What makes a customer stick around? Think about the brands you love. What do they give you that other brands don’t? You may say “price,” but that’s probably secondary to a whole host of other reasons like, “it makes me feel great,” “they get me,” or “they have great customer support.” Your favorite brands forge a connection with you that keeps you coming back.
Technology has enabled brands to connect to their customers by offering more personalized online shopping experiences. Most customers say they like and also show they like personalized experiences by purchasing more. In fact, 91% of consumers say they are more likely to shop with brands that provide relevant recommendations and offers. McKinsey research found that personalization done right can result in 40% more revenue for brands.
Changes bring new personalization challenges
As you may know, big changes are afoot that will affect how brands are currently personalizing online customer experiences. In addition to Apple iOS 14/15 updates that have blocked in-app tracking (only about 20% of iOS users have opted in) and disabled open-rate tracking for email, Google Chrome is phasing out third-party cookies by the end of 2023. Other browsers, including Safari and Firefox, have already blocked them.
These changes portend such a major shift for marketing and personalization that Shopify is shouting about it from the rooftops in their latest report: The Future of Commerce Trend Report 2022. In the Future of eCommerce section, the report outlines three key takeaways about the state of eCommerce personalization:
1. Consumers are demanding personalization
2. Personalization is not a silver bullet for customer engagement
3. Brand communities are building customer loyalty
Exploring further: What does it all mean?
Let’s dig a little deeper into Shopify’s takeaways about personalization:
- What are we talking about when we say “personalized experiences” in eCommerce?
- What are the types of personalization eCommerce brands can do?
- How should brands approach making customer connections going forward?
What are “personalized experiences” in eCommerce?
Your personalization efforts may not actually be resonating with your customers. Research shows there’s a major disconnect between what brands think is “personalized” and what consumers think. In fact, while 85% of brands say they’re offering personalized experiences (e.g., personalized emails), only 60% of consumers agree with them (e.g., email doesn’t feel relevant to them).
McKinsey did an interesting survey to understand what consumers think personalization is. The finding? Personalization should involve positive experiences that make customers feel special. Not only do 72% of consumers expect brands to recognize them as an individual and know their interests, they want the “warm and fuzzies” – to feel like a brand values the relationship over making the sale.
McKinsey breaks personalization down further into four useful categories for brands thinking about how to more successfully interact with customers:
- Meet me where I am: Enable customers to easily find what they want at any time on any online or offline channel; anticipate key times of need (e.g., holiday, back to school).
- Know my tastes: Show customers product recommendations and messages that feel tailored to them.
- Offer something just for me: Connect on individual-specific days such as birthdays and anniversaries with special promotions, discounts, and products.
- Check-in with me: Continue the relationship beyond the sale with post-purchase or behavior-based communications to follow up, offer value or relevant information (e.g., how-to video, ask for a review).
What are the types of personalization brands can do?
There are two basic buckets of personalization eCommerce brands should consider: 1) on-site personalization that uses site cookies to trigger personalization based on user behavior; and 2) logged-in experiences that require user accounts or memberships.
On-site cookie-based personalization
Third-party cookies are out, but you are the master of your site’s first-party data. Every time someone does something on your website it generates data that you can use to automatically trigger personalized experiences. To the customer, this may look like:
- Seeing relevant product recommendations on product pages, in the cart
- Seeing a personalized home page (e.g., for women, men, kids)
- Getting a “welcome back” pop-up when returning to your site
- Relevant lifestyle content, educational content, imagery
- Receiving an email with product recommendations based on browsing or add to cart activity
In addition to behavior-based personalization, brands can give customers the opportunity to knowingly share their information in exchange for personalized experiences. The best brands make it fun, using entertaining quizzes, polls, and chatbots; other tactics include surveys and self-segmentation options (select: I am a homeowner).
There are tools like Nosto and Yotpo that make it easier to implement automated onsite personalization and recommendations.
Logged-in personalized experiences
While membership and loyalty programs have been around forever, often brands treat user accounts as a utility and customer experience as an afterthought. What a missed opportunity!
Most consumers are happy to share personal information in return for personalized benefits. In addition to demographics, this is an opportunity to ask about preferences and feedback in a transparent, relationship-building way. You can use this zero-party data to offer more personalized experiences.
With the death of third-party cookies, customer accounts and logged-in experiences are going to be paramount to personalization. If your user account experience is lacking or uncreative, now is the time to invest in it.
Logged-in experiences can include:
- Exclusive membership/loyalty programs with products or discounts for members/users
- “Preference centers” where customers can indicate their preferences from product features to fit
What are brand communities?
Here’s where the rubber hits the road when it comes to the future of personalization. Brand communities are a type of logged-in experience that enables safe, transparent, and interactive brand experiences that users want to engage with. These may include community message boards, groups, events, challenges, chats, asks for feedback, and more.
In a brand community, customers feel included, listened to, and comfortable to ask questions, share thoughts, and showcase their creativity. Some great examples of brands doing brand communities well include Lego Ideas and Sephora’s Beauty Insider Community.
Another twist on the brand community strategy is grassroots engagement through brand ambassador programs. A great example is lululemon Sweat Collective, a program that engages fitness coaches and instructors with product discounts for the athletic gear they love to wear while teaching classes and interacting with clients.
What about over-personalization?
Although most of us are desensitized to ad retargeting by now, it still can be creepy when ads for products (that you don’t even remember looking at) follow you around the internet. Or when you receive a marketing email that knows a bit too much about you or assumes the wrong things (e.g., you bought Depends for your elderly parent, not yourself).
There is such a thing as too much personalization.
Shopify’s report cautions that including too much personal information (particularly when the consumer did not knowingly share it) in tailored communications can make consumers feel stalked by brands. They cite that consumers are more than three times more likely to abandon brands that “over-personalize,” compared to brands that fail to personalize enough.
One way to mitigate the risk of over-personalization is by transparently asking customers for personal information in exchange for benefits like discounts or loyalty programs.
Strategize a new approach to personalization
How should brands approach making customer connections going forward? Most importantly, brands should not rely solely on trigger-based onsite personalization and instead shift to more logged-in experiences and brand community-building. While personalized experiences based on first-party data are a good start, it will only get you so far with retaining customers in the long term because it’s very one-directional.
The benefits of logged-in and brand community experiences are numerous, including:
- Grow a more sustainable data source: Customers want to be a part of the community or membership program and willingly share their information; you’re not dependent on third-party platforms and beholden to changing rules.
- Build your brand in intangible ways: Your brand’s appeal goes beyond product and price to give you a competitive edge; customers become brand ambassadors.
- Get more accurate data: You have a lot more data and context about your customers and their behavior, reducing the risk of sending communications that don’t engage.
Your personalization partner
The time to start re-thinking your personalization strategy is now. It’s an exciting opportunity to deepen customer relationships and grow lifetime value. Want to discuss some options? Connect with us!.