The Inconvenient Truth About Ecommerce Personalization

Looking to hop on to the personalization bandwagon? Here’s why a strong foundation is essential and how you can effectively use it on your ecommerce site.

The word “personalization” has joined the Buzzword of the Month Club, alongside other favorites like “synergy”, “cross-platform”, and “cloud computing.” The idea of personalizing the shopping experience for individual customers has almost become standard of perfection in the ecommerce world.

If you can sufficiently customize the customer experience, it’s guaranteed to create a buying frenzy—or at least that’s the idea.

And there certainly is some truth regarding the benefits of personalization. After all, Amazon is the king of personalized recommendations, analyzing your shopping patterns and browsing history, the preferences of similar customers, and thousands of other data points to give frighteningly relevant shopping suggestions.

But there’s an inconvenient truth lurking behind the bold proclamations regarding the power of personalization: personalization is only effective when it’s built upon the solid foundation of good user experience.

And like almost everything else in life, it requires context.

In this white paper, we’re going to help you:

  • Put personalization in the proper context for your brand.
  • Understand how to build the solid foundation for it.
  • Know when to most effectively deploy personalization on your site.

Let’s get started.

What Is Personalization?

Before we get into the nitty-gritty details of personalization, let’s make sure we’re all on the same page. It’s a relatively simple concept. In a nutshell:

Personalization is real-time customization of a customer’s buying journey using dynamic content delivered based on segmentation.

In other words, personalization means creating a unique shopping experience for each customer in real time. Every customer sees a slightly different version of your website, with that real-time experience being shaped and defined by the particular audience segment the shopper falls into. These segments can include:

  • Past purchase history
  • Browsing behavior
  • Demographics (age, ethnicity, location, income level, etc.)
  • Psychographics (interests, habits, emotions, attitudes)
  • Other segments

Once a website visitor has been properly segmented, the dynamic customization takes place. Customization tactics include:

  • Unique offers or coupon codes
  • Inline content
  • Targeted pop-ups
  • Infobars
  • Product recommendations
  • Product cross-selling
  • Best-sellers
  • Other tactics

When Amazon suggests other products that supplement the items in your shopping cart, that’s personalization. When you’re looking at tents on REI.com and they point you to a tent-buying guide they’ve created, that’s personalization. When you’re on Zappos and you get a discount coupon because it’s your birthday, that’s another form of personalization.

At its heart, personalization is about presenting a customer with the right offer and information at the right time so you can maximize conversions and give the customer a pleasing shopping experience.

Personalization is about being as relevant as possible to the potential customer in the hopes of generating a conversion.

The Power of Personalization

Just how effective is ecommerce personalization? Recent studies indicate that it’s incredibly effective.

study by Segment showed that personalization truly matters to customers and can significantly increase conversion rates. Just take a look at the introduction to the study:

“Consumers expect highly personalized shopping experiences from retailers and are willing to spend more money when brands deliver targeted recommendations. Despite those expectations, however, a majority of consumers are disappointed with the ongoing lack of personalization in their shopping experiences. On average 71% express some level of frustration when their experience is impersonal. The proliferation of new devices and the rapidly evolving technology landscape has led to a “personalization gap” in the shopping experience, and as consumers’ expectations rise, retailers are struggling to meet them.”

The study then goes on to reveal some truly impressive numbers regarding the effectiveness of personalization.

  • 44% of consumers said they would likely become repeat customers if their experience was personalized.
  • 49% of surveyed shoppers purchased a product they didn’t originally intend to buy after receiving a personalized recommendation.
  • 54% of consumers said they expected to receive a personalized discount within 24 hours of identifying themselves to a brand (via email signup, etc.).
  • 40% of U.S. consumers purchased something more expensive because their experience was personalized.

Optimizely highlights just how much customers expect personalization when they say:

“Consumers’ expectations have shifted to the point that people expect a personal digital experience that mirrors the typical level of personalization they receive offline. Many have grown accustomed to personalized experiences from their news feed, social network, and shopping recommendations.”

In other words, Facebook, Amazon, and Google have spoiled us to the point that we expect extreme personalization everywhere we go online.

We think that every ecommerce website should be able to recommend like Amazon and help us find information like Google. If a site can’t do that, we’ll shop somewhere else.

On top of this, brand loyalty is falling among consumers. Only 29% of consumers who make $100,000 or more per year and 18% of those who make less than $100,000 per year tend to be loyal to specific brands.

And yet, despite the effectiveness and importance of personalization, very few marketers know how to implement it. As Yes Marketing noted regarding a recent survey by Shop.org:

“However, the Shop.org survey found that brands and retailers are still stuck on the simplest forms of personalization. Many are missing opportunities to improve their efforts and therefore increase conversions. About a quarter of marketers (27%) say they can execute basic personalization tactics like including a subscriber’s name or birthday in an email. Another quarter (26%) can personalize based on additional data beyond name and email (such as browsing history), but say it’s tedious. And 17% have issues with collecting and analyzing data—they either haven’t started or lack the right tools to collect, analyze, and derive insights from their data. Just 11% claim they can personalize all content in real time, indicating that about nine in 10 marketers have room for improvement.”

All this to say: Personalization matters very much to consumers, yet very few marketers know how to properly implement it. This personalization gap creates an opportunity for you to gain an advantage over your competitors.

If you can properly implement personalization on your site, there’s a good possibility you can take market share and revenue from them.

