Online shoppers have different personas; they are looking for different things when they go online. While shopping, most customers are not in a position to tell Web sites what they are looking for and to describe exactly what it should look like.
This is the reason behind predictive analytics, which has become a growing trend adopted by South African online retailers to create a personalised shopping experience for every type of online shopper. This method uses analytics software to accurately predict what customers are buying and what they may purchase in future to understand factors that inform their preferences and habits, says Jaco Barnard, head of retail, consumer goods and transportation at Wipro SA.
"Online retailers need to move away from price competitiveness and into the realm of creating personalisation and engaging the customer in the shopping experience. As the world becomes increasingly globalised, local retailers need to remain relevant and competitive," he continues.
According to Barnard, loyalty programs are an essential component of predictive analytics as they work towards creating a personalised experience for shoppers through various means.
"Loyalty programmes serve two purposes; firstly they offer customers some kind of benefit such as vouchers and discounts through bonus points and shopping score cards. Secondly, they give retailers insight into who the customer is and their spending pattern."
If a customer buys nappies on a regular basis, he continues, then chances are that the customer has a baby of a certain age, and online discount offers for mothers will then be sent to her. This info can be used to predict her future spending behaviour.
With the right analytics in place, these programs are a veritable gold mine for retailers as they can offer a tailored experience to the customer, he explains.
Gary Novitzkas, owner and founder of juniva.com, a health and wellness retailor, says his company uses loyalty programs as a means of strengthening customer relationships while also educating them on the importance of maintaining great health.
"Predictive analytics are a significant way of showing us the products which customers are prone to buying based on their current buying trends. For example, if a customer is always buying immune system booster medication, we would likely throw in several supplements to go hand in hand with it.
"We are beginning to find that customers are willing to share personal information about themselves which is then stored in our database. We try to take advantage of this through engaging customers in focused group surveys and questionnaires which can be done via social media as well as e-mail interaction," he adds.
Barnard says another way of practising predictive analytics is through price optimisation - reducing prices in order to analyse which type of customer positively responds to the adjusted prices.
"Understanding that "customer x" responds to certain discounts better than "customer y" will enable retailers to formulate discounts and a free points system around a certain individuals buying preferences,"
However, he warns there is a fine line between personalisation and invasiveness, and retailers need to be careful not to overload customers.
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