Remember the old 80s sitcom Cheers? Its theme song sang, “Sometimes you want to go where everybody knows your name.”
When customers aren’t just a number to a business – when you’re greeted by name – marketers can create incredible brand loyalty. That’s why Starbucks famously writes your name on your cup of coffee. It’s the Cheers effect.
The same logic is true for DTC brands. eCommerce personalization is one of the most effective ways to give your users a positive shopping experience and keep them loyally coming back for years to come.
Through personalization, brands can also stand out from the competition and increase conversions. Regardless of the types of products you sell, personalization is a strategy that all eCommerce brands can benefit from.
In this article, we’ll discuss what eCommerce personalization is, why it’s important, and 15 ways to prioritize the user experience in your personalization program.
- Personalization is about improving your customer’s experience – so ask yourself, what do they really want?
- Hyper-personalization is better than broad, inaccurate segmentation
- Break down your personalization strategy into pre-purchase, purchase, and post-purchase phases
- To effectively personalize your DTC eCommerce experience, you’ll need the right tools to collect and analyze data, and automate solutions
What is Personalization in eCommerce?
eCommerce personalization uses data about a user to customize their online shopping experience. Typically, an eCommerce website that utilizes personalization will display dynamic content based on user data like demographics, past purchases, browsing behavior, preferences, and device usage.
When done well, personalization gives brands the opportunity to respond to changes in customer behavior and tailor content specifically for customer needs.
Have you ever bought something online, like a toaster, and then been followed by toaster ads for weeks?
That’s bad personalization. The customer isn’t building a toaster collection.
In the past, personalization was built around user personas on a customer journey. Customers were segmented into groups based on easily accessible data points, but the results were often vague and ineffective.
Modern hyper-personalization strategy is built on the idea of a “segment-of-one.” According to Deloitte, by combining more data analytics with AI and automation, an eCommerce platform like Amazon can generate over 35% conversions on their recommendation engines. That’s the power of a hyper-personalized shopping experience for individual customers.
eCommerce Personalization Examples
You’ve likely already experienced personalization across a range of industries. You may not have even noticed when that was happening – but there’s a lot online retailers can learn from these personalization examples.
In each of these eCommerce personalization examples, you’ll notice how the goals are always the same: deliver a better customer experience to increase revenue and retention.
The travel industry has long used personalization for dynamic pricing. The closer you get to the date of your flight, the more expensive the ticket becomes. Additionally, if you search for a flight or vacation offer multiple times, your price will change. And if you click on the sales page of a vacation booking site, you’ll see offers based on where you like to go.
Telcoms use personalization in their offer management systems. Based on customer demographics, behavior, and location, offers will automatically be generated and displayed to the customer. For example: if a Telcom sees that you regularly use a lot of data, you might be offered a higher data cap or greater speeds.
Netflix and other streaming services
Netflix is famous for using analytics to personalize everything on your homepage, from movie recommendations to the cover art shown. Even more importantly, Netflix uses this data to personalize the content that it creates by predicting what users want to watch.
The result is a 93% success rate on Netflix original content.
Music Streaming Services like Spotify
Music is all about discovery, and personalized recommendations. Spotify creates a personal Discover Weekly playlist for subscribers, which drives 1.9 billion new listens every day. The more subscribers use Spotify, the less likely they are to cancel. This personalization plays a huge role in customer loyalty.
Spotify also releases an annual personalized playlist report. It sounds boring, but Spotify Wrapped has become a social media breakout craze. In 2020, downloads jumped 21% in December as users shared their playlists with their friends.
Benefits of Personalizing the Customer Journey
Personalization is a way to make sure that the offers and products presented to your customers are relevant to them. eCommerce personalization can also have a big impact on your bottom line. Research from Epsilon indicates that 80% of consumers are more likely to make a purchase when brands offer personalized experiences. Personalization programs also enable online retailers to create more satisfied and engaged customers.
