E-commerce

Using personalization to boost ecommerce ROI: trends, facts, tips
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You love blue. You’ve bought several blue items from a particular up-and-coming brand. You’re also a loyal customer who, after previous purchases, has come back to the home page multiple times to fill your virtual shopping cart up with more blue things.

You pay close attention to what similar shoppers have apparently bought, and you love applying those instant coupons that always seem to be part of the company’s online marketing campaigns. 

Because you’ve opted in to digital-marketing-data collection on the site, you’re an open book of valuable personalization marketing tidbits. And if they’re a smart ecommerce organization, they’re reading up on your customer behavior and browsing history, applying what they’re learning to create just the right personalized marketing to enhance your customer experience every time you come back…while simultaneously padding their bottom line.

Just as with personalizing anything based on customer profiles, the ecommerce shopping journey can be tailored for individual customers’ preferences and needs based on the wealth of data collected about their shopping habits and interests. And when that happens in all the right ways? With well-personalized experiences geared for your target audience, your conversion rates and ROI are subject to exhibit some fairly big gains.

The profusion of ecommerce data to be mined from a customer base has led to the rise of dedicated personalization engines — a software component that provides search results expressly geared for specific users. It applies digital behavioral context about people to content in order to show prospective buyers more-relevant results.

Plus, this level of advanced personalization is an endless positive loop: customers’ purchases then provide more data that the business can cull in order to create additional well tailored shopping experiences, further enticing these customers.

When it comes to the latest ecommerce personalization trends, statistics, and tips for moving into the 2024 iteration of online personalization, here are a few of our favorite things to consider.

Trend: Personalization is still hot

Maybe due to the pandemic being (mostly) a thing of the past, retail ecommerce sales are expected to drop slightly, from 10.4 percent in 2023 to 9.6 percent in 2024. After such a wild ride, a little contraction in the market would seem expected. However, a sound personalization strategy is still an indispensable no-brainer for any ecommerce-industry heavyweight looking to win over its customer demographic. According to Shopify, ecommerce growth in 2023 is 5% higher than from before the pandemic, and it’s expected to remain stable for now.

Fact: Seventy-one percent of consumers expect personalization, and if they don’t get it, 76% switch to a competitor (Mckinsey & Company)

Tip: Keep your tech current

When you know your site personalization is optimized in all the right ways to meet your visitors’ and customers’ unique needs, you’re ready to prioritize customer satisfaction and maximize your conversion and profit.

What are those ways?

  • Getting creative in the era of data-collection restrictions
  • Improving your personalization with the help of AI
  • Automating your personalization
  • Personalizing by building strong social-media communities
  • Providing a winning omnichannel experience

Trend: Overcoming data-collection challenges

Facts

  • Forty percent of people don’t trust that businesses will use their data ethically (KPMG)

  • Fifty-seven percent of web users have found it impossible to protect their privacy, yet 63% would take some online privacy risks for convenience (Statista)

“Welcome to our website. Can we secretly follow you around with our third-party cookies and compile notes, then use what we learn to woo you with some personalized content?”

“No thanks,” say many consumers nowadays. They’re plagued by privacy concerns, wary of having lost much of their personal data on a large scale, and not interested in continuing down that road. 

In light of the fact that there’s still no overarching U.S. consumer data privacy law — though states including California and Colorado have adopted them — some consumers are preferring to stay completely anonymous. When they land on a website and are asked for permission to be tracked, they opt to continue stealthily as a guest.

Other online shoppers are fine with providing personal data tidbits that could be utilized to make their ecommerce experiences a more personalized undertaking.

Regardless of varying consumer sentiment on privacy, the successful ecommerce conversion use case still revolves around everything you can learn about your shoppers’ interests and preferences as you prepare to intrigue them at all the relevant touchpoints. Then, you can use this comprehensive information you’ve gleaned to craft and deliver the most promising and appropriate promotions and recommendations. 

So rollout of this scaled-back marketing trend is a problem for some companies that got used to tapping the  informational gold mine without getting express permission (Meta being the main example).

