PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
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Instead of just personalizing the content on the web pages of a shopping visit based on a shopper`s online activity, a state-of-the-art personalization program would present coordinated merchandising displays that offer multiple products tied to segmented interests indicated by the customer`s shopping behavior, Johnson says. By pitching to a consumer`s community of interests, organized by a favorite apparel brand or a passion like cars or home improvement projects, a retailer can use personalization to broaden a range of merchandise offers. "Personalization can say, here`s where you go if you`re doing something with your car, with your house, with back-to-school, with a wedding," Johnson says.
Adds ATG`s Todaro: "If you know a customer is an avid skier, you can push skiing conditions to them through pop-ups, banner ads or through a concept we call slotting, or dynamically changing real estate in a part of a web page. We can rotate any content into that slot, and change pages dynamically as the customer goes through a site."
Supporting more effective personalization today, experts say, is better integration in underlying infrastructure--a situation that will continue to improve as technology vendors move further into open standards that support integration across multiple applications and platforms.
IBM, for instance, plans to introduce this year its Retail Enterprise Data Warehouse, or REDW, which is being designed under open standards set by the Association of Retail Technology Standards, or ARTS. REDW integrates with IBM`s WebSphere Commerce platform to serve as a data repository for all of a retailer`s touch points, or selling channels. "All customer information can be extracted and put in REDW," says Stevenson. Prices for the WebSphere Commerce platform start at about $30,000 for an Express version designed for small retailers, he adds.
REDW also supports serving up customer data when it`s needed in applications, he adds. "This is some of the underlining plumbing to enable you to execute not just personalization, but to get the right data you need to personalize correctly," Stevenson says. "If you don`t have good customer data, then you can only personalize in a small way. That was one of the reasons personalization didn`t do well early on in the dot-com era."
Lots left to do
That means that completely clearing up the black eye of personalization requires doing the necessary legwork to identify segments of customer interests, experts say. It`s a chore each retailer must figure out for itself.
At Best Buy, for instance, its strategy of using its stores to identify customer segments is just the beginning of a process that will move more to the online channel, Taylor says. "We`ll identify more and more segments, and the online channel is the most cost-effective way to do that," he says. "But we`re just scratching the surface for now."