eCommerce PersonalizationHere’s Why a Personalized User Experience is a “Must-Have” for the Modern Market

January 19, 2023 | 14 min read

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eCommerce Personalization

In a Nutshell

Personalization is a recent buzzword in eCommerce. Since the pandemic, digital commerce is swiftly rising to prominence, with over 70% of the public demanding more personalized content from retailers. But is an investment in personalized marketing right for your business? What are the benefits? Are there any downsides? Let’s find out.

The Value — and the Necessity — of eCommerce Personalization in Contemporary Commerce

The global eCommerce market topped $5.7 trillion in 2022. That figure is estimated to keep growing over the next few years as eCommerce outpaces most other retail subsets.

The rapid growth of eCommerce is, in no small part, a product of the kind of personalized experience that retailers like you can offer consumers online. Looking for new ways to optimize and deepen eCommerce personalization is going to be the edge that puts you ahead of the competition.

In this article, we’ll take a closer look at personalization to explore how it drives performance, decreases churn, and exceeds user expectations. We’ll also explore some real-world examples to draw from, and outline a few pitfalls you need to avoid.

What is Personalized Marketing?

A personalized, or “one-to-one” marketing strategy differs from traditional marketing efforts. You’re not casting a wide net, and trying to target multiple users simultaneously with general content. Instead, the goal is to tailor marketing messages based strictly on the specific recipient’s interests and needs at that moment.

How is this accomplished?

In simple terms, personalized marketing is a business strategy that curates content with the purpose of directly targeting an individual user. The specific content chosen is based on data the company collects from that user over time, including purchasing history, browsing history, demographics, and geolocation.

Unlike traditional marketing, you’re seeking to get to know each customer when you prioritize eCommerce personalization. You want to supply them with customized ads and promos that are relevant to them personally, and direct them quickly to products and experiences based on their preferences.

Key Components of Personalized Online Shopping  

There are a variety of ways that the principle of personalization can be adopted by retailers. For example:

Content

eCommerce personalization lets you curate content that is specific to a user’s needs or wants. For instance, you can tailor the user’s experience (webpages, browser, search by type) to feature items that are similar to previous purchases or align with the user’s favorites or browsing history. This would be better than bombarding the user with flashy, generic promotions scattered throughout an interactive browser.

Email

Sending personalized emails to users based on the content they most interact with is another brilliant form of personalization. You can use data collected from previous purchases and sessions to craft a targeted offer, for instance. Other examples of this include birthday offers, cart abandonment emails, and welcome promotions. 

Product Recommendations

You can identify users’ likes and needs based on their browsing and purchase history by taking advantage of data segmentation and curation. An example of this would be a buyer in need of a new face moisturizer or shampoo logging into a favorite cosmetic application. The app would pull recommendations and promotions based on their specific browsing and purchase patterns, rather than merely showing generic deals. 

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Again, the point of personalized marketing is to provide customers with content they are already interested in. You can avoid overloading their browsers with irrelevant information that does nothing but incentivize buyers to click away.

This approach is really becoming less and less of an option and more a necessity. Companies that have thus far failed to consider the importance of this approach could be in big trouble later on. 

The Necessity of an eCommerce Personalization Platform

So, what do you stand to gain from taking this approach? eCommerce personalization offers a number of benefits, including:

Higher conversion

Curated experiences often lead to conversions in a way that traditional marketing efforts fail to do. After all, it’s not hard to guess that someone is more likely to buy something for which they were already looking.

Better Feedback & Insights

Figuring out what works — and what doesn’t work — is a lot more difficult to diagnose with a traditional marketing approach. Empowering customers to add and sort favorites, customize content, etc. gives you insight into the thought processes of your customers.

Improved customer retention

Personalizing customer experiences means you can provide a buyer with messages and promotions that are relevant to them personally. If you provide these on a consistent basis, that customer will probably return to your site for future purchases.

More Cost-Effective

Let’s be honest: personalizing a customer’s experience isn’t cheap. However, your money will be much better spent. Each dollar invested in personalization is much more likely to yield results than one spent on generic, non-personalized marketing.

These are just a few benefits. eCommerce personalization can help with anything from streamlining your data insights to reducing your chargeback issuances.

