Personalization is critical to growing customer loyalty, increasing revenue and staying relevant with customers. Read on to learn more about what personalization is, why it's so important for eCommerce, and the three things you'll need to get started with personalization in your own eCommerce marketing.
What is personalization?
Personalization treats each customer as an individual. It means offering tailored marketing messages that are timely and relevant. At its heart, personalization is about creating a unique, seamless experience. Customers return to you because you provide offers that resonate with them, anticipate their needs and save them time.
Personalization covers a range of marketing activities, from incorporating product recommendations based on behavior to anticipating customer needs. Successful personalization engages your customers on your website, app and in marketing emails with targeted content.
Research backs up the need for personalization:
- Our research with YouGov shows that two in five (41%) shoppers would drop a retailer who sends irrelevant offers and one in four actively want to be sent offers and recommendations based on previous purchases.
- Boston Consulting Group found that, as a general rule across all sectors, companies who create personalized experiences grow revenue by 6% to 10% – two to three times faster than those who do not.
- In retail specifically, McKinsey found that personalization increases revenue by 10% to 30%. That’s because marketers aren’t just making relevant suggestions but also learn to reach out when a customer is most likely to be in ‘shopping mode’.
What personalization isn’t
It’s also important to note what personalization isn’t.
It isn’t adding a customer’s first name to an email (in fact, one in three consumers don’t care if retailers call them by their name in marketing emails). It isn’t an automated retargeting ad showing what someone browsed on. And it isn’t creating marketing programs based on demographic segments. All of these tactics were early efforts to personalize the marketing experience. But with today’s technology, personalization has been taken to the next level.
What is eCommerce personalization?
To understand eCommerce personalization think about the shopping experience when customers knew the merchants they shopped with.
The store owner might greet a returning customer with information about a new item in stock that matched or complemented the products the customer bought in the past. For particularly loyal customers, the merchant might offer a small gift with the purchase, such as a free scarf to go with the new winter coat. Recommendations were regularly offered, and advice given.
Ecommerce personalization seeks to replicate that kind of one-to-one experience. In its most sophisticated form, it crafts behavioral triggers and contextual data into marketing messages that are appropriate to each customer’s stage in the lifecycle and purchase journey. So first-time buyers are treated differently to loyal customers, website browsers differently to cart abandoners etc.
In a nutshell, personalization is about tailoring the experience at every customer touchpoint, from the tactics you deploy to the type of marketing messages you serve, when you serve it and on which channel.
Personalization tactics include:
- Email content that updates dynamically at the moment of open to display the most relevant content at that moment in time.
- Product recommendations that are based on behavior rather than wisdom of the crowd or business rules.
- Websites that dynamically show a shopper’s favorite brands on the homepage or highlight content based on the shopper’s location or the weather forecast for their area.
- Website navigation that highlights the shopper’s favorite categories.
- Website pop-ups and banners that are tailored to the shopper’s browse behavior on-site or lifecycle stage.
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Personalization vs. demographic segmentation
The two tactics are sometimes conflated but are not the same. Segmentation groups shoppers who share a defining characteristic to create more targeted messaging. It is a key component of personalization, but it does not help marketers achieve 1-to-1 personalization.
Demographic-based segmentation for example assumes that everyone who shares a gender, age group or location will shop in the same way for the same goods.
Personalization sometimes employs segmentation but goes further. A female millennial and a middle-aged man may appear to be very different. However, they are likely to have a lot more in common than other people in their demographic niche if they are both, say, keen surfers looking for a new surfboard. Different demographics, but a shared interest, puts them in the market for the same product.
Demographic segmentation is not personalization for another reason: We regularly purchase goods for someone else, whether it’s for other members of the family or wider gifting. That same millennial female shopper and middle-aged man would again look very different in terms of demographics, right up to the point when they are buying children’s clothes. It might be for their own family or it could be as a gift; the point is, two very different looking customers are both interested in the same product segment.
A customer’s behavioral and contextual data are required to make the experience more personal.
Why behavioral targeting fueled by real-time data is critical to personalization
Shoppers tell you a lot about themselves by how they interact with your online store and your emails.
What a shoppers is looking at on your website and what they are clicking through in your email campaigns – perhaps social posts and adverts too – reveals what they are interested in far more than demographic or even previous purchase data.
How they react to marketing messages is another indication of intent. If someone is researching a particular product and reacts to your marketing efforts by clicking back to take another look, you can bet that this is an item they are interested in. If they looked at the product once, and have ignored subsequent messages, they’ve likely moved on.
To use behavioral data effectively you need to work in real-time. You have to capture the behavior as it is happening and trigger the appropriate message or adjust what they are seeing on your website (such as a pop-up with a free shipping offer).
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How to get started with personalization
There are three things you’ll need to get started with personalization: Data that is joined up, real-time content, and techniques to make sense of it all.
The importance of unified data
The more data you are able to gather about your customers, the more refined and targeted marketing messages become. Being able to collect various types of data is important, but you also need to marry data collected through various channels to achieve a holistic customer view and use these insights to enhance the brand experience.
While you can trigger web personalization using cookies, you can’t send any personalized emails without an email address offered by the customer for marketing purposes. The email address often acts as the unique identifier. With it, you can match the address to other data you’ve collected.
A personalization platform that is able to identify shoppers across channels and devices, even when they haven’t identified themselves, e.g. by logging into their account, will help you collect rich customer data - a vital ingredient for any effective personalization campaign.
Personalization requires dynamic content
To really enhance the experience, personalization needs to provide value to the customer. Real-time data is vital for making that happen. If you send an email about a flash sale, and the customer opens the email a day later, will it lead them to sold out products? That’s a bad experience, as is getting a cart abandonment email after they’ve placed an order. To truly resonate, content needs to update dynamically to reflect the context when the shopper engages with it.
Tactics and techniques
For many brands and retailers, a triggered email campaign is their first experience with personalization. Or they add behavior-based product recommendations to abandoned cart messages, but won’t use similar recommendations on the website.
Instead of focusing on a specific kind of campaign or channel, you need to align personalization initiatives across as many channels as possible to ensure a seamless experience.
Finally, you need to present the most relevant content to guide customers along their journey and increase conversions. Personalization can be based on a multitude or combination of factors, including the stage in the customer lifecycle and purchase journey, preferences or contextual data, such as time and location.
Tailor content to the lifecycle stage of each individual in order to acquire, grow and retain customers.
For example, your website hero banner could show:
- Data capture form to new visitors
- Sneak peek of new products to loyal customers
- Personalized discount code to lapsed customers
Display the content that resonates with the shopper’s stage in the purchase journey and helps drive conversions.
For example, your email header banner could show:
- Best-selling products to browse abandoners
- Free express shipping offer to cart abandoners
- Request to write a product review to recent purchasers
Sell vacation packages? Mid-December searchers that have browsed and bought island vacations in the past should see some similar choices, perhaps with a countdown timer for those that want to leave after Christmas.
Time of day
Do you sell baby gear? Why not personalize the website to feature your products for helping baby sleep better for customers that visit the site between 10 pm and 6 am. Especially if the customer has browsed on those products in the recent past.
Location and weather forecast
Recommend products based on the shopper’s location and the weather forecast. For example, promote sunny holiday destinations to shoppers who open your email on a rainy day.
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A final word on personalization
Just like there shouldn’t be one way you market to shoppers, there is no one way to deploy personalization. You should start small with quick wins, and enhance your campaigns step by step to make them more advanced. In the search for tactics, you need to keep one thing in mind: All efforts must lead to a shopping experience that delights customers and encourages them to come back again and again.
Find out more about our industry-leading Personalization Platform.