When done correctly, data suggests that a positive customer experience yields 20% higher customer satisfaction rates and a 10-15% boost in conversion rates.
Plus, customer satisfaction can build customer loyalty. It’s cheaper to retain customers than it is to acquire new ones, so increasing customer loyalty is also beneficial for your bottom line. According to the Harvard Business Review, it can be anywhere from five to 25 times more expensive to acquire a new customer than to keep current ones. Overall, eCommerce personalization can be incredibly beneficial for eCommerce brands of any size.
Some of the benefits of eCommerce personalization include:
Improved Brand Engagement
Personalization increases brand engagement because you are showing customers what they want to see in a way that is relevant to them. Users are more likely to engage with your brand when the experience feels custom and personal to them.
Higher Conversion Rates
Consumers are much more likely to make a purchase when brands offer personalized experiences. Personalization can be a powerful competitive advantage and lead to higher eCommerce sales because you’re showing customers exactly what they’re looking for. By using personalization strategies like product recommendations, retailers can highlight products that specific groups of customers are more likely to buy. This strategy increases conversion rates for items that may not be popular with all users.
Increased Customer Satisfaction
Personalization in eCommerce businesses creates enhanced customer relationships which leads to higher overall customer satisfaction. Through personalization, your brand can cater to specific customer needs and make the shopping experience easier and more enjoyable.
Create More Loyal Customers
When customers have a positive shopping experience that feels personal to them, they’re more likely to come back and continue shopping with your brand instead of competitors. And loyalty pays off. Research from Adobe shows that nearly 40% of a store’s revenue is generated from only 8% of its most loyal, repeat customers. Over time, loyal customers are estimated to be worth 10x more than their first purchase.
Commerce Personalization and User Experience
User experience design is the process of designing a product or system in a way that provides a great experience for its users from start to finish. Personalization aims to create a positive, custom experience for the user.
Through personalization, eCommerce sites can remember customer preferences, show products they want to see, store payment information for quick checkout, and update them on upcoming promotions that they will be most interested in. All of these tactics work together to create a seamless user experience.
For more information on UX Design, check out this article on setting up a UX design process.
Designing an eCommerce Personalization Strategy
When creating your eCommerce personalization, start with your funnel. Conduct UX research to see how each component can be improved with personalization.
Is there a customer experience gap that’s driving down your customer retention rates? Any eCommerce business can likely boost sales by providing a more personalized service. By tailoring online shopping experiences with data like your customer’s location, you can increase customer lifetime value and drive repeat purchases.
To achieve this commerce personalization, we’ll break it down into three broad categories: pre-purchase (ads, landing pages); purchase (searches, PDPs), and post-purchase (re-engagement).
1. Dynamic Landing Pages
The easiest way to personalize landing pages is based on traffic sources. Use information like their location, the search terms or ad copy that brought them to your page, and even their device to personalize your landing page with relevant content.
2. Get Customer Data With Product Recommendation Quizzes
If you don’t know much about your visitors, ask them to tell you. A product recommendation quiz puts your customers in charge of their shopping personalization.
Online personal styling service Stitch Fix knows that fashion is personal. Users are asked to identify by body, style, price point, and more.
3. Personalized Search Results
For many DTC shoppers, the search bar is their default interaction with your website. When a user enters a search query, show personalized content based on their browsing history, and show a list of the most relevant products for them.
This will make it faster and easier for customers to find exactly what they need — and increase your revenue and conversion rate. According to one report, French retailer Lacoste doubled their conversions by adding personalization to their online store search.
4. Recommended Products and Add-Ons
Presenting customers with personalized product recommendations will enhance the user experience and increase conversions. Personalized product recommendations on product pages show customers similar or complementary products to the ones they’re already interested in. According to Invesp, 54% of retailers claim that efforts to deliver personalized experiences are a key driver of the AOV (average order value) in customer purchases.
