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Brands and retailers that want to win over potential customers and drive increased sales need to offer more than high-quality products and services.
In the age of on-demand, curated content, consumers want personalization, such as marketing and sales efforts that speak to their specific interests, customized pricing, and products that meet their needs.
But what does this look like in practice, and how do brands effectively implement personalization processes at scale?
Here, we explore the evolution of ecommerce personalization trends, examine four industries undergoing significant change, and offer practical insights to help businesses better connect with customers.
According to McKinsey & Company, “Consumers don’t just want personalization, they demand it.” The statistics tell the tale: 71% of consumers expect personalized interactions, and 76% get frustrated if brands don’t offer these interactions.
What exactly is personalization? It’s the analysis of customer-provided and third-party data to pinpoint products or services that align with consumer interests, budgets, or emerging preferences.
In practice, personalization includes analyzing historical purchasing patterns to offer shoppers a tailored selection of products through customized email or social media links.
Personalization isn’t simply selling customized products that offer a more niche experience or changing emails to include customers’ first names.
While these surface-level efforts may help brands appear more interested in customer preferences, they’re often perceived as the bare minimum effort required, leaving many customers looking for brands doing better work elsewhere.
Consider the German market. Known as pragmatic shoppers, Germans are often more concerned with function than form and more focused on quality than brand connection. As noted by research from KPMG, however, “COVID-19 caused many German consumers to look inwards. People developed a preference for local products, and there was an increased reliance on services such as weekly markets.”
As a result, personalization is now the most important factor in cultivating loyalty among German customers.
Four major industries are putting personalization at the forefront of their strategies.
Brands like Stitch Fix are finding ways to create hyper-personalized clothing options for consumers, according to Common Thread.
Instead of simply browsing products on a website, Stitch Fix customers can complete a style quiz that creates taste, fit, and price profiles and matches users with a stylist. Customers then pay a small stylist fee, which is credited toward any eventual purchases. When curated items arrive, customers can try them on and purchase or send them back free of charge. As of 2020, Stitch Fix was worth $2.9 billion, according to Common Thread.
The takeaway: Discover exactly what customers want by asking for in-depth information upfront
As noted by Retail Dive, grocery brands such as Misfit Markets are using customer data to create online shopping experiences that only show consumers products they may want to purchase. By analyzing historic purchase trends and preference data, the company’s mobile app helps consumers cut down on time otherwise spent looking at products they don’t want.
The takeaway: You can streamline the purchasing process and boost sales by using customers’ historical data.
There’s personal, and then there’s personal.
According to EHL Insights, British brewery Meantime Brewing has opted for the second type with its DNA-based beer service. In partnership with genetic testing company 23andMe, the brand analyzes customer-provided saliva samples to determine their flavor preferences. Then, they create bespoke beers tailored to consumers.
The takeaway: Personalization deep dives offer potential for niche brands to deliver unique experiences for enthusiasts.
According to Prestige, personal care brands such as Skin Inc. are making the best use of machine learning algorithms to help customers find personalized skin care products.
Customers can take the company’s Skin ID Quiz, which analyzes a database of more than 1 million profiles to find product matches and recommend the ideal products to address specific skin care concerns.
The takeaway: Machine learning offers a way to turn anonymized customer data into personalized recommendations.
How do brands and retailers make the move from product- to people-focused efforts, while aligning with ecommerce personalization trends?
One of the biggest potential issues is privacy: If customers don’t feel that brands are adequately protecting their data, they’ll leave and shop somewhere else, making personalization efforts useless.
Consider research from PCI Pal, highlighted by Business Wire, which found that 83% of Americans would stop spending with a business for several months after a data breach.
Twenty-one percent said they would never return. In the United Kingdom, 41% of consumers said they would never come back. While consumer data underpins personalization, its protection is critical.
In practice, ensuring data privacy starts with brands being upfront with customers about why they’re collecting consumer data and how they’ll use it. Next, brands must apply basic security practices, such as robust encryption and multi-factor authentication (MFA).
Finally, companies must consider any relevant regulations — such as General Data Protection Regulation (GDPR) or the California Consumer Privacy Act (CCPA) — depending on their operating location and customer base.
While it may be tempting to go all-in on personalization as quickly as possible, brands need to remember the goal: creating long-term, reciprocal relationships with customers. It’s worth taking small, data-driven steps to reduce the risk of fostering friction rather than familiarity.
Start by better understanding your current digital shelves. Ask yourself what’s working, what isn’t, and what needs to change.
If companies opt to leverage historic and trend data to create customized consumer links to product pages, for example, they should focus exclusively on this effort and ensure that metric data backs up the efficacy of these efforts before expanding personalization programs.
McKinsey & Company notes that companies that are willing to commit to personalization generate 40% more revenue from these efforts than businesses that aren’t.
This means that investment in personalization efforts — from social media product placements to tailored emails to user-specific marketing campaigns — can pay significant dividends over time.
But it’s not enough to simply see the value of personalization. To leverage key trends and deliver on consumer expectations, brands must collect and curate customer data to create in-depth purchasing profiles that help them offer customers what they want — before they know they want it.
Ready to make the shift from product placement to personalized purchasing? Download the “Essential Steps for Building an Ecommerce Personalization Strategy.”
Doug Bonderud is an award-winning writer with expertise in ecommerce, customer experience, and the human condition. His ability to create readable, relatable articles is second to none.
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