Properly Prioritizing Personalization

After reading the above statistics, you may be tempted to start trying to implement personalization immediately. That would most likely be a mistake.

As we noted above, deploying personalization without first focusing on user experience rarely moves the needle when it comes to increasing conversions and revenue. Adding personalization to a site not optimized for conversions is like going to Starbucks, ordering a highly “personalized” drink (two espresso shots, extra-hot, no foam), and then having it take 20 minutes to be prepared.

If your website isn’t designed to give users a seamless, pleasant shopping experience, personalization won’t help much. Personalization can’t save a website that’s clunky, confusing, or frustrating. That’s why personalization is, first and foremost, a conversation about prioritization.

Before you begin deploying personalization across your site, there are other areas that require your attention. Most sites need conversion rate optimization before personalization will even be the least bit effective. We recommend the following six-step process for personalization.

Step #1: Fix the Glaring Errors

Before you even think about personalization, you need to fix obvious errors on your site such as typos, slow page loads, shopping cart bugs, glitches, etc.

These kinds of errors will send visitors running so fast that no amount of personalization will ever get them back. If you don’t fix these errors, you damage your credibility and violate the trust of visitors.

Once you lose the trust of visitors, it’s very difficult to get it back.

Step #2: Create a Pain-Free User Experience

After fixing the most obvious, glaring errors, it’s time to focus on giving site visitors a pleasant, pain-free shopping experience.

This requires diving deep into site analytics, heat maps, user testing, and surveys to determine where visitors might be having problems on your site. Once you’ve identified potential problem areas, you can begin forming and testing hypotheses regarding how to fix the problems.

The testing typically takes the form of A/B or multivariate testing and is intended to systematically improve conversions in the areas of your website that will have the greatest impact.

To reiterate, if you don’t create a pain-free user experience, personalization won’t help you. After all, if a user is confused by your website navigation structure or the checkout process, personalization can’t solve that problem.

Step #3: Put High-Quality Content in the Right Places

Ecommerce relies much more heavily on content than standard brick-and-mortar shops. After all, your customers can’t physically touch your product or see it in person. They rely upon the product descriptions, specifications, photos, and videos you provide.

After creating a pain-free UX, the next step is to ensure that you have rich, high-quality content in all the necessary places.

  • Do you have multiple high-resolution photos for each of your products?
  • Is it easy to compare different types of the same product on the same page?
  • Do you use “lifestyle photos” showing people using your products, so that customers can envision how they’ll use the products?
  • Do you have rich, in-depth product descriptions that answer customer questions and overcome potential objections?
  • Do you include customers reviews so that new customers can have confidence in their purchases?

All these things and more are necessary before you can think about implementing personalization. After all, dynamic product recommendations won’t generate more sales if your products have grainy photos and thin descriptions.

Step #4: Optimize Your Navigation Around Your Best Customer Segments

If you’ve taken the time to study your numbers, you should know which segment(s) of your audience provides you with the highest Customer Lifetime Value (LTV). Once you’ve determined which segment this is, you want to make it as easy as possible for them to purchase from you.

Create a simple, straightforward buying path that will guide them from the moment they visit your site to their final purchase. Evaluating your analytics, heatmaps, and user tests can help you determine if there are any areas of your site where these valuable customers tend to get stuck, confused, or frustrated.

Once you identify these areas, focus on simplifying the buying path. Clarifying the buying path for your highest LTV customers before implementing personalization will maximize the revenue from this segment when you finally start personalizing.

Step #5: Provide Incentives for Those Who Hesitate

Now that you’ve completed the first four steps and optimized your site for conversions, you can begin the personalization process.

We recommend starting by offering incentives to those who hesitate to purchase (i.e. they’ve visited in the past and haven’t purchased).

If a customer has browsed work boots in the past, show him a bigger selection of work boots. If the visitor is from Sydney, where it’s the rainy season, show her rainy weather gear. Or simply offer them some sort of discount to get them to open their wallet, with the prospect of upselling or cross-selling down the road.

Because you’ve already done the hard work of conversion rate optimization (steps 1-4), your site is easy to navigate, all your product pages are rich with information and photos, and the purchase path is easy to follow.

The end result is that your reluctant visitors are now far more likely to make a purchase.

Step #6: Personalize for Undiscovered Segments

If you follow steps 1-5, you’ll inevitably discover an audience segment you didn’t know you had.

This untapped pool of customers represents yet another source of revenue, and personalization can help you unlock that revenue. The catch, however, is that you’ll never discover this untapped audience if you don’t first work through steps 1-5.

Discovering this new group of customers is your reward for thoroughly optimizing your site and personalizing it for those who hesitate to purchase.

Don’t Go Straight to the Pros

It’s not uncommon for college basketball stars to play one year of college ball and then go straight to the pros.

And while this works for a few of the absolute best players, most aren’t ready to make the leap; they simply haven’t done the hard work of preparing themselves to play professional basketball.

Implementing personalization on your site without first optimizing it for conversions is like skipping college basketball altogether and trying to play in the NBA. It’s almost guaranteed not to work.

If you don’t first do the hard work of optimizing your site, personalization won’t make much difference. In fact, it will probably end up being a waste of money. You’ll spend valuable hours and dollars trying to craft personalized shopping experiences, only to have customers purchase elsewhere because your site wasn’t properly optimized.

However, if you “go to college” first by optimizing your site, your personalization efforts will be far more effective.

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