Unlocking the Potential of Ecommerce Personalization
By: Ted Rogers
< Back to resources
In the rapidly evolving world of ecommerce, understanding customer behavior and providing them with a great experience is vital for success. Learning how to utilize customer information is essential, with data analytics holding the key to unlocking valuable insights.
This article explores the fundamentals, empowering you to harness the power of personalization to optimize your customer experience.
What is Ecommerce Personalization?
Ecommerce personalization allows you to tailor the online shopping experience to the individual. This means delivering relevant content, recommendations, and offers based on a customer’s unique preferences, behavior, and demographics.
Businesses collect information about their customers, and this data is used to create a unique profile. The profile helps the store understand the customer’s individual needs and preferences. The business then uses this profile to personalize the shopping experience.
91% of consumers are more likely to shop with businesses that recognize them, remember their preferences, and provide relevant offers and recommendations. [1]
Ecommerce Personalization Examples
Here are some of the most common and successful examples of how ecommerce personalization can be implemented:
- Product recommendations: Suggesting items based on a customer’s browsing history, previous purchases, or similar interests.
- Targeted promotions: Sending personalized email offers or discounts relevant to a customer’s preferences.
- Dynamic content: Showing different website content or layouts based on a customer’s location, language, or device.
- Personalized search results: Tailoring search results to a customer’s past searches and interests.
What Information is Required for Ecommerce Personalization?
Ecommerce personalization requires the collection and use of various types of customer data to create a tailored experience.
80% of customers would provide personal data in exchange for access to deals. [2] This information is critical for a deeper understanding of your customers, allowing you to provide improved user journeys and custom offers – the bedrock of effective personalization.
Here’s a breakdown of the key categories.
Customer Data: Direct and Inferred
This can be information that customers provide directly, like demographics (age, location, and gender), preferences (interests and wishlists), and purchase history (past orders and reviews).
There is information that can be inferred from customer behavior, like browsing history, product views, clicks, search queries, abandoned carts, and engagement with marketing campaigns.
Product Data: Attributes, Performance, and Relationships
This includes attributes, features, and specifications of products – whether digital or physical
(categories, brands, colors, sizes, and materials). You also need to monitor performance data like sales figures, reviews, click-through rates, and other indicators of product popularity and customer sentiment.
Product relationships are also important – examples of this being: complementary products, frequently bought-together items, and seasonal trends.
Contextual Data: Device, Event, and Location
This can help you tailor your approach to how and when your customers prefer to shop by looking at device and browser information, such as device type, operating system, screen resolution, and browser used to access the store. Contextual data also includes “real-time events” like current promotions, seasonal sales, and available stock.
There is also the potential to cater to customers via geographic location (country and city) or time zone if this is collected with consent.
Additional Ecommerce Personalization Data Considerations
- Creating customer segments: Group customers based on shared characteristics or behaviors for targeted personalization.
- Aligning with business goals: Focus on specific objectives like increasing sales, conversion rates, or customer engagement to guide the personalization strategy.
By effectively gathering, analyzing, and utilizing this information, businesses can create dynamic, personalized ecommerce experiences that resonate with individual customers, ultimately leading to stronger relationships and a more successful online store.
Ethical and legal considerations as well as data privacy regulations must be observed. Transparency and user consent are essential when collecting and using customer information for personalization. For more regulatory context around ecommerce, learn about how, as a Merchant of Record, Digital River can take on the financial and legal responsibilities of selling online.
5 Key Benefits of Personalization in Ecommerce
Leveraging customer data and analytics can yield a treasure trove of personalization opportunities and outcomes for your ecommerce business. Here are our top five benefits:
1. Increased Conversion Rates and Sales
When customers see products and content that are relevant to their interests, they are more likely to purchase them. Personalized product recommendations, targeted promotions, and dynamic content can all contribute to higher conversion rates and increased sales.
2. Improved Customer Experience
Personalized experiences make customers feel valued and understood. This helps ensure increased satisfaction and loyalty which can lead to organic advocacy. For example, a customer who receives a personalized email offer for a product they were recently browsing is more likely to feel that the brand cares about them and their needs.
3. Higher Average Order Value (AOV)
Personalization can encourage customers to spend more money by suggesting complementary products or upselling related items. For example, a customer who purchases a new pair of shoes might also be interested in buying socks, shoe care products, or a matching bag.
4. Reduced Churn Rate
By creating a more engaging and satisfying experience, personalization can help to reduce customer churn. Customers who feel valued and understood are more likely to remain loyal to a brand.
5. Stand Out from the Crowd
In today’s competitive ecommerce landscape, personalization can give businesses a significant advantage. By providing a more relevant and engaging experience, businesses can differentiate themselves from their competitors and attract more customers.
How to Use Customer Data for Effective Personalization in Ecommerce
While raw data holds potential, it’s the interpretation and transformation into actionable insights that unlock its true power. Here are some steps to follow:
- Define your goals: What is your top priority in rolling out personalization? I.e., Increased sales, higher customer satisfaction, increased AOV.
- Choose the right metrics: Align your metrics with your goals and ensure they accurately measure what matters.
- Segment your data: Analyze data by different customer segments (e.g., demographics, purchase history) to identify specific trends and personalization opportunities. Using visualization tools like charts, graphs, and dashboards help you understand complex data relationships and identify patterns.
- Take action: Don’t just analyze, act. Develop and implement strategies based on your insights to improve customer experience and boost your business.
Applying What You’ve Learned About Ecommerce Personalization
With the right tools such as Digital River’s eCompass, you can transform data into a powerful and strategic weapon, allowing you to create a customer experience that drives loyalty, boosts sales, and propels your online business to new heights.
Remember, data is knowledge, and knowledge is power. Use it wisely to unlock the full potential of your business.
Contact us today to learn more about Digital River’s services and support for companies looking to unlock the potential offered by ecommerce data analytics to improve their customers’ experience.
[1] https://www.accenture.com/content/dam/accenture/final/a-com-migration/pdf/pdf-83/accenture-making-personal.pdf
[2] https://www.sailthru.com/personalization-index/
