How Personalization is Key to eCommerce Success

How Personalization is Key to eCommerce Success
Written by
Richard Emanuel
Published on
October 6, 2020
Read time

If you were to ask a physical store owner what they most wanted in the world, they would probably tell you that after the basic ‘more customers’ would be ‘more information about customers’.  Imagine if you walked into a supermarket and they knew your name, what you liked, your shopping preferences, if you had kids and pets, and much more.  What kind of shopping experience would this mean, when your trip could be personalized?

For eCommerce businesses, this facility is already available due to the amount of data collected on every user around the web. And while some customers still have the automatic reaction of distaste at being ‘spied’ upon, the majority recognizes this as simply the way that it is. And they have come to expect personalization in their eCommerce experiences.

Types of personalization

Modern personalization on the internet is about more than popping the first name on an email or remembering the customer’s previous orders. One element of personalization is in navigation – you go to an online shop and look at a new kettle but don’t buy. Next time you visit, kettles are the first item on the navigational list.

Predictive recommendations are another big area – having collected information on you, a store can base recommendations on what you look at and are interested in as well as what you have already bought. Amazon is the classic at this and gets around 30% of its sales through these recommendations.

Personalized content is the other main way that businesses can catch the eye of customers. Using the information on buying behavior combined with demographics and even information from third-party providers can help paint a picture of what the client might be interested in. This means that everything from emails to social media content and even pop-ups can be tailored to those interests.

Do customers expect personalization?

While there are clear benefits for businesses in personalization, there is often the concern that customers will find it too invasive and even a bit creepy. Yet a number of studies show this isn’t the case.

One study by Invesp showed that 53% of shoppers who personalize their services believe that the store is providing a valuable service. And 75% of customers actually favor brands who personalize messages and offers around their habits and interests. Nearly half of customers also spend more money when content is personalized, according to Smart Insights. Contrast this with 74% of customers who became frustrated when faced with non-personalized content.

Marketing data backs up this view. 59% of marketers saw an increase in ROI when they put personalization systems into place in their stores. And the improvement to conversions is around 8% for many of these stores. In fact, 90% of marketers believe that personalization is the future of eCommerce, regardless of the type of store or product. There are many factors influencing the growth of e-commerce businesses, and personalization definitely falls on top.

Cameron MacQueen, Head of Business Development at Nosto, explains “Personalization is often expected today as the average connected individual has experienced curated news feeds on Facebook; recommended videos on YouTube or Netflix; individualized playlists on Spotify (discover weekly), or tailored shopping experiences on Amazon.”

MacQueen goes on to explain “Personalization has also become an essential part of E-commerce as it allows online retailers to meet each customer’s needs and wants faster and more efficiently than ever before by offering customers the most relevant content throughout their journey and leading to increased rates of engagement, conversion, satisfaction, loyalty, and sales”

What information is needed for personalization?

The case is clear that not only does personalization benefit the business but is expected by the customer and is quickly considered the norm when shopping online. This means if a business isn’t using personalization, they need to quickly start instituting measures. Branding with an e-commerce site comes with personalizing your brand and website. But what kind of information is needed to start this kind of system?

There are four main types of data that is collected and used for personalization:

  • General data such as geo-location, demographics, number of visits
  • Customer intent – their recent activity, overall behaviors, past purchases and even browser history
  • Crowd wisdom – data aggregated to correlate information from people with similar data and the individual person to help make predictions
  • Customised variables – this is the company-specific stuff such as categories to present, top selling items and even manually selected items

Most companies find that they need specialist software to handle this collection and personalization of content but the return on investment for using this is worth it. And as customers come to expect this level of personalization, businesses run the risk of being left behind if they don’t get involved.

MacQueen explains “Technology now allows online retailers of all sizes the means to collect an abundance of data and performance insights that traditionally were not available to brick and mortar stores. But without immediate action, too much data is often counterproductive for marketing and E-commerce Managers.” He goes on to say “Having the right tools in place to automate decisions in real-time is far more efficient than having a 360-degree customer view but having to manually act upon those insights. When it comes to E-commerce, data is far more useful if it is reflective of customer interests, immediately actionable, and can be automated for scale. At Nosto, we focus on helping our clients utilize their own customer behavioral data to drive real-time marketing automation across their site, email, and social media to create more personalized shopping experiences and better engage with their customers.”

Humanizing the On-Site Search Experience

Nextopia, a global leader in on-site search and navigation solutions, is dedicated to growing online retailers' businesses through innovative technology and proprietary methods. They tell us how on-site search is a critical, yet undervalued tool. Statistics show that consumers expect internal search engines on websites to know what they’re looking for, but unfortunately 85% of searches don’t return what the user sought.

This is where personalizing the search box comes in. E-commerce website giants like Amazon, Walmart and Sears have been using this technique for years now, and it has changed the way that consumers shop online. They expect an amazing experience in online stores in which they are presented with products that are almost specifically tailored to them.

Consider using an intelligent on-search algorithm and a geo-target technology to personalize the user experience:

1. Intelligent Algorithm

Use a robust algorithm that directs customers to the proper results from learning their shopping behaviors. This provides your shoppers the products that they are most likely to buy. This alleviates manual merchandising tasks such as keyword tagging each individual product and programming manual keyword re-directs.  It allows a retailer’s staff to leverage their time and effort elsewhere in the business such as looking at their reporting to optimize inventory mix, change their PPC/AdWords to leverage off their on-site search data and create targeted messaging and promotions on their site.

2. Geo Target

Keeping in mind a consumer’s geographic location is a critical factor that many retailers forget about. A consumer in Texas will have different shopping needs than a consumer in New York. That’s why it’s important to tailor your website accordingly. Tools like geo merchandising allow your eCommerce site to be tailored to customer’s specific needs and wants, providing a sense of personalization. Nextopia’s geo-target solution allows specific regions to be targeted with certain product promotions and recommendations.

If you have any questions about personalization or eCommerce development, get in touch with us.