THE ULTIMATE GUIDE TO

PERSONALIZATION

Discover the four phases of personalization to supercharge customer experiences.

THE VALUE OF PERSONALIZATION

Retailers everywhere seem to have one main question: What is the customer’s experience with my brand?

As retailers look at the customer experience, personalization frequently rises to the top of the list. According to Forrester Research, Inc., 68% of firms in a Forrester survey state that delivering personalized experiences is a priority. Personalization has many benefits for both the consumer and retailer. The consumer enjoys a seamless, relevant experience across all touchpoints that responds to their specific needs. Interactions they have with retailers and brands are finally the interactions they have expected all along. They feel valued and come back for repeat purchases. When done correctly, retailers who implement personalization will drive higher net promoter scores (NPS), more loyal customers, and ultimately more sales. Specifically, the benefits can be grouped into three major buckets:

1. Increased conversion rates:

However you define conversions, whether by revenue, downloads, or sign ups, the right personalization will dramatically improve them. Research by HubSpot found that Personalized CTAs resulted in a 42% higher conversion rate than generic CTAs.

2. Larger average order values (AOV):

When customers see what they want, they buy. When you help them discover the perfect products and accessories, along with content and stories that explain them, they buy more. Personalization can improve average order values by upwards of 40% and conversion rates improve by an upwards of 600%.

3. Improved Customer Satisfaction:

When customers find what they are looking for they feel satisfied, tell their friends, make fewer returns, and come back to shop again. Overtime you will see the big metrics that drive customer lifetime value go up when using personalization.

The idea is simple: the more personal and relevant the interaction is with a shopper; the more engaged they will be on the site. The more engaged they are, the more likely they are to buy. The more they buy, the better the results. The goal is to engage in a way that recognizes and anticipates the shopper’s intent, at any given moment.

SHOPPERS WANT PERSONALIZATION

The proof is in the data. Specifically, consumers report personalization greatly influences their path to completing a purchase. These numbers are great, but it’s only the beginning. There is more to personalization than the basic personalization plays like targeting, product recommenders, or related items in shopping carts.

This eBook will give you a better understanding of the different approaches, maturity levels, return on investment (ROI) profiles, advantages, and limitations of personalization techniques. Specifically, we will delve into the latest technology trends, such as machine learning and real-time, to provide a better understanding of the strides, developments, and impact personalization can make in your business.

CONTENTS

The Personalization Maturity Chart 6
Basic Recommendations 10
Segmenting and Targeting 15
Machine Learning 20
Individualization 25
Personalization Worksheet 30
Eight Mistakes in Personalization 32

THE PERSONALIZATION MATURITY CHART

Today, most companies have implemented basic personalization, but there is significant opportunity to improve its effectiveness by leveraging modern technologies and maturing the approach to stay competitive.

As retailers and manufacturers increasingly adapt to meet their customer’s buying preferences, the focus on personalization has turned towards digital channels and the customer’s personalized experience along the buying journey. This chart outlines the different maturity phases of a personalization strategy, and the corresponding impact to the organization’s bottom line.

Phase 1: Basic Recommendations

In today’s world, basic product recommendations are table stakes and considered the most primitive of approaches. This phase involves gathering historical or trending purchase data and making broad recommendations throughout the customer’s buying journey.

Phase 2: Segmentation & Targeting

Example use cases of this approach include segmenting by age, gender, income levels, hobbies, location, or what type of online behaviors are observed. When segmentation is combined with recommendations to create targeted offers, retailers and manufacturers will experience an increased business impact of their personalization strategies.

Phase 3: Machine Learning

Retailers and manufacturers can mature their segmentation-based personalization approaches that rely on historical patterns, rules-based actions, and collaborative filtering with a solution that leverages machine learning to predict forward-looking buying intent. Machine learning utilizes a set of algorithms to dynamically drive personalized experiences for customers.

Phase 4: Individualization

The fourth phase of personalization is individualization or commonly referred to as “Personalization 2.0”. Individualization builds on the core principles of personalization—segmentation, targeting, and relevant content—by enabling the creation of 1:1 experiences for each individual customer.

BASIC RECOMMENDATIONS

In the beginning of personalization, we had logins and product recommenders. These are great, yet basic, features that add value to the commerce experience. Years ago, if a company was doing product recommendations, that meant they were doing personalization really well.

THE LIMITATIONS OF PRODUCT RECOMMENDERS

The basic technology behind many product-to-product recommendations is collaborative filtering. This technique uses an aggregate of browsing behaviors of shoppers visiting the site to figure out likely items of interest.

Limitation #1: Ignoring The Customer And Focusing Only On Products

Simple product-to-product recommendations seem personalized because they rely on recently viewed or purchased items from a customer’s history, but they ignore other important customer data.

Limitation #2: They Lack Differentiation

Every product-to-product recommender is marketed as unique, but they are often commoditized and easy to replicate, leading to no competitive edge.

Limitation #3: A Traffic Threshold Must Be Met For Best Results

Simple product-to-product recommenders can give poor results on low traffic areas. Recommendations may not be relevant due to insufficient browsing data.

Limitation #4: Narrow Recommendations

These recommenders only analyze one item at a time, which can lead to an incomplete picture of the customer's needs.

MOVING BEYOND BASIC PRODUCT RECOMMENDATIONS

Product-to-product recommenders are a stable stepping stone, but today’s personalization engines combine browsing and purchase history to understand individual preferences.

SEGMENTING AND TARGETING

Product recommenders are useful tools for merchandising, but segmenting and targeting allow for a more narrow view of the customer than simple recommenders. Understanding the difference between these concepts is crucial for an effective personalization strategy.

THE DIFFERENCE BETWEEN SEGMENTING, TARGETING, AND PERSONALIZATION

Segmenting and Targeting are about marketer needs and utilize broad groupings; Personalization is about customer needs and utilizes a personalization engine to serve up relevant content.

MACHINE LEARNING

While traditional rules-based algorithms can be effective, machine learning automates personalization strategies through a unique set of self-learning algorithms that can predict buyer behaviors and purchasing intent.

INDIVIDUALIZATION

In a world where individual customers want unique experiences, the best thing a company can do in the realm of personalization is to provide individualization. Machine learning cannot always deliver 1-1 experiences on its own, so combining it with human insight is essential.

EIGHT MISTAKES IN PERSONALIZATION

1. Living And Dying By Profiles
2. Building Your Personalization Strategy On Rules Alone
3. Over Orchestrating
4. Thinking Everyone Is Special
5. Misusing Your Experts
6. Forgetting The Power Of Search
7. Thinking Of Personalization as an Accessory
8. Limiting Personalization On Your Site

CONCLUSION

Web personalization can significantly enhance your conversion rates and customer loyalty. The key to success in eCommerce personalization is to meet customers’ immediate needs efficiently and effectively.