When Wal-Mart announced plans to use its retail locations to fulfill online orders last week, the media and business community broke into a collective game of word association. The word? Amazon.

Prior to breaking the news, Wal-Mart was already one of the few companies that could compete with Amazon online. But after unveiling how it plans to do so—by fulfilling online orders in its own stores—Wal-Mart became Amazon’s first serious threat.

The irony is that Wal-Mart will fulfill these orders using Amazon’s own in-store locker strategy. Wal-Mart has the significant advantage of already having 10,000 retail locations—something Amazon can’t currently compete with. For Amazon, staying competitive will either require rolling out a slew of its own physical locations (which is a possibility considering its test store concept last year) or establishing partnerships with 3rd-party brick-and-mortar retailers (something it is very much in the process of doing). In the meantime, however, all Wal-Mart has to do is boost its online game. Well, and install the lockers.

Clearly Amazon and Wal-Mart have different product sets. They also don’t overlap 100% in target customer bases, and there are a bunch of other things that are fundamentally different about their models… But for the sake of oversimplification, let’s say that all Wal-Mart has to do to rise to ecommerce supremacy is up the online ante. What exactly would that take? A lot. But Wal-Mart’s two most crucial priorities will be helping online customers navigate its extensive product list easily and quickly, and streamlining online and offline operations to create a turnkey overall experience.

Priority #1: Wal-Mart must transform itself into an invisible (and psychic) personal shopper to help customers navigate its vast inventory.

Like Amazon, Wal-Mart has a massive product offering. This isn’t a new problem for either of them, but as the race to fulfill orders guarantees quicker turnaround times and more convenience after placing the order, Wal-Mart must control every thing it can before the order is placed to ensure it’s actually placed through them. In this case, that means making sure customers can find what they’re looking for, quickly and easily. Or, in the case that customers don’t know exactly what that is, helping them figure it out with a fairly high degree of accuracy.

The good news is that this isn’t Wal-Mart’s first rodeo; they’re not exactly starting from scratch. They know who their customers are and they’ve got tons of data from past purchases and online behavior to inform their efforts.

They’ve also got enough content to appeal to every person in the US if they want to – it’s just a question of surfacing the right content to the right people. Therefore there is no extra work involved in getting more products or content; the challenge is simply using it better.

To act as an invisible personal shopper, Wal-Mart must master what they do with this powerful combination of content and data—and when they do it. The goal is to use it in real-time, as customers are browsing their online store.  This is different from standard product recommendations—things like “people who liked this, also like that”–which online shoppers have become accustomed to. Retailers now have the technology to go far beyond these persona/segment-based tools.

They can make use of both historical data (what this particular individual has looked at and/or purchased in the past) and current data (what this particular individual is looking at right now) to make predictions that will shape a particular customer’s experience in context and real-time.

Priority #2: Create a streamlined and turnkey experience across all touch points between online and offline visits.

With this new model comes the potential for far more room for error than ever before. Online customers who will now be traveling to Wal-Mart’s physical locations to pick up their orders will no doubt expect a consistent experience from the moment they order all the way to fulfillment. Along the way, there are a number of touch points, including email, direct marketing, advertising, customer service, and so on.

Building on the idea of personalizing each individual’s online experience, Wal-Mart can easily improve each subsequent experience—something that may seem like it involves a significant level of complexity. But with the right infrastructure, it can be completely automated and dynamic.

The key to accomplishing this is putting visitor profiles at the heart of each cross channel experience. In other words, Wal-Mart can use the same model of targeting used online to inform which content each customer sees across all other channels. In the end, the digital channels match email marketing matches advertising matches direct mail matches messaging at the point of pick-up (a phrase I just coined, mind you), and so on.

At the end of the day, Wal-Mart’s rise to online dominance really just revolves around turning an otherwise complicated shopping experience into one that feels quaint and easy. It can accomplish this by setting up a strong behind-the-scenes infrastructure that puts the customer experience at the forefront. And isn’t that what their new strategy is all about—giving the customer what they want where they want it?

It’s predicted that shoppers around the world will have purchased about $119 billion worth of goods and services through their mobile phones by 2015. Which means, as a sales channel, it will either supplement or replace other marketing platforms—namely, brick-and-mortar store locations, online stores like Amazon and eBay, and/or standalone ecommerce sites. Either way, mobile will be instrumental in expanding brands’ reach and connecting them to new and existing audiences in a different way. But determining where mobile will fit in is an exercise in correctly gathering and interpreting consumer data.

