Exclusive Q&A: Mastercard says personalization hinges on loyalty

Consumers demand an increasingly customized experience, which retailers can maximize by tying it to loyalty.

In a recent conversation with Chain Store Age, Ori Bauer, CEO of Dynamic Yield by Mastercard, discussed the drivers of consumer expectations for personalization, as well as how artificial intelligence and loyalty programs can fit into retailer efforts to meet the need for individualized customer service.

Is there a growing consumer demand for personalized customer experience?

Yes. First, the world around us is becoming more personalized and consumers are using apps on their phones like Spotify and Tik Tok, provided by companies that invested a lot in creating a very personalized and relevant experience for consumers.

Now consumers have grown to expect that level of personalization from any type of digital interaction that they that they have. If Spotify knows what song to play next, the expectation is that when I go to shop online, I get a very similar experience.

What’s also happening is the request for personalization is coming across the different generations. Gen Z, which is gaining shopping power, has very little patience and the lowest level of loyalty to a specific brand, and also expect a high degree of personalization.

But we’re now seeing the same expectation for a personalized experience among consumers in older generations. People just got used to receiving this kind of individualized service.

How can retailers meet customer expectations for personalization?

One thing that is extremely important for offering personalization at scale is the use of artificial intelligence (AI) and machine learning (ML). Instead of trying to predict the next word that is relevant in a sentence, we have trained our models on billions of interactions with products to predict the most relevant content or offer to show to the consumer.

That is, the content the consumer would most likely interact with, depending on what our customer is trying to optimize for. And in many cases, the consumer is not identified, so you have to personalize for an unknown person. You can use the context of the transaction; so for example, looking at where a customer came from – such as social media campaign or a search engine.

How can retailers use loyalty to provide value beyond points and discounts?

Providing rewards points and discounts is always an effective tactic to draw consumers, but if you combine the benefits of loyalty and personalization, you can make it significantly more impactful.

For example, I like casual clothing. Let's say I shop with an upscale menswear retailer. If they’re trying to promote a new line of suits, there is very little likelihood for me to purchase it even if I receive a 30% discount. But if a I get a relevant offer, like a certain discount for a new line of jeans, it is much more likely I will interact with that loyalty promotion and make a purchase.

The more you can learn about a customer through the use of advanced algorithms and ML capabilities, the more you can use that information to drive and show relevant offers, not just generic offers or generic promotions, and it becomes more likely for you to engage with the customer.

What can retailers do to create a truly seamless customer experience?

Retailers need to avoid overselling and overpitching to the customer. They need to embed these AI-based and personalized marketing capabilities into a seamless consumer experience that is valid across different channels.

If a customer comes in through an email campaign and then visits your website, they expect to see a continuation of the email experience into the website without feeling like they are being oversold.

In-store personalization is also picking up. For example, if you identify a customer that is part of your loyalty program when they visit a brick-and-mortar store, you could connect information about their purchases online to them in the store. Then an associate can assist them and recommend relevant products, which could have an amazing impact.

The customer experience should be as seamless as and as frictionless as possible and embedded into the flow. If you do it right, you create more engagement and the customer feels more empathy toward you. At the end of the day, this generates more loyalty and more revenue for the retailer.

[Read more: Mastercard forecasts holiday sales gain of 3.7%, led by electronics]