With the Apple initiative protecting consumer privacy, opt-in messaging on websites has been making it obvious that more-prohibitive laws on proactively collecting third-party consumer data have been heeded. That’s all well and good for consumer rights, but a bit of a disaster for advertisers and businesses that could previously grab and use people’s data for their own money-making objectives, personalizing content willy-nilly under the radar. 

The only workable solution in this changing environment is soliciting and leveraging user-provided data. The silver lining: while this ecommerce-data-collection piece of marketing strategy is now a bigger challenge, there are still effective ways to collect customer data without resorting to third-party information-gathering methods. Though it seems counterintuitive, respecting privacy by collecting less — but still very helpful — behavioral data is arguably better for business.

In this realm, two types of online-data collection don’t interfere with privacy, are less expensive to execute, can give you data to work with that’s actually more accurate, and can facilitate the building of strong relationships with shoppers and customers:

  • Zero-party data. According to Forrester, that’s info a customer “intentionally and proactively shares with a brand. It can include preference-center data, purchase intentions, personal context, and how the individual wants the brand to recognize [them].”
  • First-party data. Someone’s activity on a website, purchase history, and subscriptions are all examples of this level of information. When a shopper opts in, allowing for these tidbits to be scooped up as they’re browsing, you can then amass and duly analyze them to produce marketing insights that will help ensure a personalized customer journey.

Tip: Adjust your data-collection methods

In this new environment, how can you approach potential buyers online so they’ll feel comfortable on your site and volunteer some information about themselves that can get you started with personalizing for their various customer needs? Some ideas:

  • Pop up a short survey asking for input about their specific needs
  • Ask a single question that can determine what to show them next
  • Provide an engaging quiz that designates their product preferences
  • Approach them with a friendly bot that asks to help guide them
  • On a social-media site, intrigue them by offering a multiple-choice poll question

Who knows? You could end up ahead by asking customers to enter an information-providing relationship with you and supply the data you need in order to elegantly offer them the best retail solutions to their problems. 

Trend: Upgrading ecommerce personalization with AI

Fact: Companies using advanced personalization report a $20 return for every $1 spent (ClickZ)

Like everything in the modern world of information, ecommerce personalization capabilities have gone on steroids with advances in artificial intelligence and machine learning. Generative AI has heralded a world of creative options, allowing an ecommerce retailer to operate much more efficiently. Personalization techniques have become more agile and easy to set up in real time. “Contextual personalization” is one way AI is being applied for quickly creating tailored online shopping experiences, facilitating identification of ideal target customers for messaging and personalized recommendations. 

By continually analyzing people’s browsing habits, preferences, and buying history, an online retailer can substantially optimize its personalized product recommendations and discounts to provide the best possible user experience.

Then there are intelligent chatbots, automating the process of supporting shoppers and ensuring their shopping satisfaction. AI-induced personalization has made bots considerably smarter and more natural as communicators for shoppers to enlist as virtual advisors. 

Thirdly, site search and recommendations are being overhauled by AI.

Personalization has been spawning product recommendations for years, albeit with varying amounts of success. Now, with the advent of AI and how it’s upgrading everything in ecommerce, there’s a lot going on in terms of companies adopting the technology. And it makes sense: the better your AI solution for site or mobile-app search, the more revenue you stand to extract from your website traffic.

Integrating smart search techniques — including “predictive” strings that spontaneously appear in the user’s search box — can not only jolt your conversion higher, it can give you a competitive advantage by reducing consumer frustration from the get-go. It boils down to the fact that AI-aided search produces “intuitive” results — information that just feels right to the customer — based on the user’s collected and analyzed data.

These improvements are pretty amazing, but they could also end up being just the start, as AI appears poised to continue streamlining online functionality.

Tip: Use AI to improve your site search and recommendations

In the smart search arena, Algolia NeuralSearch is one proven ecommerce-boosting option. 

