AI-driven personalization gives electronics retailer a boost

Conrad Electronic uses customer intelligence solutions from SAS to craft relevant offers in real time

The rise of e-commerce has pushed many traditional retailers to the brink. Forced to compete with powerhouses like Amazon and Alibaba, stores are reinventing themselves to survive in a digital world turned upside down by global competition and record-low prices.

By contrast, the well-established German electronics retailer Conrad Electronic is embracing the new opportunities. The 95-year-old, family-owned company launched one of Europe’s first online stores in 1997, and now nearly 70 percent of the company’s business is conducted online.

But times are changing. Shoppers today expect highly personalized experiences, both in stores and online. Businesses that can deliver relevant offers at scale typically see increased sales. However, very few companies have the analytical capabilities to pull it off.

“We deliberately chose SAS^®,” says Florian Lustig, Director of Predictive Analytics at Conrad Electronic. For years, the company manually scored its marketing models with SAS; however, changes in consumer expectations and habits have prompted the retailer to adopt a new digital approach by automating and personalizing its marketing campaigns.

How it works

By adding a suite of customer intelligence solutions, Conrad Electronic can now analyze online and offline customer data in real time to align offers to the interests of individual customers. “This was the birth of real-time analytics for us,” says Björn Eichler, Director of Predictive Systems at Conrad Electronic.

The ability to score online shoppers based on their current and historical behavior enables the retailer to learn their preferences and display relevant offers along the customer journey. Consider the following example.

A customer who’s interested in thermostats goes to Conrad Electronic’s website. In the background, a conversion score is calculated based on their transaction history and current browsing behavior. This determines their probability to purchase. Based on this score and other factors, a relevant banner appears on the website, coaxing them to complete the transaction.

If the customer gets distracted and abandons their cart, SAS Marketing Automation then automatically initiates a trigger campaign based on their profile, generating a push notification on their phone and an email with a coupon later that day. Happy with the discounted offer, the customer returns to the website and purchases the thermostat.

This personalized approach based on both learning and appropriate automated response is made possible through the artificial intelligence and machine learning capabilities found on the SAS Platform. Behavior-based bannering works only with identified customers, but because only 2 percent to 3 percent of website visitors are recognized, advanced technology is needed to form a complete profile of unknown visitors.

With neural networks, which learn from real-time information (clickstream behavior, length of stay on certain pages, etc.), the retailer can now identify 60 percent of visitors, enabling it to increase the relevancy of displayed banners and ultimately drive higher customer satisfaction and increase revenue.

Does personalization improve results?

Achieving real-time personalization at scale is a journey for modern retailers. Test, tweak, scale, repeat. So far, Conrad Electronic has been able to personalize 20 percent of emails, which accounts for 50 percent of revenue for the channel. Opt-outs have dropped sharply, and by automating campaigns, the marketing department has increased productivity while reducing costs.

“Our campaigns used to be very programming-intensive and required data and programming know-how,” Eichler says. “With SAS Customer Intelligence and AI, the marketing team is more independent, and there is better collaboration between departments because we all share the same platform.”

Eichler notes that unlike many other analytics providers, SAS can accommodate all marketing channels, which was a key requirement for the omnichannel retailer. More than 200 multichannel campaigns have been launched across 12 European countries. In doing so, the retailer has reduced its number of contacts while making each one more significant. This has improved relationships by enabling Conrad Electronic to engage its customers with the right offers at the right times.

Data protection top of mind

In a bid to secure its future, Conrad Electronic is branching into smart home services with a new Berlin-based project called Conrad Connect. The platform, which already has 125,000 users, links smart devices such as LED lights, thermostats and irrigation systems, to give homeowners unprecedented control over their smart houses.

This venture adds to the high volume of customer data pouring in from stores and the website. Flush with data, Conrad Electronic must remain vigilant to protect individual privacy and comply with strict European data regulations. According to Lustig, this is a top company priority. “The use of personal data in compliance with data protection is a demanding organizational task, but it’s another way in which working with SAS helps us.”

As the retail market evolves, Conrad Electronic looks to expand on its personalization efforts to remain relevant to a new generation of shoppers. With SAS, the retailer is well positioned to celebrate its 100th anniversary as the leading European marketplace for technology and electronics.