The document discusses how retailers can leverage social networking and the internet of things to drive personalization and engagement. It notes that traditional marketing approaches are ineffective due to information overload. Personalization is key, but retailers struggle to truly understand customers due to fragmented data. The rise of connected devices and social media provide new insights into motivations, interests and preferences that can be used to engage customers and improve targeting. Leaders are using these insights to better segment customers and tailor assortments, offers and interactions.

1. Commerce’s New Connections
Leveraging Social Networking and The Internet of Things
to Drive Personalization and Engagement

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Competition for Consumer
Attention Continues to
Grow…

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500/Day 5,000/Day
Image Courtesy: Wikipedia Image Courtesy: Wikipedia

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30,000marketing messages per day
Today consumers encounter almost
-Yankelovich Consumer Research
Image Courtesy: Wikipedia

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Spray & Pray Marketing
Hence the Fate of Most
Marketing Messages…
1 – Silverpop e-Mail Marketing Benchmarks Study
2 – Clickz
83%Retail e-Mail Open Rate1
Unopened…
One-to-One Personalization

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Spray & Pray Marketing
Hence the Fate of Most
Marketing Messages…
1 – Silverpop e-Mail Marketing Benchmarks Study
2 – Clickz
97%Retail e-Mail Click-Through Rate1
Ignored…
One-to-One Personalization

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Spray & Pray Marketing
Hence the Fate of Most
Marketing Messages…
1 – Silverpop e-Mail Marketing Benchmarks Study
2 – Clickz
66%"unsubscribed from e-mail
that I had opted into because
it wasn't relevant”2
or Worse.
One-to-One Personalization

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And Meaningful Loyalty
Remains Elusive
Source: – Colloquy
$48 Billionloyalty rewards distributed annually
36% Effectivein earning repeat shopping visits
$32Bessentially
wasted

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So…What’s
Missing?
PERSONALIZATION

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59%believe personalized offers have a
noticeable influence on their spend
- Infosys
Image Courtesy: Wikipedia

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40%
buy more from retailers that personalize
the shopping experience consistently
across all channels
- eTailing Group

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78%are more likely to be repeat
customers of retailers with
targeted, personalized offers
- Infosys

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Retailers See That
Personalization Can Pay Big
Potential Value of New Marketing Opportunities
Better Targeting via More
Detailed Customer Preferences
Real-time Personalized Offers
58%
50%
39%
47%
Highly Valuable Somewhat Valuable
Source: Retail Systems Research
97%find value in both
improved targeting
and
personalization

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75%of Netflix views come from personalized
recommendations
--McKinsey & Co

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Image Courtesy: Aurelijus Valeiša
35%of purchases on Amazon
are the result of personal
recommendations
--McKinsey & Co

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Loyalty Program Data
Acxiom Data
Purchases
Website Clickstream
Abandoned Shopping Carts
Service Requests
Returns
e-Mail Opens, Clicks
The Good News? Marketers Have
More CRM Data than Ever Before

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Loyalty Program Data
Acxiom Data
Purchases
Website Clickstream
Abandoned Shopping Carts
Service Requests
Returns
e-Mail Opens, Clicks
The Problem? More CRM Data
Has Not Led to More Insight
27%strongly agree that their
company knows who their
best customers are
Only
4%strongly agree that they
are proficient at target
marketing across channels
Only
?
Source: Retail Systems Research

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Traditional CRM Segments
Added Value in their Day
Image Courtesy: XDesktopWallpapers.com
Donald F. Draper
Creative Director
Sterling Cooper Draper Pryce
1271 Sixth Avenue
New York, New York 10000
Klondike 5-5356

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Traditional CRM Segments
Added Value Even 5 Years Ago
Image Courtesy: Alpha Coders
Geographic • Demographic • Lifestyle • Purchase Behavior

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However, Traditional Segments
Are No Longer Enough
71%
of leading retailers indicate
that fragmenting customer
segments make it harder to
reach their customers
Source: Retail Systems Research
They Tell Us Whom/Where to
Target, But Three Key Questions
Remain Unanswered…

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What
Motivates
Them?
Image Courtesy: Wikipedia
1

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Image Courtesy: Wikipedia
How Do We Engage Them?2

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Image Courtesy: Charles Starrett
What Do They Want?
“Any customer can have a
car painted any color that he
wants so long as it is black”
Self-Fulfilling
Assortments
3

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The Balance of
Power has Shifted

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Retail, Upside Down
“Sell What We Have”
Has Become…

