Zappos Head of Customer Research on Achieving True Personalization

It’s easy for large companies to fall into the trap of thinking of their customers as numbers. After all, each one has a lifetime dollar value attached to them.

We quantify the number of times they visit our website in a given time, how many items they purchase (or return) and what NPS rating they gave during their last store visit.

Alexander Genov, head of customer research at Las Vegas-based e-retailer Zappos, has spent over 15 years helping companies understand customers as people, not purchase histories. 

“Part of my role is to help marketing and other departments understand customers as people and do segmentation in the right way – not the boring demographic segmentation where you find that rich people on average spend more money,” Genov said at the recent Annual Retail Forum at Columbia University. 

Here’s why companies are getting personalization wrong 

He notes that few companies offer real personalization, and that in ecommerce the term is applied too liberally. AI-generated next best recommendations based on a customer’s purchase history don’t amount to true personalisation.

To personalize the customer experience, the retailer must understand the customer’s intent in purchasing the item, and can then upsell or cross-sell other relevant items that can help them achieve their goal, like impressing someone on a first date with the right shoes and outfit.

Read more: Netflix's Tony Jebara on How to Personalize the Customer Experience

Another problem with personalization is that it’s seen as a purely digital effort, when it should be rooted in understanding that every customer is different, then designing a technology stack to deliver that experience – if technology is even necessary. 

Zappos has historically billed itself as a “customer service company that just happens to sell shoes, accessories, bags, etc.” Its famed liberal return policy lets customers return shoes up to 365 days after purchase, no questions asked.

One former warehouse employee at Zappos noted on Reddit: “Some of the returned shoes were so beyond damaged that I was shocked we would take them back… Some of the things I found in shoes were bugs, razor blades (one time), lots of pet hair, weird notes or things like grocery lists.” 

Read more: Zappos CEO Tony Hsieh on the Evolution of a Billion-Dollar, Mission-Driven Brand 

Genov admits that some customers abuse return policy by ordering tens of thousands of dollars worth of items and returning “99 percent” of their purchases, essentially renting items for free.

Hence his advice on distinguishing between high-value and low-value customers and servicing them accordingly. 

“Identify the customers you want to really keep happy – with the rest, feel free to either ignore or keep a good standard of service. Don’t be rude to them; just don’t go above and beyond for them,” he said. 

Understand that every customer is different

Personalization at scale is certainly important – surveys, NPS ratings, algorithmically “personalized” web browsing and in some cases, phone interviews.

However, these personalization features should be secondary to gathering qualitative and quantitative information about your customers.

Genov swears by home visits to existing Zappos customers as a way to extract insights you won’t get from questionnaires, and that it’s always important to dig deeper. 

Read more: Here's How Cutting-Edge Companies Use Voice of Customer Data 

During one home visit in Los Angeles near Redondo beach, Genov met with a couple and their two teenage daughters. The woman had recently bought a pair of stylish crocheted shorts, and mentioned she’d bought an identical pair after seeing daughter wear them.

She gushed about being able to dress them up or down for night and day. Her husband, meanwhile, didn’t say much, other than too mention that he lives in jeans when he’s not wearing a uniform while on duty as a police officer. 

“We could have stopped there and said, OK, the wife is passionate about fashion and the guy doesn’t care about clothing,” said Genov. “But we went one step further and when we talked about running shoes he lights up – and you understand not only the full family dynamic but the fact that people have different aspect to them.” 

Personalization is never cut and dried – especially when it comes to clothing. During another home visit, Genov discovered that the clothes we wear aren’t so much a reflection of our current mood as the state of mind we wish to be in.

“This woman talked to us about dressing in the morning not because she feels a certain way, but because she wants to feel a certain way.”

Here are four ways to better understand your customers.

1. Start with a business objective and turn it into a research question

Before launching a focus group or voice of customer interviews, frame a specific business problem you want to solve by understanding your customers better. For instance, a supermarket might be seeking to boost sales of its less-shopped categories like electronics or outdoor equipment. 

It could do so by asking customers what their product needs are, whether they typically associate the supermarket brand with these products, and so on.

Remember that the overall research question is the big-picture problem you’re trying to solve, such as “How can I boost sales of product X?” The questions you ask your customers in the focus group or interview should flow from the research question. 

2. Identify all customer-facing stakeholders

You’d be surprised at just how many different departments within your organization touch the customer. Make sure to involve the product, marketing and sales teams before launching any market research, says Genov. 

“How many times have you seen [a situation] where your marketing group does this huge research projects and shares the insights and people say, I would put this slide in a different place or I would phrase the questions differently,” he says. 

It’s important to convene relevant parties as a group, communicate the business objectives and frame the research question in a way that benefits multiple stakeholders. Market research is an expensive undertaking and the last thing you want is a duplication of effort. 

3. Talk to your customers

Determine what is the best way to obtain the information. If you’re looking to understand the why behind a certain customer behavior, it’s best to do in-depth phone interviews.

If you’re prototyping a new product or feature rollout, a focus group or survey is better. If you’re specifically examining sentiment, interviews or surveys are best for analyzing word choice, tone of voice and so on. 

4. Don’t hoard information

Consolidate all customer data into one place and share it with the entire organization. There’s no harm in oversharing when it comes to a 360-degree view of the customer.