How to Leverage Personalization to Gain and Retain Customers for Your eCommerce Business
Personalization is a growing eCommerce trend, so much so that many online shoppers are coming to expect it. In fact, around 63% of customers now see personalization as a standard offering by online stores. If an online store doesn’t offer that personal touch, customers tend to go elsewhere.
New customers appreciate an online store that welcomes them with tailored product offers, quizzes to determine their needs and preferences, location-based recommendations, and other custom features. Brands that personalize the shopping experience see 10-15% higher conversion rates and a 20% increase in customer satisfaction. Higher customer satisfaction means customers are much more likely to shop that brand again.
So, what goes into effective personalization, and how can eCommerce businesses incorporate it into their online stores? In this post, we’ll examine the three keystones of eCommerce personalization, how some brands have implemented them, and how you can use personalization to grow your brand and business.
1. Know and Engage Your Customers
Customers want brands to understand them and cater to their needs. 80% of customers are more likely to make a purchase when an online store offers personalization. Meanwhile, 66% would be actively discouraged from making a purchase by content that isn’t personalized.
However, this level of personalization is tricky when you don’t have any data on a particular customer, such as a new arrival. That’s where third-party data comes in handy to help understand the new customer’s preferences and welcome them to your store. Such data includes the referring website, location services, the search terms that led them to your store, and more.
This sort of data gives you a snapshot of your new customer and the information you need to appeal to their tastes, interests, and needs. A good personalization platform should integrate third-party data automatically, tailoring the website layout, product offers, and sales journey to each arriving customer.
Once you’ve got a customer in the door and leveraged third-party data to make them feel welcome, you can build towards micro-targeting. Micro-targeting or 1:1 personalization is the highest level of personalization, constructing an individual profile for each customer and customizing your offers for them. To micro-target your audience, you need to obtain your own data on each customer.
A popular method for gathering this data is a quiz that allows the customer to tell you a bit about themselves when they first visit your website. This method greatly increases the relevance of content your customer sees, streamlining the shopping experience.
A quiz also shows new customers that your brand is interested in them personally. Quizzes are a fun and simple form of self-expression and self-discovery that is shareable and appealing. They can even be an opportunity to guide your new customers to create an account, as in this example from fashion company Stitch Fix.
Stitch Fix then uses visuals to allow customers to refine their ideal style. This strategy has allowed Stitch Fix to build a loyal customer base with a six-month retention rate of around 30%, one of the highest in the industry.
Opt-in forms such as pop-ups and floating bars can be personalized, too. Something as simple as including the customer’s name and location in opt-in forms can make them more likely to give you their email address and help you deliver relevant content. Offering special discounts to first-time visitors can also improve the chances that they will make a first purchase and provide you with their email address.
Once you have a customer’s email, you can begin to guide them down your sales funnel with automated emails tailored to fit their needs and interests.
You can also retarget them with personalized messages such as abandoned cart reminders, “we miss you” emails, and order follow-ups as well as paid marketing campaigns. Each of these messages can contain personalized recommendations based on your customer’s profile, which includes their site activity and previous purchases.
Similarly, when a customer returns to the website, pop-ups containing items they browsed but never purchased can create a continuous shopping experience with high conversion rates.
Personalized rewards systems also provide high levels of engagement and extensive data on individual customers. Mobile apps are highly effective at crafting such rewards systems thanks to gamification, on-the-go connectivity, and more accurate location services.
Starbucks has made excellent use of this strategy. By rewarding users for their engagement with deals and hyper-personalized messages, the Starbucks app increases data collection, sales, and customer satisfaction. The Starbucks rewards program gives members special birthday treats, allows them to win more points by playing games on the app, and offers them discounts and promotions. based on their tastes.
2. Segment Your Audience
While micro-targeting is essential, you can also leverage similarities between customers by using segmentation. Segmenting your audience means organizing it into groups with similar needs. These needs can be based on a variety of factors such as location, interests, age, and more.
A good personalization platform will have automated segmentation capabilities to automatically identify audience segments and their attributes. This automation makes it easy to target each segment with the right offers to convert them into first-time or repeat customers, especially as you scale your business.
One successful segmentation strategy is to display products or campaigns based on a customer’s location. This level of personalization can start on your store’s homepage before your customer has even made a single click to indicate their preferences, simply by virtue of collecting location data. It’s also highly scalable, since it can start delivering from the moment you gain your very first customer, and doesn’t become any more complicated as your audience grows.