When it comes to item recommendations on your site — for instance those appearing in a “Frequently bought together” section at the check-out stage — AI is also transforming the level of impact from “not necessarily relevant” to “uncannily perceptive.” When it’s an instant no-brainer for a customer to happily add an item that you’ve thoughtfully recommended for them to their cart as they’re checking out, you know your AI algorithms are nailing it and you’re possibly in for some eye-popping return on investment.

personalization AI banner

Trend: Automating personalization

Fact: For 2023, more than half of organizations were planning on integrating AI and automation technologies.

Thanks to AI, ecommerce personalization can be automated in numerous ways to streamline a company’s marketing efforts. By automating the personalization of product recommendations, search, email messaging, and other aspects of ecommerce, companies can supply a customized shopping experience without wasting time on day-to-day merchandising tasks, with all their ongoing labor expenses.

Tip: Automate your personalization activity

What business wants to be stuck with manual merchandising drudgery? Putting your personalization on autopilot is a “surefire way to upscale your operations,” says a Forbes prediction.

Trend: Infiltrating social media

Fact: Ninety-five percent of working-age Internet surfers use social-media platforms (Datareportal)

Remember the days when social media was all about the adventure of  amassing a huge collection of online friends? When this novel practice seemed to have nothing to do with commerce, much less electronic commerce?

It was a time of such innocence. Since then, online socializing and online shopping have steadily merged to create “social commerce,” a customer-engagement marketing venue defined by Shopify as “when commerce businesses use social media platforms and their selling features to make sales directly on social media.” One indicator that this phenomenon is here to stay: younger people (Generation Z) turn to social media for researching brands more often than they turn to trusty search engines, notes the company. 

“Meeting” your prospects in a social-media setting can mean starting a potentially lucrative customer relationship with someone, and, if you’re doing things right, also connecting with a bunch of their friends (and theirs), many of whom could reward your brand with budding trust and customer loyalty. Yes, it’s true. To succeed at the highest ROI-generation levels, social media is the place to hang out with a neon “Buy now” button in tow.

Tip: Make a strong showing in social media

Start building online communities of people who like (love?), trust, and are naturally eager to help you promote your brand. Go where your potential customers spend time online, whether that’s Instagram or Facebook. Offer them engaging, enjoyable, relevant content that draws them in to comfortable, long-lasting connections with you.

Trend: Providing top-notch omnichannel personalization

Fact: Most (eighty-eight percent) of consumers feel that the experience a brand provides is just as important as its product

Shoppers are used to seamless experiences; they expect to enjoy an issue-free omnichannel journey. You want them to be able to easily find, research, buy, and even return an item, whether they do it through social media and in-store browsing with their smartphone firmly in hand or online after chatting with your helpful bot.

In terms of personalization, how well unified are your various sales communication channels? For instance:

  • Is the information you’ve gathered about an individual online synched in near real time with what’s in your personalized email marketing follow-up note to them about their recent cart abandonment?
  • Does the digital experience people see on mobile devices have the same feel as it does on your ecommerce site?
  • If a prospective customer were to use more than one of your channels, wading in and out as needed, would they feel like it’s a pretty cohesive journey?

Tip: Make all your channels consistent and seamless for users to navigate

When you can control all your channels as a single marketing entity, you don’t have to worry about where shoppers jump on and off of their personalized shopping experience; they’re likely to be satisfied with each element as well as the overall experience.

Get the personalization you need

As you can see, ecommerce store personalization efforts aren’t a one-and-done, they’re a continually evolving technological art. To get or keep a competitive edge in ecommerce, you must rethink your site’s features and functionality on a regular basis.

In terms of that perspective on personalization tools for ecommerce platforms, are you doing everything humanly (and robotically) possible — in all your operating channels, 24×7, to reach, relate to, and ensure retention of your customers with the right relevant experiences?

If not, well, you’ve come to the right place. We here at Algolia specialize in advanced personalization of search and discovery for ecommerce businesses’ products and services.

Ready to make some magic happen? Contact us about how you can give your ROI metrics a potentially major overhaul.

About the authorCatherine Dee

Catherine Dee

Search and Discovery writer

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