Because mobile devices are an extension of each consumer’s life—set up and customized to their individual needs and preferences—they potentially offer marketers more personal data about their audiences than ever before. It’s a goldmine of information for the direction of marketers’ mobile strategies and determining where mobile fits in as both a sales channel and marketing medium.

So how can mobile consumer data improve sales and marketing efforts?

1.     Using data for real-time content targeting

Now that marketers have the ability to utilize CRM intelligence to improve consumers’ experience with a brand across all touch points, they can also marry this data with new mobile behavioral data. One particular application of CRM data in the mobile environment is a marketer’s ability to target specific customers with specific content in real time. That’s right, real time.

This approach complements how consumers are using mobile (on the go) and will therefore increase its effectiveness in reaching them in a meaningful and relevant way—improved brand retention, loyalty, and customer lifetime values; increases in revenue per visit, and a truly connected multichannel experience. CRM-based Real-time content targeting is the gateway to connecting with consumers, across any medium, consistently, and at the right time.

2. Provide a Consistent, Optimized Experience… Everywhere

Marketers must accept mobile for what it is: one of many channels to the overall marketplace. And consumers don’t think of mobile as a channel, but rather another means of connecting to a brand, whenever they want—wherever they want. Any personalization you might be achieving on the PC, must be reflected on the mobile site (and on social, email, tablets and so on…).

Aligning all these efforts first requires companies to consider how consumers are using mobile devices to interact with the brand, and how that will differ from the online or in-store interaction. It’s unlikely, for example, that a banking customer will want to complete a loan application on a mobile phone, but probable that she will use the device to check account balances or find the location of the nearest branch. Account balance pages, therefore, should be priority for targeted and optimized content offerings, which are consistent with those offerings among other channels.

Of course, different platforms allow for unique opportunities and shouldn’t be treated as if they are entirely the same—because they’re not.

3. Personalize all access points

With traditional web sites, companies have the luxury of using space to present a great deal of information across different areas on each page. But this luxury is not available in the mobile channel. Given mobile devices’ limited screen sizes, companies must ensure the right content is put in front of the consumer in the right format, the first time–without being able to exploit other test areas on the page.

Marketers can make the mobile experience just as customized and personal as it is on a standard website—and, along the way, draw in and win over customers. Segmentation allows marketers to capture behaviors and attributes about their web and mobile visitors in order to create content tailored to their location, their time of day, type of browser or operating system, or even their brand of mobile device. Another form of personalization, behavioral targeting, gets personal on an individual level: users can be targeted by previous searches, past purchases, the time of their last visits, and even their activities in physical stores, call centers or websites—to predict the next best offer for them in their buying lifecycle.

Any way it’s presented, personalizing the customer experience across all channels is an essential practice for a marketer wanting to be on top of the game.

What does personalization really mean? You’ll be forgiven if you have absolutely no idea. As trendy catchwords go, “personalization” has become a go-to term for websites and online marketers, laden with all the possibilities of connecting with individual consumers and a departure from the limitations of a one-size-fits-all approach.

Nearly every online marketing vendor touts some form of personalization as the secret sauce for helping to target customers.

It makes sense. The potential of personalized online marketing, when done well, is enormous—and for that reason, it’s a compelling sell. The problem is, it hasn’t been done successfully thus far. And thanks to vendor hype and overpromise, just mention the word “personalization,” and most have learned to greet it with a healthy dose of skepticism.

But personalization isn’t just marketing hype. It’s a complex concept that really can live up to its billing. However, retailers, in tandem with their marketing vendors, must first identify what personalization really means—and what it means to their business and target customers.

Furthermore, when it comes to their websites, mobile sites, apps and CRM platforms, major e-commerce players need to realize that only through a customized combination of multivariate testing, optimization and personalization best practices can they truly begin to reach consumers with personalization that is effective and full of impact. There are no easy answers or instant solutions for creating personalization that works. It’s about evolution rather than revolution.

Defining Personalization

A truly personalized customer experience—what amounts to a custom website for every consumer—has been the Holy Grail of marketing for over a decade. Yet the very concept is conflicted, fragmented and confusing. Ask 10 marketers to define personalization and you’ll get 10 answers. You’ll also find that despite all the hype, the bar has been set low; most of these same marketers are hoping for nothing more than a few product recommendations or more effective targeting.

Even the experts don’t give us a whole lot of direction on personalization. According to Forrester, Web personalization is “creating experiences on websites or through interactive media that are unique to individuals or segments of consumers.” Just about as vague as every other definition.

In reality, every specific piece of information you can gain about your customer—from search information to online behavior and purchases—can be used to create a personalized experience. That means that your approach to personalization can be as simple (using one or two collected insights) or complex (a detailed formula based on multiple insights) as you want it to be.