Businesses that have customers all over the world, such as Shop Direct, employ location-based personalization by offering products tailored to the current season wherever the customer lives. This tactic boosts sales by making relevant offers to shoppers and helps seasonal products sell year-round.
Another way to leverage location that can pay huge dividends is creating personalized bestseller lists. Shoppers love browsing popular products, knowing that other customers enjoy them as well. However, a simple list of the top-selling products in the store will not appeal to them as much as a relevant list of bestsellers based on their segment.
For example, lifestyle brand LeSportsac tailors their Trending page to a user’s location. Since they had a large segment located in Hong Kong, where bolder designs and color schemes were more popular than the elegant and minimalistic designs favored in the United States, LeSportsac used segmentation to cater their Trending page to local styles. This change resulted in a big sales boost.
3. Personalize Your Product Recommendations
The end result of knowing, engaging with, and accurately segmenting your audience is a wealth of data that can lead to personalized product recommendations. These recommendations are what ultimately lead to sales, since they simplify and streamline the shopping experience by directing your audience to relevant products they are more likely to find appealing.
We touched on personalized product recommendations as a great way of re-engaging returning customers through pop-ups, automated email campaigns, and advertising campaigns. But product recommendations can also increase order volume by upselling, cross-selling, and downselling at and around checkout.
Upselling suggests products that are more expensive than a related product your customer is interested in, increasing your profit margins. Cross-selling recommends similar products to what your customer is browsing or has purchased, at a variety of price points. Downselling suggests less expensive products that may either improve the chances of a sale to a budget-conscious customer or increase cart size with add-ons to their desired items.
Good personalization software generates these suggestions based on the data you have gathered by engaging your audience. Third-party data can help give personalized product recommendations even to customers who have never shopped in your store before. Quizzes refine customer profiles, guaranteeing that respondents will see more relevant recommendations.
For example, below you can see a list of suggested products that appear on the homepage of LeSportsac’s online shop. These products were suggested to us even though we had never visited their website before. These suggestions, which were generated using third-party data and popular products, aren’t as personalized as they would be after a customer has browsed and engaged with the website. However, they offer a starting point to the personalized shopping experience.
User behavior is also key to creating personalized product offers. Amazon is excellent at highlighting products customers have already looked at, reminding them of their interest and encouraging them to make a purchase. Behavioral product recommendations are a large part of the reason Amazon has 60% higher conversion rates than most other eCommerce websites.
In their “Buy Again” page, Amazon also suggests purchasing items customers have previously bought, such as food items and nutritional supplements, accessories or parts for electronics and appliances, beauty and personal care products, and other products that are frequently bought multiple times. This page has very high conversion rates since the customer has already demonstrated they will buy each of the products listed on it.
Fashion brand Madison Island refines their recommendations based on the amount of time a customer has spent browsing particular pages. The longer a customer browses the website, the more personalized the product recommendations will be, and the more likely it becomes that customers will make a purchase.
Strategically placing these recommendations boosts their power even further. Product detail pages (PDP) are a highly effective location to offer recommendations of associated product categories. These recommendations may encourage customers to make a purchase by allowing them to find exactly what they want. It may also result in a larger shopping cart, such as with Amazon’s “frequently bought together” recommendations. In fact, over 44% of customers buy on the basis of these recommendations.
What Next?
Now that you have an idea of what eCommerce personalization is, what the essential components are, and how to gather and leverage data on your customers, it’s time to put these ideas into practice. We recommend taking advantage of the powerful personalization options of a platform like Shopify, which is what we’ve used to build high-performing stores for our clients for years.
Personalization should be the foundation of every aspect of your eCommerce business. Whether it’s advertising, email marketing, website design, customer service, or product development, you should always ask how you can personalize each customer’s experience with your brand.
It’s also vital to centralize all audience data so that product recommendations and retargeting efforts will not only incorporate information from a customer’s interactions with your online store but also with your social media account, ads, email campaigns, and more. Now more than ever, eCommerce is an omnichannel business, and customers expect a seamless omnichannel experience—one that’s fully personalized to their needs and interests. With a centralized personalization strategy, you can provide each customer the kind of deeply tailored experience that will keep them coming back for more.
Contact our team today to find out how we can help you leverage personalization to scale and drive your business.