5. Create Personalized Bestseller Lists
Customize best-seller lists based on your user’s location or interests to make the products appropriate for the climate, currency, and interest of the user. Best-seller lists can also be presented by time. For example, the list could feature the best-selling products from the last month, day, or even hour. A specialized best-seller list is more relevant, interesting, and personal for your customer.
6. Targeted Discounts
Creating personalized offers for users based on their behavior is an easy way to boost customer engagement. You can offer simple personalized marketing like discounts on items the user has previously purchased, provide a curated list of items the user is likely to be interested in, or send a customized offer for something like their birthday.
7. Dynamic Pricing
Distinct from targeted discounts, personalized dynamic pricing (PDP) is a hugely and widely used aspect of personalized marketing in other industries (such as airlines, as we’ve already seen.)
A study in the Eurasian Journal of Business and Economics found that PDP improves profit by 19% compared to uniform pricing, and 86% compared to status quo pricing.
Many consumers spend several weeks doing market research before making an online purchase. Personalized dynamic pricing based on the frequency and duration of visits to your online store can increase conversions and profitability. This is especially true when PDP is used in conjunction with supply, demand, and competitor pricing monitoring.
8. User-Generated Content
User-generated content (UGC) refers to photos, videos, and reviews from real customers. Research shows that 88% of shoppers look for photos and videos provided by other consumers before committing to a purchase. UGC improves the overall user experience on any eCommerce site because users can see the products in real life and imagine themselves using the product. When users can view content from real customers, they have an easier time making a purchase decision.
9. Localized Content
Increase customer satisfaction by delivering content that is relevant to your customers’ region, language, and demographic. Customers will want to return to a site that takes their location and demographic into account. This personalization tactic can include banners, blogs, currency, and even product descriptions.
10. A Better User Profile
At checkout, most DTC websites offer the user to sign in or check out as a guest. However, the user profile is often underutilized in personalization efforts.
Decrease customer frustration by pre-loading information like sizes, styles, or preferences. Pre-fill check-out pages and forms. And make it easy to re-order previous purchases on your eCommerce store with one click.
11. Loyalty Programs
In a loyalty program, customers give retailers data in exchange for a more personalized shopping experience. The simplest form of loyalty program offers points or cash back (buy 9, get the 10th free.)
Beyond that, there is consider opportunity to further customize the experience, including gamification, custom offers, or access to exclusive products and events.
Starbucks uses its app to partner with other companies like Pokemon Go and Spotify, creating a dynamic, engaging experience that further drives consumer loyalty.
12. Reward Top Customers
The Pareto principle says that 80% of revenue will come from about 20% of customers. That’s not a hard and fast rule, but similarly to loyalty programs, it’s a good idea to find ways to reward your best customers.
Use unique, personalized communications with them. Give them access to exclusive products (or the chance to pre-purchase). Hold events or create an online community to share news and updates relating to your product category.
13. Unique Emails and Notifications
Once a purchase has been made, don’t leave it there. Send customized notifications by email or text message as the order is picked, packed, and shipped. And, once delivered, a personalized follow-up email will reinforce your customer’s satisfaction instantly. For example, if a customer buys a pair of shoes, send a customized email with shoe cleaning and care instructions.
Mark certain milestones like birthdays with celebratory email marketing. Send reminders to re-order if your customer’s past purchases expire or get used up. In each case, use as much data as possible to make sure emails feel like a personal message that speaks directly to each user’s needs.
14. Surprising, Delightful Packaging
eCommerce personalization doesn’t have to end once a customer leaves your website. A plain, brown cardboard box feels distinctly impersonal. Adding custom packaging, a card with the customer’s name on it, or special little gifts related to the customer’s order are all ways to surprise and delight your customer.
If you can make their delivery feel more like a care package from a friend, customers are far more likely to change their purchasing habits and make future purchases from you instead of a competitor.
Often, this level of customization is difficult to scale, which makes it a powerful way for smaller DTC brands to offer a compelling experience that bigger companies can’t match.
15. Quick, Responsive (Automated) Customer Service
Your customer is never in a more delicate spot than when they need your customer service. If you rise to the occasion, they’ll sing your praises. If you frustrate them, you’ll never stop hearing about it.