With the right combination of technology, research and testing, e-commerce businesses can now deliver a personalized online experience that far exceeds anything that can be delivered in store—short of hiring a dedicated personal shopper. With the right personalization strategy and tools, companies can create an online equivalent of a brick-and-mortar store, where anything a consumer might want is located in a single aisle.

Technology Is So Personal

It goes without saying that your marketing team is comprised of geniuses, but a lack of imagination—and technology—may be limiting their vision when it comes to personalization.

Yes, they’ve thought about segmentation, recommendations and retargeting, but these techniques are only a fraction of what technology now allows. New sophisticated real-time automated SaaS solutions empower marketers to create personalized experiences that far exceed what was previously possible. With SaaS solutions working in tandem with strategy and implementation, companies can begin to move toward complex forms of personalization—and achieve online what is already being done offline with propensity modeling and other business analytics.

Really, knowing about low-cost SaaS solutions—and how to use them to take advantage of opportunity—might just be the most significant indicator of marketing genius.

Getting Started with Personalization

Once the right technology is in place, one of the best ways to employ personalization is with a set of “rules” that define parameters. These rules establish conditions for a specific visitor experience; for every insight gleaned, you create a more and more personalized experience.

Of course, rules don’t exist in a vacuum. When defining them, you must take into account known consumer behaviors, including the various stages that shoppers go through when making any kind of purchase and the fact that they may visit your site several times before actually pulling the “buy now” trigger. While this knowledge might seem to complicate your rules in the immediate term, it can be used to your advantage.

Sure, go ahead and create rules for first-time visitors, but you can and should also devise more complicated formulas that incorporate insights and data from previous visits and apply them to future visits. So, for example, retarget repeat visitors based on the last product they searched for during their last visit. This rule path can then be enhanced with complementary content or offerings, whether for discount on the searched product or an up-sell on similar items. It’s personalization that gives customers what they want and shows them that you value them—a must for creating relationships and loyalty online.

Keep in mind, however, that while targeting with rules is effective and often a great place to start, it does have its limitations.

Marketers will find it nearly impossible to manually define rules for expansive websites that have vast and diverse daily traffic. In this case, technology needs to be partnered with sophisticated behavioral targeting through mathematical models that enable you to predict the most compelling content and offers based on known insights and data points about each visitor. This type of model learns and adjusts dynamically over time to optimize visitor experiences with content that yields the highest conversion rate. This approach is also better for the broader range of content (product types, specific brands or destinations) that each individual receives based on unique predictive attributes.

Using Product Recommendations the Right Way

Want to see great personalization in action? Amazon continues to set the gold standard for best practices in personalization. The site has an unparalleled ability to recognize and deftly exploit consumers’ online browsing and buying habits. (Of course, it also has the advantage of customer interactions living entirely online, while most retailers have offline presences that dilute their ability to gather insights.)

Because of Amazon’s clear success, almost every major e-commerce site has taken steps to mimic Amazon’s highly successful interactions with returning customers. (“You were interested in XYZ, so you may enjoy ABC,” etc.)

But that doesn’t mean they’re getting it right. Everything from competing recommendations (you want shoppers to buy more, not different) or recommendations for products that are out of stock to a lack of testing and product reviews means that many recommendation programs are falling flat or, even worse, are counterproductive.

To offer successful personalization through recommendation, focus on the essential elements.  Product recommendations should be placed on category pages, product pages and the shopping cart or basket page, with each page type getting its own recommendation formula and approach. This approach allows for more targeted recommendations and for segmented testing and optimization of recommendations. Recommendation content, placement on the page and the design of a promotion all play a role in the success of recommendations. Segmenting and measuring the conversion impact of every detail (e.g., images, fonts, colors, the number of recommended products, the placement on pages, and the recommendation model used) can help you identify the approach that yields the highest conversion rates for your visitors.

With a program for monitoring and improving recommendations, you improve the shopping experience for each customer—and potentially increase revenue and cart sizes.

Maximizing the Opportunity  

Companies that have already successfully leveraged new SaaS solutions along with optimization and personalization strategies have achieved, on average, a double-digit increase in conversions. And with these programs becoming more common, consumers are going to be expecting a sophisticated level of personalization.

The good news is that with the SaaS-based model, companies can have personalization programs up and running immediately. Add in multichannel data from call centers and stores or branches, and they can create an organization-wide, cross-channel approach to personalization within a quarter.

There is no doubt that, after years of hype and hyperbole, we’ve finally found the holy grail of online marketing: Personalization.