Despite the common perception of small businesses offering a more friendly and personalised service, due to the high costs of data collection and information management, online personalisation has long been the reserve of online retail giants such as Amazon and eBay.
As these e-commerce providers grew into international household names, customers have come to demand similar levels of personalisation across all of their browsing and online retail experiences. As a result of this expectation, businesses of all sizes are being forced to adopt a higher level of personalisation within their ecommerce strategies.
By leveraging information such as a customer’s location, previous purchases and online shopping preferences, retailers have been able to fine tune their customer communication and marketing efforts, and provide increasingly accurate product recommendations. These improvements are not only better for customers, but have also helped businesses to break through the online clutter and position themselves as trusted retailers.
But it’s not just customer satisfaction that is driving this trend. As the cost of data collection and analysis has decreased, the opportunity to personalise customer experiences has opened up to the wider retail market. With technology developments and e-commerce platforms offering “Big Data” or behavioural analytics and “drag and drop personalisation” as standard, even the niche retailers are beginning to tailor their products and services based on customer preferences.
This has been further added to by the mass adoption of mobile technology, which has helped to generate a constant state of connectivity amongst modern consumers. As a result, customers are never more than one click away from a comparative price or a better deal. This increase in consumer power has forced many companies to compete on a level beyond lowering prices and the battle now stands in the customer experience that the retailer provides.
Personalisation and the customer experience
Rather than undertaking a ‘fight to the bottom’ on price, many retailers are instead focusing their efforts on improving customer experience and providing a higher level of convenience. Contextualization and personalisation has proved a key tactic in achieving this goal.
By recognising regular patterns in customer behaviour, personalised content can help to save customers time and provide a more intuitive, tailor-made experience. Additionally, while SEO and advertising remains a point of contention for many customers and still drives traffic to a site, personalised recommendations can help to overcome any barriers to conversion. In fact, for a lot of customers these recommended results can provide a helpful tool for building wish lists and reducing search times.
In addition to these benefits, there is also a deeper psychological aspect to online personalisation. By providing tailored recommendations, retailers are starting to close the gap between online and offline shopping. Whereas previously, online retail could not provide the same browsing experiences as a traditional high-street store, by tailoring the user’s experience customers can now filter through millions of items and only browse those that are of genuine interest. The retailer also needs to tie the online and offline world together to really benefit and ensure that the customer experience is consistent across the two channels. Bottom line is that retailers really need to adapt to the new world and serve the customers, both online and offline, since customer behaviours (and demands) has fundamentally changed.
The benefits delivered that personalisation brings has a big impact on customer satisfaction. However, the question remains as to whether such benefits can actually have an impact on the bottom-line.
The impact of personalisation on the bottom line
The simple answer is yes. On average, companies that are personalising their customers’ experiences are seeing a lift in sales of around 19%. In many ways however, this is just the tip of a much larger iceberg, with some cases of personalised content driving site traffic by up to 64%.
Despite this clear potential however, the reality is that only 15% of companies that are personalising their content are seeing a good return on investment.
The most likely reason for this is that while personalisation offers a real opportunity for online retailers, many are still falling down when it comes to their planning and execution. All too often this is due to organisations looking to jump on the “Big Data” bandwagon. By attempting to mine vast quantities of data without having the facilities to organise and repurpose it, businesses are essentially trying to run before they can walk.
Instead, when it comes to personalisation, organisations should be looking to start small and grow from the ground up. By using the information already available (e.g. user profile, history, and IP address), marketers can start to build basic customisation techniques into their online strategies. Following this, once a basic customer persona is in place, they can delve deeper into the complexities of demographic and psychographic personalization, based on real insights into what drives results for their business.
