Article written by Simon Vaala, CSO at Hello Retail (Originally posted on LinkedIn)
To understand the importance of personalization in eCommerce, let us first consider how the consumptive aspects of our societies have changed drastically throughout the last decades.
We used to have very few choices of advertising channels. Tracking performance was not available, except for the number of people coming to your physical store after launching a TV ad might have increased. Simple as that! Mass advertisement lived and worked. Back in those times, there was little chance of knowing your customers and yet even less being able to speak directly to them when attempting to drive them down to the store.
But what happened back then and still happens when you are physically in a store? Let us consider that you are walking down the pedestrian street and stopping outside a store. First of all, you walk in because something inspired you to take a closer look. Perhaps it was that blue shirt in the window which is exactly your color and model. Once in the store, you are greeted by a shop assistant, and you ask for help to find that specific shirt in your size. The assistant helps you out – even though you could have found the shirt yourself by walking around the shop for a little while.
Great, the assistant is back with the proper size, and you try it on. You leave the cabin, and the assistant cheers. The shirt fits you. The assistant, who has years of experience in the shop and has sold several shirts in that model and color, recently just sold that shirt together with a pair of jeans. The assistant picks up a pair – surprisingly in your perfect size – and says aloud: “You know what, I just had another customer who bought the exact same shirt and he also bought these jeans. It was a perfect match. You want to try them on?” Well, You weren’t actually looking for new jeans, but why not. If someone else bought these two together, I couldn’t be completely off track. Luckily, they are a perfect match, and I decided to buy them. The assistant guides you to the counter. You are just about to pay when the assistant picks up a pair of socks. “you know what, that other customer who also bought that shirt and jeans also bought these socks since they go so great together. If you buy three pairs, you will get one for free. Should we include them in your purchase?”
At this point, you trust the assistant. He knows your style; he found the correct sizes; he recommended something that was a fantastic fit, so you accepted the offer on the socks and made the payment. You get the receipt and leave the shop with a big farewell and “please come back soon again..”. You stop outside the shop, turn around and see that the assistant rapidly changes the shirt to a red one instead. Another man from the street stops, observes the shirt for a while, then goes into the shop, where the assistant greets him. You stay outside just long enough to hear the assistant say aloud: “You know what, I just had another customer who bought that same shirt and also bought these jeans. It was a perfect match. You want to try the jeans on?”
Today, the situation is a vice versa. In this tech age, we can now track more or less everything that happens online, why we may know exactly where our visitors come from. But we have little personal knowledge of the visitors and their taste since we obviously cannot assist our web visitors in the good old-fashioned face2face-way.
Now, imagine this was your webshop! Would you not like to strive for giving that exact same personal experience if it would mean more converted customers who even purchased more while being in your store?
When you launch your webshop, you start with having your storefront, and you can easily purchase highly relevant traffic target group-wise. You can choose which products you have in your “window”, and you have your different departments where customers can go for a walk and have a look. They can even purchase your products and get them shipped. But how do you ensure that they stay in your shop and that you are as relevant to everyone as possible – and what about the assistant?
Most shop platforms focus on giving you a full-size shop that contains all you need to be able to keep your shop running. Some shop platforms may offer you a very simple assistant who does not really care which products are being recommended, when they are recommended and to whom. Just like having a real teenager who wants to sleep or look at Snapchat instead of focusing on the customer’s needs. I assume we have all tried being assisted by such a person! But no shop platform offers you a virtual and machine learning assistant who is always on, who is always keen on remembering what every single customer or potential customer was looking at in the storefront window, what they decided to try on from the department sections, what jeans and shirt that most people really fancied, what they tried on together, what extra products they also purchased while standing at the cashier and what made them come back when you decided to give them a relevant offer in your newsletter after a certain period.
And this is where a true personalization engine needs to be considered. So when you have decided to start driving serious traffic to your shop, that people do not visit it in vain or at least they think they have. Since it is too difficult for them to find the relevant products. What will happen then? Well, Google is just one click away, and Google will make sure that if a visitor comes back, they will help drive the traffic to another shop, and you lose out on the potential revenue.
So when working with a true personalization engine, you help your customers. This is a really important factor. You help them! You make sure they find relevant products based on hard facts, based on machine learning. We human beings are not that different after all. And we feel comfortable buying what others have also bought. That is why true personalization and recommendations are so powerful.
So, I want to wrap up the importance of personalization in eCommerce with some hard facts. Fun to mention is that the promise of a personalized online shopping experience remains largely unfulfilled. It’s a curious circumstance because the statistics show that there’s a big demand and payoff from customizing the offering each of your customers gets when they visit your site. According to Invesp:
- 59% of online shoppers believe that it is easier to find more interesting products in a personalized online retail store
- 56% are more likely to return to a site that recommends products
- 53% believe that retailers who personalize the shopping experience provide a valuable service
- 45% are more likely to shop on a site that offers personalized recommendations
According to Accenture, nearly 40% of shoppers have left a store to buy from another site because they were overwhelmed with too many options.
Even if they don’t leave, almost 75% of your potential customers will be frustrated with irrelevant content or products not specific to them.
So how much money would you like to invest in driving traffic to your shop if you have not invested in personalization and the above stats are the result of it? If you risk losing 40% of your visitors to other stores, do you have a reason not to invest your focus and time on personalization on your webshop?