consumers benefit from the experience as well.  I'm willing to give up some personal information in exchange for discounts and more relevant marketing, and the next-generation of shoppers are even less concerned about privacy.  Retailers need to use all the tools available to differentiate their offers and connect with their customers.

So if Orbitz wants to put three-star hotels at the top of the list for me because I'm using a PC, that's fine by me.

About


David Dorf, Sr Director Technology Strategy for Oracle Retail, shares news and ideas about the retail industry with a focus on innovation and emerging technologies.


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