The Cold Start Shopper Problem: Providing Personalization in a Private World

Online is now firmly cemented as the go-to shopping channel for many consumers, whether it be for the final purchase or for research at home or on the go. While convenience and ease of use are keeping people online, shoppers still face frequent issues when making a digital purchase.

Coveo’s annual Relevance Report looks at the expectations of online shoppers and how well brands fulfilled them. At first glance, the outlook isn’t a whole lot better than in 2021. Ninety-one percent of respondents encountered at least one problem when shopping online over the past year, citing issues such as slow websites (35 percent), not finding what they wanted (34 percent), and disorganized site or app navigation (29 percent).

To navigate these issues and maintain brand loyalty, e-commerce providers need to give their customers relevant online shopping experiences. Addressing these prevalent problems at scale is already a tall order, made even more difficult by the impending end of third-party cookies and heightened concerns about consumer privacy.

The Cold Start Shopper Problem

In today’s environment, building loyalty with customers is difficult — and maintaining it's even harder. Shoppers have high expectations, low tolerance for issues, and plenty of other options, including massive marketplaces like Amazon.com. What makes it even more challenging is that 40 percent of customers use guest checkout and choose to remain anonymous when purchasing.

How can retailers provide personalization without customer data? We call this problem the cold start shopper dilemma.

The cold start shopper problem has gotten even worse over the past few years. Recent privacy changes have made delivering personalization more difficult than ever. In the past, merchants used cookies to identify customers and provide an individualized shopping experience. However, Google announced a plan to phase out third-party cookies almost two years ago, and has pledged to join other browsers in ditching them completely by the end of 2023. E-commerce providers can no longer rely on third-party data to create relevant customer experiences. This is further exacerbated with moves by Apple and others to restrict third-party data sharing.

Additionally, the rise in ransomware attacks and subsequent data breaches have also made consumers hesitant to check “accept all cookies” when they log into their favorite websites and apps.

So how can retailers overcome the cold start shopper dilemma?

Brand Trust Can Save the Day …

The best way for retailers to personalize the experience of privacy-conscious shoppers is to gain their trust. Despite 59 percent of people agreeing they're concerned about how their data is used by retailers, 51 percent confirmed they would still be more likely to share personal data with a brand they trust.

How do you build this trust? First, create a quality online experience, including search engines that deliver the correct results and well-organized websites. Brands also need to invest in their customer service. Coveo found that 96 percent of people believe negative customer service affects their loyalty to a brand. Chatbots, knowledgeable customer service employees, and generous return or reimbursement policies go a long way in fostering trust and encouraging customers to return.

Along with building brand trust, retailers need to invest in the right technology.

… Along With Artificial Intelligence

Just as a store clerk would analyze in-store shoppers for clues to what they’re looking for, online merchants can leverage machine learning and artificial intelligence (AI) to quickly bring personalized recommendations to anonymous shoppers — large amounts of data not needed. The technology only needs a few in-session clicks to discover the shopper's intent and start providing suggestions.

Many might be surprised to learn that session-based AI doesn’t need huge troves of data to work. Purpose-built machine learning models can determine what shoppers want based only on what they’ve looked at and clicked on so far. For example, if you start looking at women’s golf clubs, and then search for gloves or balls, the commerce website can predict that you're interested in women’s golf balls and female golf gloves vs. soccer balls or goalie gloves.

Fixing Relevance Before Privacy Changes

Ninety-three percent of consumers expect the online shopping experience to be at least equal to, if not better, than in-store. However many won’t share any of their data with online retailers — a problem that will only get worse over the coming years as Google eliminates third-party cookies.

Retailers can tackle this dilemma with a two-pronged approach:

• Invest in their customer service and website quality to foster brand trust.
• Implement machine learning technology that can personalize experiences without tons of data.

With these two steps, merchants can solve the cold start shopper program and prepare for a cookie-less world.

Brian McGlynn is the general manager of commerce at Coveo, a provider of AI-powered enterprise search solutions.