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Retail, Upside Down
Sell What We Have
“SellWhatTheyWant”

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Image Courtesy: Gabriel Saldana
Strategic Actions by
Best-in-Class Retailers
Product strategies based on deeper
customer segmentation
Coordinate product placement with
customer behavior
Establish quantifiable methodologies
for measuring customer activity
Increase online ad relevance with
search criteria
36%
29%
24%
24%
Source: Aberdeen Group
Top

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Linking Assortments and Offers
to Customer Data is Mandatory
Analysts All Agree…
Image Courtesy: Rick Harris
The best way retailers can deliver a unique, exceptional
shopping experience is to personalize brand
interactions to individual shoppers and
groups that share similar preferences and/or demands.
“
”

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CONNECTIONShold the key to customer relevance
PEOPLE MACHINES

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Degrees of Separation
1.9BPEOPLESource: We Are Social
4 Social
140BCONNECTIONSSource: Facebook

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Private traits and attributes are predictable from
digital records of human behaviour
Going Beyond Likes

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Going Beyond Likes
The Cambridge Study Revealed that
People Who Like Onion Rings have
Above Average Intelligence…

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Going Beyond Likes
…and that People Who Like The “Sliding
on Floors with Socks” Facebook Page
Typically Do Not Use Drugs

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Image Courtesy: picstopin
Many People Like Alcohol
(and boy do we talk about it on social media!)
But Few People ‘Alcohol’
Discovering Passions
Hiding in Plain Sight

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The $64K Question
How Do We Monetize
These Insights?

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Kraft Dips into Data to
Uncover Advocates

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BEFORE the Shortage
• CRM-Driven Consumer Analysis
• Occasional Usage (1-3x/year)
• Slow Growth Product
• Being Milked for Profits
AFTER the Shortage
• Added Social Data to CRM Analysis
• Heavy Usage Among Advocates
• 10% Buyers = 40% Sales, 50% Profits
• Lots of Growth Headroom
• New Marketing Approach
Source: Advertising Age
Sales
Share
Ad Efficiency

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Walmart Labs:
Social Sells More Stuff
Semantic analysis of a huge
data store of real-time social
media streams to inform
marketing and commerce
The Social Genome Project

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FRIENDS
MENTIONS
FAN PAGES
PROFILES
EVENTS
CRM
Worth Its Salt
for Walmart?
OMG! I love salt!!!!
02:12 PM • May 05, 2010
@Natasha95
-------------CONTEXT------------

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Walmart.com
searches informed by
the Social Genome see
10-15%
higher
conversion
rates
Image Courtesy: HDWpapers.com

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Loyalty Program Data
Acxiom Data
Purchases
Website Clickstream
Abandoned Baskets
Service Requests
Returns
e-Mail Opens, Clicks
Consensus: Social Insights Lead
to More Targeted Segments
Loves J.K Rowling Novels Guilty Pleasure: Downton Abbey
Practices Yoga Drives a Prius
Dodger Fan Climbs Mountains
Sagittarius Vegetarian
52%of marketers credit social data
with helping them identify
new business opportunities
46%indicate social analytics help
define customer personas and
market in ways that resonate
Source: eConsultancy 2013Source: eConsultancy 2013
?

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The Next Frontier in
Personalization?

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The Rise of
the Machines

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The
Internet
of Things
“Equipping all objects
in the world with
minuscule identifying
devices or machine-
readable identifiers”

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1000devices connected to
the internet in 1984
,
Image Courtesy: NXE Wallpapers
Source: Cisco

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Image Courtesy: MovieWallpapers.com
12Bdevices connected
to the internet today
Source: Cisco

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50Bdevices connected to
the internet in 2020
Source: Cisco

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The Connected Home
By 2022 the average
household with two
teenage kids will own
Internet
connected
devices
Source: Reuters
50

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220MSmart connected cars
will be sold by 2020
--GSMA
The Connected Auto

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The Connected Human
Fitness Activity
Trackers grew
in 2013 and
analysts expect in 2014
Source: Canalys
300% 9M

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zettabytes
Source: Tibco
2.8
Imagine the Possibilities

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connections
in our daily lives
With the growing number of
we will all become more in tune
with our data and expect more relevance
from retailers and brands

54. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIALCopyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
Retailers and Brands Must Be Prepared
to Complete The Trust Equation
Personal
Data + Respect
Trust =Tailored Offers,
Deals & Interactions

55. Thank You