Personalization isn’t just a customer service curio anymore: it’s an expectation. You need to provide customers with the ability to browse products according to personal preferences, and actively customize those preferences to some degree. Otherwise, they will shop somewhere that does.

eCommerce Personalization: By the Numbers

According to data from McKinsey and Company, about three-quarters of consumers have experimented with alternative shopping methods in the last two years. More than 80% have no intention of returning to traditional methods. 

Here’s another point to consider: companies that prioritize personalization tend to generate more revenue.

Additional data shows that companies which have invested in personalization often earn 40% more revenue than their counterparts. Personalization pioneers like Target and Amazon, for example, aim to reach the right person at the right moment. This approach is expected to have generated around $1 trillion in revenue through 2022. 

As the graph above indicates, 71% of consumers expect personalized content when they log-in to a commercial browser or application. Even more become frustrated when they are greeted with generic content.

This data isn’t meant to imply that you must reinvent the wheel to increase personalization on your site. Rather, the point is that it’s important to consider these factors when designing and showcasing content. Ask yourself:

  • Is your content reaching customers where they are?
  • Does your content make suggestions based on individual preferences?
  • Does your content offer promotions based on browser preferences?
  • Is your system able to check in with frequent site visitors and regular customers?

If you can’t answer each of these questions in the affirmative, personalization should become your new priority — stat.

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5 Real-World Examples of eCommerce Personalization

So, now that we understand why personalization is so important, let’s take a look at several companies that are leading the way in showing how to deploy this strategy. 

Amazon

Amazon

Description: The personalization experts at Amazon continue to meet and exceed customer expectations with each passing year. Innovations Amazon has pioneered, such as 2-day shipping and simplified returns, have completely upset the retail apple cart in the last decade. In fact, many stores and retailers have had to rethink every aspect of their business due to Amazon’s daring approach to eCommerce.

When a consumer lands on the Amazon homepage (through a browser), they are presented with the following navigation options:

  • Recommended for you
  • Recently viewed
  • Buy it again
  • this is a checklist

All of these sections are tailored to each user based on their interactions with the site, according to browsing history and preferences. This also includes the lists themselves. Each category will be moved around a user’s dashboard according to the most-visited or most-clicked categories. This user interface is seamless in both desktop and mobile formats.

eCommerce Personalization
Netflix

Netflix

Description: Netflix built its entire platform based on personalized user experience. Because of this, every user’s dashboard is tailored specifically to their interests. So, no two Netflix accounts have the exact same appearance.

To accomplish this, Netflix utilizes a combination of AI and machine learning algorithms to curate and promote content. These systems are capable of distinguishing an individual user from another and providing them with content that most aligns with their interests and browsing history.

 The dashboard usually features categories like “Because You Watched” or “More Content Like,” which are populated based on the user’s activity. These categories will change and move according to your browsing patterns, watch history, or bookmarked shows.

eCommerce Personalization
Sephora

Sephora

Description: Sephora is another company with personalized content that really shines. Over the past five years, the company has consistently ranked near the top of Sailthru’s Retail Personalization Index. The driving force behind this is its mobile app, which deploys augmented reality technology to let shoppers ‘try on” various looks and styles. This is powered by facial recognition and machine learning technology.

The app gleans information about the user through various quizzes and analysis, then allows the user to try their products on their own face via several filters. This essentially lets shoppers browse and test several “looks” on their own face, in one session, and all without ever leaving their home. 

Innovative styling tech aside, the app also offers seamless omnichannel shopping with just a few taps. Every purchase a shopper makes, what they browse, the styles they most often gravitate toward — all this information is made available via mobile or in-store. It also allows them to book in-store and online consultations, and provides customers with top notch promotions and loyalty rewards.

eCommerce Personalization
Sephora

Starbucks

Starbucks is one of the most visited retail locations on the planet, selling an estimated four million cups of coffee every day. Naturally, the company would want a way to connect better with their customers, and encourage more personalized experiences.

To deliver this, the company crafted a highly intuitive app that remembers customers’ names, orders, birthdays, favorites, and past activity. The app also features personalized maps and directions to convenient locations through geolocation, and offers seamless online ordering and pickup notifications. The app also tailors promos and loyalty reward offers to each customer based on their preferences.

eCommerce Personalization
Target

Target

With a $100 billion market evaluation, retail giant Target was one of the first to reap the benefits of increased personalized content. The company has deployed the method so successfully, in fact, that they are currently expanding their efforts to challenge Amazon for the top spot on this list.

