October 31, 2003, 12:00 AM

I Know You

ATG’s Phil London tells how to target customers and provide them with relevant information during the all-important holiday shopping season.

At Shop.org in late September, enthusiasm for the 2003 holiday retail season was hard to miss. Retailers of all sizes and specialties displayed an exuberance that has not been seen in several years. And who can blame them? Given the projections of industry analysts, it is hard to imagine anyone feeling blue in the run up to the holidays. According to the National Retail Federation, this year’s holiday retail sales are expected to increase 5.7%, bringing holiday spending to $217.4 billion. A consumer survey from Brand Keys predicts that half of all consumers will do some portion of holiday shopping online this year-up 18% from last year-and that the amount they spend online will increase 62%.

Despite the optimistic forecast, however, there will always be winners and losers. Having a successful 2003 holiday season will depend on how that $217.4 billion pie is carved up-and how that gets carved up will depend more this year than ever on how well retailers execute their multi-channel strategies. In the last few years, there has been a significant maturation of the Internet and online channels from static transaction pages to more robust, personalized sites. With the greater ability to interact with customers through multiple touch points, online channels have grown into important components to of bottom- line performance.

A single umbrella

Today, many retailers have deployed multi-channel strategies that integrate their online, catalog, call center, and in-store initiatives. Through the integration of these key channels, retailers such as J. Crew Group Inc. and Restoration Hardware Inc. have been able not only to deliver consistent branding across different channels but also to drive sales both online and offline. Rather than having customers segmented as online and offline shoppers, the reality of the multi-channel strategy is worlds of online and offline shoppers coming together under a single umbrella.

So, as the multi-channel strategy has moved from concept to mainstream adoption and retailers integrate call centers and in-store kiosks, the industry appears ready to tackle the holiday season more aggressively than ever. But success is not guaranteed. As with anything, the difference between success and failure this season will be a fine line. Making sure you are on the right side of that line will have a lot to do with how you target your customers and how well you are able to provide them with relevant information.

With that in mind, how will you make this season a success? Well, a little luck or having the “hot” product is always nice, but here are a few tangible ideas:

Understanding the difference between personalization and customization

A common practice among Internet retailers is to offer customers recommendations on additional products based on specific pages visited in the past or the commonality one customer may have with many other shoppers. Some will define this as personalization, but what is really being described is customization. Personalization is defined by leveraging an acute understanding of your customer based on a granular level of information. Do not get caught up in targeting shoppers with promotions based on their last interaction with you. That purchase may have been a gift for someone else. Create campaigns based on scenarios that leverage your customer’s preferences and are delivered at the right time through the right channel. For example, if your customer is an avid reader of new fiction who also enjoys browsing bookstores, target that customer with personalized e-mail campaigns around hot new titles that will drive the customer to purchase the book in-store as opposed to online.

In this world, “no” can ultimately mean “yes”

Try as you might, some of your customers are going to ignore the campaigns with which they are targeted this holiday season. With personalization-as opposed to customization-the ability and opportunity exist for you to change an online promotion on the fly and create a new campaign that will resonate with customers. Learn to leverage a “no” to your advantage. That means pro-actively creating scenarios in which a negative response triggers a second promotion offering an alternate selection. For instance, if a customer abandons a transaction in the final stages when the shipping charge page appears, you have the opportunity to present that customer a free shipping promotion next time he logs on. Or, if the customer abandons the transaction at the product information page, you can create campaigns offering a more detailed product description for that customer the next time he visits the site.

Online or offline, it’s still a purchase

Customers gravitate to convenience. The easier and faster it is for a customer to locate and purchase an item the more likely she is to buy. This is the heart of the multi-channel strategy. Retailers have moved beyond the point where in-store, catalog and online exist in silos. Design and launch your online promotions with your offline channels in mind. Retailers who can provide customers with the ability to order an item online and pick it up at a store or redeem a gift certificate online are reaching out to their customers and making the holiday season as convenient as possible.

Like the seasons, scenarios change

The product designated each year as the hot item never retains that status the following year. Customers’ tastes and preferences also shift over the course of 12 months. You may have built scenarios in 2002 that will simply fall into the delete folder in 2003. For example, Neiman Marcus launched aggressive online promotion campaigns for the 2002 holiday season that centered on new products (i.e. Yves Saint Laurent handbags), a Top 50 gifts list and last minute gift ideas. Why? The retailer couldn’t rely on previous customer shopping patterns alone to drive sales. Successful retailers this year will not only take what they learned from their customers last year but also scrutinize what they learned from those customers this year to develop and deploy online promotions and targeted campaigns.

Creating a point of sale from a point of service

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