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How Retailers Are Misreading Their Customers

Report finds gulf between shoppers’ wants and retailers’ perceptions.

 “Know thyself,” the ancient Greeks advised, and any marketer worth their “likes” in social media lives by the updated maxim “Know thy customer.”

But that doesn’t appear to be the case for most retailers, according to a new study by Alliance Data, a provider of private-label credit cards. Its research report, “The Great Divide,” suggests that retail brands are making overreaching suppositions about consumers’ needs that don’t necessarily jibe with what the customer actually likes or wants.

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The study, involving more than 2,000 consumers, 200 retail marketers and 40 brands, identified 31 separate marketing and communications elements. Ranking their importance, retail marketers gave each communication element an average score of 92, while consumers’ average importance scores ranged from 28 percent to 88 percent, indicating a clear disconnect.

Case in point: 98 percent of the retailers said personalization, i.e., content and product recommendations based on past purchases or browsing history, is an important or very important consumer need. But consumers overwhelmingly rated this type of communication as unimportant, instead preferring messages that are relevant to their needs at a given time.

Another wide divide: 84 percent of consumers said clear content is important to them, although only 49 percent believe retail brands are doing a good job of delivering it.

The consequence, argues Alliance, is that retailers are devoting resources to needs that consumers don’t consider important, reducing their ability to execute on higher priority wants.

“Marketers face the challenge today of dealing with rapidly changing consumer expectations,” said Shannon Andrick, marketing advancement VP for the company’s card services business. “While they’ve made progress in areas such as simplicity and personalization, there are still significant gaps between brand performance and customer expectations. Our hope is that through the data and insight in this study, brands can better focus their resources on the needs consumers consider most important.”

Indeed, the biggest unmet need revealed by the research was consumer control over brand communications. More than half of consumers (52 percent) said they are more likely to pay attention to emails and other brand content when they can control the frequency and type of messaging.

Conversely, consumers were highly enthusiastic about new retail technologies like buy online, pick-up in store; online checks of available in-store inventory; mobile payments; and mobile scans of in-store products to check prices, get product information or receive discounts. Alliance’s advice: focus on capabilities driving the most value for consumers, and discern and remove barriers to adoption to help drive customer engagement.

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The complete report is available for complimentary download.