The company is soon to release several new omnichannel features, including better location-based products and marketing and improved showrooming and price matching. This is in addition to their groundbreaking shop-in-shop concepts like in-store Starbucks, Ulta beauty counters, and Levi’s denim shops. These investments promote each brand, both online and in-store, through increasingly personalized mobile content intended to promote each brand through a uniform Target branded framework.

The company boasts 2,000 physical locations, BOPUS options, and various elite partnerships. Enhanced personalization has helped them achieve this potential,. 

eCommerce Personalization

Are There Any Drawbacks of Personalization?

We’ve been singing the praises of personalization for a while now. However, there are a few points of concern that you need to consider once you decide to invest in more personalized content. These include:

Customer Privacy

With so much personal data being collected by machines learning and AI platforms, consumers may be concerned about how that data is being used, and by whom. This is no small issue; consumer data privacy has been the recent target of several legislative bodies. The California Consumer Privacy Act and the General Data Protection Act, for instance, seek to limit the collection and use of personal data without full disclosure and permissions.

Much of this technology is relatively new and only now being tested in commerce. So, the broader use and implications related to data privacy remain to be seen. Keep in mind that, if consumers opt out of personalized marketing reliant on this technology, you will need a personalization backup plan.

Data Collation

Data silos are a serious concern for companies with an influx of incoming data. If data is collected through one department, but not shared in a timely fashion with other departments, the communication breakdown can cause backlogs, data dumps, and even breaches. The data collected isn’t being utilized effectively when internal tracking and sharing systems aren’t functioning harmoniously between departments.

It’s crucial that you seek to design personalized content to be aware of this issue and plan ahead to keep systems, locations, and departments running fluidly.

Data Clarity

Transparency is an essential element for any marketing scheme. This is particularly true when personal details, such as a customer’s facial features and other details, are being collected in the process.

Being absolutely transparent with customers about the nature of the data collected, how it will be used, and attaining the necessary permissions ahead of use are vital.

Frankly, the more transparent you are with your customers, the better. Consumers appreciate companies that prioritize ethical use of their data to provide them with the best possible user experience.

Fraud

Biometric technologies are considered much safer and secure to use than legacy methods. Also, personalization in general should make it more difficult for fraudsters to slip through undetected. All that said, augmented reality tech and biometrics do pose specific fraud concerns.

Many experts warn that biometric data (such as facial recognition and machine learning software) can be used to target individual users and crack their personal data, etc. While we haven’t yet seen any of these biometric “attacks” on a significant scale, the possibility is certainly something you should be aware of and plan for.

All that said, the only serious “con” you’re likely to run into regarding increased personalization is the lack of it.

Most major retailers now offer personalized product recommendations, personalized emails with individualized promotional content, and advanced profiling systems. These let customers define their means of interacting with the business.

When these elements aren’t present, customers may buy things that weren’t exactly what they hoped for, weren’t specifically targeted toward them, or generally weren’t what they were looking for in the first place. Buyer’s remorse is one of the leading causes of chargebacks and friendly fraud, for instance. You can drastically reduce this problem by increasing personalization at the consumer level.

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FAQs

What is eCommerce personalization?

Personalized marketing is a business strategy that curates content to directly target an individual user based on data the company collects from that user over time, such as purchasing history, browsing history, demographics, and geolocation.

Why is personalized online shopping important?

Personalization isn’t just a customer interest, it’s a hard demand. If you don’t provide customers with the ability to browse products according to personal preferences and/or customize those products to some degree, they will shop somewhere that does.

Do I need an eCommerce personalization platform?

If you’re an eCommerce retailer, then yes. Companies that prioritize personalization tend to generate more revenue. According to a study by McKinsey and Company, companies that have invested in personalization often earn 40% more revenue than their counterparts. Personalization pioneers like Target and Amazon, for example, aim to reach the right person at the right moment. This approach is expected to have generated around $1 trillion in revenue through 2022. 

What are the benefits of personalization for merchants?

eCommerce personalization is an ingenious way to bridge the gap between retailers and the audiences that are specifically looking for their goods and services. Better yet, personalization also helps merchants retain those customers, too.

Some of the key benefits of personalization include increases in conversion, learning, feedback, engagement, leads, retention, revenue, and sharing. Also, personalization is effective at decreasing overhead costs, and can lead to fewer chargebacks.

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