Retailers Achieving Personalization Benefits, But Still Room for Improvement

With the recent increase in retail store closings (according to Credit Suisse, 2,880 retail stores have already shut down this year), it’s more important than ever for retailers to get their e-commerce channel right. But online, it’s very easy for consumers to shop around before making a purchase — comparing prices and styles across sites with just a few clicks. To overcome this challenge, retailers are looking to differentiate their e-commerce sites and apps to encourage shopper loyalty. Personalization allows retailers to do just that, providing a maximally relevant, helpful experience for each shopper based on a deep understanding of that person.

How well are retailers executing their personalization efforts? To analyze the trends and current state of personalization, Evergage recently completed its annual personalization study. Conducted in partnership with Researchscape International, the survey compiled responses from 206 digital marketers at organizations of all sizes. Here are some findings and their implications for retailers.

Personalization Yields Great Benefits … But There’s Still Room for Improvement

Nearly all (96 percent) of the marketers surveyed agree personalization helps advance customer relationships, and 88 percent believe that their customers expect a personalized experience. In addition, while 88 percent of respondents indicate they see positive improvements in KPIs from personalization, there's still room for improvement. For example, less than one-third (30 percent) are very or extremely satisfied with the level of personalization in their marketing efforts. With that in mind, here are a few tips to help retailers see more success:

• Test personalized experiences in different formats. Pop-ups to capture email addresses and reduce cart abandonment are often effective, but more subtle forms of personalization across the homepage, product detail pages, site navigation and even on-site search results can improve engagement and loyalty without disrupting the shopping experience.
• Blend short-term tactics and longer-term strategies. Think about how to use well-timed personalization to drive incremental purchases, encourage shoppers to sign up for loyalty programs, etc., while still creating unique, individualized experiences that will keep customers coming back.
• Find a personalization platform that gives marketers control over recommendation algorithms. We often find that an algorithm that boosts an individual’s favorite brands, preferred price point, and most-shopped colors and styles is more successful than an algorithm that simply displays co-browsed items.

Machine Learning Represents an Opportunity

Machine learning is the key to providing unique and relevant experiences for each shopper at the individual level. For example, Zumiez, a multichannel specialty retailer of apparel, footwear, accessories and gear for skateboarding, snowboarding and surf lifestyles, uses machine-learning algorithms to provide shoppers with true one-to-one experiences throughout its site — from the homepage to checkout. Zumiez responds to each shopper’s preferences to guide which brands they see, products they discover and content they're served. With this approach, Zumiez has seen a lift in conversions, engagement and average order size.

Our survey found that currently, only one in three marketers (33 percent) uses machine-learning personalization (either by itself or in concert with rule-based personalization, which powers experiences for segments of shoppers). Of those that aren’t using machine learning, 32 percent intend to start doing so in the next year. As more and more retailers apply machine learning to drive online shopping experiences that are truly tailored to each individual, those that don’t risk falling behind.

Cross-Channel Personalization Isn't Standard Yet

Personalization usage across channels shows us that the majority of marketers don't have a cross-channel personalization strategy. Most (72 percent) are using personalization for email, while 57 percent are using it on their websites, 28 percent on their mobile websites and only 20 percent in their mobile apps.

Given widespread mobile usage among consumers, the lack of personalization in mobile apps is a bit of a surprise. There's a huge opportunity for retailers to better connect their channels — from email to web to mobile — to ensure that cohesive, one-to-one personalized experiences follow shoppers wherever they go and reflect their latest and in-the-moment actions.

Looking Ahead

This year’s study found that while marketers almost unanimously believe that personalization is an important strategy for advancing relationships with customers, they aren’t as satisfied, as a whole, with their current efforts. Looking to more advanced techniques such as employing machine learning to personalize the full experience across channels at the one-to-one level will help them improve results and loyalty.

Paula Crerar is vice president of content marketing and programs at Evergage, which provides real-time personalization to more than 2 billion web visitors and application users.