- 7 facts about personalization trends in ecommerce
Research suggests consumers want more personalized content and companies that provide it using AI-driven profiling are more likely to succeed this personalization trend. Yet, many companies disregard these obvious findings.
Tired of feeling bombarded by advertisements, modern consumers have developed the ability to block out most mass-market advertising messages. They prefer a more personalized approach which treats them as individuals.
This trend for personalization has grown stronger. According to Twilio’s 2022 State of Personalization Report, 62% of consumers say a brand will lose their loyalty if they deliver an un-personalized experience, a rise of 20% since 2021.
For ecommerce retailers to achieve further growth and revenue with its customers, artificial intelligence (AI) empowers real-time profiling and decisioning, enabling retailers to present browsing experiences curated to each individual visitor. Thereby retailers can personalize offers and content that inspire visitors to convert.
To help businesses stay on top of personalization trends, here are seven facts exploring real-world examples.
1: Personalized search
Imagine you want a new pair of shoes. You visit the same store two days in a row; the first day, you walk up and down every aisle, looking at every pair of shoes and picking up those that catch your eye. On the second day, the shop assistant has started to understand more about your preference and they’re able to refine what they show you.
It’s not enough to showcase generic products, the same set to every visitor – potentially across several visits. Listening to, understanding and serving individual users is key both in-person and on digital channels. The DIY times in digital stores are long gone. The goal should be as close to 1:1 personalization as possible.
Fact 1: Customers are unique. Treat them as such.
2: Personalized products according to customer history
A new mother returns to work after maternity leave. Her customer history at a large store shows she had swapped her regular purchase of business attire for maternity clothes, travel cots and buggies.
But now she’s planning a business trip and her year-long customer history is less relevant. To understand what is now relevant for her and not produce out-of-touch, meaningless search results that she will skip over, it takes AI algorithms, analyzing hundreds of behavioral touchpoints in real-time.
Fact 2: Over-valuing historic data points can be misleading. CRM data plays a role, but listening to and understanding what users want NOW is much more important.
3: Personalization through A/B Tests
A/B tests, pitting variations against each other to decide the most effective option, are commonly used by marketers. The downside is that they only optimize for average users.
Just because a certain spa hotel is preferred by a particular demographic – such as women aged 40-60 years – it doesn’t mean the property would suit everyone in that demographic. Many other customers from different segments are looking for a relaxing retreat. Rules-based segmentation similarly ignores the need to treat customers individually.
Fact 3: Defining ‘average’ users will inevitably isolate some of your audience. Real-time individualized personalization produces stronger commercial results than A/B tests.
4: Personalized email campaigns
Significantly, personalized emails drive six times higher transaction rates according to Experian. People value emotional connection so much that birthday emails generate 342% higher revenue.
But most companies don’t go beyond tailoring a name, gender or home town. How many celebrate your birthday with a generic gift, voucher or product recommendation (“Treat yourself”)? Too many! These types of emails are so trivial they’re easily ignored.
Fact 4: Despite the popularity of communication methods like video conferencing and WhatsApp, email still matters. The more personalized it is, the more likely it is to be read and valued.
5: Personalized recommendations according to other users
Everyone has seen the ‘you might also like’ or ‘others bought this’ recommendations, labeled ‘collaborative filtering’ by Amazon. At times they’re useful, but users become fatigued and screen them out, hungry for something more relevant, more personal. Who wants to be like everyone else?
Fact 5: Segmenting and lookalike audiences are a nice try, but individualization is king.
6: Personalized chatbots
Chatbots can deal with routine matters, but are not yet a real substitute for personal contact. They can be programmed to provide limited recommendations and support, but customers can become frustrated when bots cannot cope with a slightly more complex query. As a result, message bots are often bypassed by humans, using them as a way to simply get transferred to a human customer service representative.
Fact 6: There is a natural tendency to transform what we know and value in the analog world into the digital world. Often these attempts create a limited copy. To use the full potential of technologies like AI-driven personalization, companies need to rethink the digital customer journey entirely.
7: Behavior-driven inspiration
AI-driven profiling based on behavioral analysis is transforming travel retailing by providing a deeper understanding of customer desires, according to Hitachi. Intelligent automation, based on real-time user profiles of anonymous users, can create inspiring shopping experiences on the fly, and adapt them with every newly-captured data point.
Fact 7: AI is able to analyze behavioral data on the fly to make accurate predictions about what users want. Even before they know it themselves.
Using AI for personalization in ecommerce and retailing has morphed from a fast-growing trend to a necessity for businesses. According to IBM, adoption will leap from 40% of companies in 2022 to more than 80% in three years. Retailers understand AI is the best way to understand clients’ needs.
Find out more about how BD4’s AI-powered 1:1 personalization can help you get a deeper understanding of what your customers want.