Imagine this situation. You are looking to buy that 55-inch 3D LED TV. After the online research, comparisons and demos , you go to your favourite electronics retailer to buy it. You finalise the one that suits your need and are about to make the payment using your phone at the PoS terminal. On your phone, you are presented with a choice of personalised offers from the two banks you bank with, based on your purchase history and credit record. You are tempted by the one that gives you 5 per cent off on the final price, along with a ₹5,000 rebate on that dream home theatre system. You end up buying that too!

This is a good example of real-time personalisation that can be delivered through the mobile phone. Basic personalisation (such as name and account personalisation, interest or product content), along with “blanket” marketing campaigns, no longer serves customers. Digital has become so pervasive that customers expect a “here and now” and truly personal experience.

Things have started moving forward from the usual coupons and brochure promotions, which are very generic, with no real personalisation. Digital marketers are taking it to the next level, based on real-time behaviour, context, location and relevance. Technology that supports such personalisation already exists today with real-time data, analytics and consumer connectivity. Systems and algorithms are available today to: Understand consumer needs and behaviour; Analyse past buying patterns and predict the “next action”; Collect and analyse real-time data like location and context; Optimise customer experiences. With this, we can build brand loyalty and create a unique customer experience to drive engagement and sales.

The opportunity The Kleiner Perkins Caufiled Byers Internet Trends 2016 report throws up some interesting insights. There are now 3 billion internet users globally, with steady growth of 9 per cent year-on-year. Physical retailers are evolving and increasing their e-commerce presence. The internet continues to ramp up as a retail distribution channel with 10 per cent of retail sales in 2015 versus less than 2 per cent in 2000.

The millennials, who form 27 per cent of the US population and the largest generation in the US, will be the primary spender in the next 10-20 years. They are growing up with internet, mobile computing, social media and streaming media on their mobile phones; 80 per cent of internet search is today through a smartphone. Internet ad revenue hit $60 billion in 2015, more than a 20 per cent increase over 2014. Mobile ad revenue grew by more than 66 per cent, while desktop was up just 5 per cent. Online sites like Houzz, which offers image-based content with personalised planning, saw 3-4x higher engagement and 5x higher purchase conversion in 2015.

India is a growing internet market (40 per cent growth from 2008 to 2015), ranked second after China and ahead of the US. The mobile internet user base in the country has steadily increased from 238 million in June last year to 306 million at the end of December 2015, says a report by Internet and Mobile Association of India (IAMAI)-IMRB International. Various estimates suggest that there are just under a billion cellphone connections in India, and every month, there is an addition of around six million new cellphones in usage. Cellphone users are switching to smartphones with almost 65 per cent of all new Net users in India experiencing their first surfing activity through smartphones.

The roadblocks While the opportunity is huge, there are two key challenges that can become an impediment.

The first is the digital payment ecosystem. The digital/electronic payment ecosystem in India — which includes banks, the large payment technology solutions companies and independent mobile wallet solution providers — needs to create a robust and collaborative back-end for e-commerce. ‘That would allow it to move to the next level and personalise content to enhance the digital customer experience. With the consumer data and spending pattern available to them, they can go that extra mile to give a “true” personalisation experience to their customers. The key to success of mobile wallets will be the ability to integrate payment, loyalty and contextual engagement functionality while addressing security concerns.

The second is data security. In the digital world, identity is everything. If that is compromised, consumers will be unforgiving. This is probably a step-by-step evolution where advances in security measures with associated adoption will result in incremental improvement.

Retailers might have challenges of their own, such as unavailability of the right data for marketing; Siloed functioning of departments; Personalisation being seen as expensive; No proper articulation of the ROI. These are issues in the near term, but once we realise where customer needs are headed, these challenges will disappear.

Darshan Shankavaram is Senior Vice President, Digital Service Line, Capgemini