A personalized customer service experience is a great way to defuse tension and leave your customer satisfied. If you have human customer service agents, using robust customer relationship management software (CRM) will allow agents to instantly identify key traits of the customer and present them with a polished, customized experience.
Even with chatbots, personalized suggestions and solutions will reduce user frustration by meeting their needs more efficiently. And using a hyper-personalized “segment of one” will even allow you to make relevant offers that your customer might find engaging and compelling.
Customer Service: When & When Not to Automate
Automating every part of your customer service may sound like an efficient way to help your customers — but a personal touch will still go a long way. Customer service isn’t just about resolving customer problems quickly… it can be a strong channel for both customer acquisition and LTV when done with care.
In fact, a 2018 study found that 75% of customers still prefer support from a live agent over self-help tools like chatbots.
Here’s one way to approach customer service automation.
- Support ticket creation
- Help finding a certain product or piece of content
Leave it to your customer service team:
- Live support when asking questions about your brand or products
- Personalized follow-ups after experiencing product issues or site issues
eCommerce Personalization: Where to Start
The key goal of personalization is to improve the customer experience. 97% of business leaders agree that managing the customer experience is an integral part of their overall business strategy for creating loyal, long-lasting relationships. When we deliver personalized content, website visitors experience smoother, frictionless shopping that’s memorable and shareable.
A high level of accurate personalization can best be achieved by combining powerful analytics, accurate customer data, and automation. As you approach your eCommerce personalization strategy, ask yourself the following questions:
Can You Get Enough Customer Data?
Can you collect the range of customer data points necessary to make a compellingly personalized experience? Modern analytical tools make this easier than ever, but without knowing demographics, search behavior, past purchase history, browsing history, and customer value, it will be hard to build effective segments.
Do You Have the Budget?
Because personalization requires both data on your customer segments and marketing automation, it can be expensive. As you identify a budget, you can tailor your strategy to include steps that can be done well (and avoid things like the toaster collection that alienate customers instead of delighting them.)
As you work on budgets, remember that not personalizing can have an opportunity cost, too. Accenture estimates that poor personalization efforts cost US organizations $756 billion in 2016.
What Do Your Customers Actually Want?
No conversation about customer experience is complete without a deep understanding of the customer journey. When it comes to Netflix, customers want to spend less time searching for what to watch, and more time watching. Personalization that prioritizes content they love is exactly what Netflix subscribers want, which leads to loyal customers.
If you sell big-ticket items, your customers may feel overwhelmed by choices. They may want you to deliver them a personalized solution that eliminates decision paralysis. If you sell lower-priced fashion accessories, your customers may prefer to be shown a range of items that match other products they’ve purchased in the past.
These details can have a big impact on your personalization strategy.
Software Recommendations for eCommerce Personalization
When we onboard eCommerce companies, one of our first steps is to make sure they have a way of collecting accurate, detailed data about their users. There’s no single eCommerce personalization platform, but these third-party tools and integrations are essential in providing unbiased feedback to make business decisions and create an enhanced customer experience.
There’s a reason why community-building is so important for DTC brands. Everyone wants to feel like they’re part of a community where their values are shared. And with eCommerce personalization features, your brand can help foster that sense of community — a place where everyone knows your name.
eCommerce customer personalization is a powerful way to increase your customers’ satisfaction and your bottom line. By implementing these strategies, your brand is likely to see improvements in brand engagement, customer loyalty, and sales conversions. However, these tactics are just the beginning, and eCommerce personalization is not a one-size-fits-all solution.
- Nirav is the CEO and founder of Anatta. Nirav received his engineering degree in 2006 from George Washington University. Prior to Anatta, he served as founder of Dharmaboost, a software company working with Cisco Systems, Hewlett Packard, and New Leaf Paper. He is also cofounder of Upscribe, a next-level subscription software for fast growing eCommerce brands.