What is personalization in e-commerce and how does it work?

1. What is personalization in e-commerce?
2. Definition
3. How does personalisation work?
4. How is personalization evaluated?
5. Why is personalization important for e-commerce?
6. Who needs personalization?
7. How do I start with e-commerce personalization?
8. 6 functioning personalization examples.
9. Conclusion

Imagine you want to buy a pair of sneakers on the Internet. You open the browser, and as you type in the request, you imagine all the time spent searching for the desired product. But then, when you open a favorite online store, you immediately see the recommendation for sneakers with the color, material, size and type you need. "Lucky you!" - you will immediately think. But it's not that simple. This is where personalization happens.

What is personalization in e-commerce?

Definition

Personalisation in e-commerce is the process of creating personal experiences and interactions for customers on e-commerce websites. It can be presented through dynamic content, product recommendations or special offers based on the user's previous browsing behaviour, demographic characteristics, purchase history or other personal data. Personalisation involves various software technologies that collect, store and manage customer data to generate individual experiences, not to collect private information, but to create the most pleasant conditions for shoppers.

How does personalisation work?

Personalisation on an e-commerce website can be implemented in different ways.

However, the most important thing to remember is that personalisation starts with data collection and the types of data that can be collected for personalisation:

• Previous user purchases
• Last behaviour and interactions on the website (last viewed, products from abandoned shopping baskets)
• Behaviour and interactions with marketing ads
• Type of device used
• Demography
• Geolocalisation / IP address
• Time
• Weather
• Recommendation source
• Emails
• Phone numbers

And then it can be determined in real time what is best for a particular customer.

What can be personalized?

• Content
• Product recommendations
• Product displays
• Search results
• Sales offers
• Advertising
• Pop-ups
• Currency
• Newsletter

How is personalization evaluated?

Personalization is an increasingly valuable tool for e-commerce that aims to keep your customers engaged and loyal while improving the indicators of achieving your business goals, and the success of personalization can be evaluated with:

• Conversion rate
• Bounce rate
• Engagement
• Total time on site
• Average page views Average order value
• Add-to-cart rate
• Shopping cart abandonment rate

However, you can create your own metrics that best suit your personalization goals.

Why is personalization important for e-commerce?

Personalization is becoming an essential part of e-commerce. More and more online companies are spending an incredible amount of money to offer their customers this kind of stately care, and not for nothing. Numerous researches have already shown why personalization needs to be taken seriously:

• 80% of high-frequency shoppers will only shop with brands that personalize their experience (SmarterHQ).
• 91% of consumers are more likely to shop with brands that recognize, remember and deliver relevant offers and recommendations (Accenture's research). According to Forrester research, 89% of digital companies are investing in personalized content, including Coca-Cola, Fableticks, Netflix, Sephora, USAA and Wells Fargo.
• 80% of consumers are more likely to buy when brands offer personalized experiences (research by Epsilon).
• 71% of consumers get frustrated when their experience is impersonal and are willing to spend more when brands make targeted recommendations (Segment Research).
• 67% of consumers think it is important for brands to automatically tailor content based on the current context. If brands don't tailor accordingly, 42% of consumers will be “annoyed” that content is not personalized. (Research by Adobe).

Who needs personalization?

Imagine walking through the store and suddenly the clerk doesn't speak your language, the currency isn't what you have in your wallet, and it seems impossible to find something you're looking for. It could be a frustrating experience and drive the customer away from that store, probably never to return. That's why personalization is such a high-value tool, especially when shopping online. Honestly, personalization should really be in every B2C and B2B space because it allows you to give consumers or businesses exactly what they want. 73% of B2B shoppers want personalized experiences, similar to B2C - like customer experiences.Thanks to multiple personalization forms (turn to the "6 personalization examples that work" section below), the best option can be selected and developed for each product or service. However, the problem comes at the "How do I get started?" stage.

How do I start with e-commerce personalization?

Wf you haven't used personalization yet, it's time to start. As mentioned above, personalization can be implemented in different ways and within multiple technologies, tools and software. And here you can choose one of the 2 ways to get started with personalization:

1. Own deployment (choose the personalization tool, software or technology).
2. Cchoose the agency that offers personalization.

Own provision (wählen Sie das Personalisierungstool)

Some companies may consider personalization using available tools and utilize internal resources. It is a good option for small people with a very tight budget, but it usually has the following disadvantages:

-Selecting the appropriate tools can be difficult and requires specific knowledge and understanding of personalization processes. -It requires trained and experienced personnel, otherwise the learning process can be lengthy and sometimes expensive. -There is no guarantee of success if it is a trial and error process the first time around. -It can end up alienating customers rather than improving the shopping experience.

First determine the following:

1. Decide where and how to implement personalization. It mainly depends on where personalization will have the best impact on sales.
2. Determine how you will evaluate personalization success. Choose a set of key indicators such as conversion rate, bounce rate, engagement.
3. Find various e-commerce personalization tools to help you get started and trained.
4. Assign sufficient resources and people to oversee the project.
5. Start personalizing and segmenting the site to find the areas that benefit the most.
6. Define a long-term strategy based on the results of the personalization tests.
7. Continue to monitor the results and improve the process as needed.

Personalization tools

Personalization is a rapidly evolving technology and is constantly improving thanks to artificial intelligence (AI) and machine learning. Such software provides individual website visitors with the right content at the right time based on their previous behavior.

How does it work?

The AI personalization system analyses all the data to identify what it is about, how long it is and what format it is in. It then categorizes different topics and learns to find its way around them. Using a range of machine learning models and techniques, the system determines what content to recommend to each website visitor. The personalization system frees you from having to read through thousands of search queries and manually identify trends. Determine your own key points and parameters depending on your personalization goal. However, a personalization tool also requires some human work, namely coordinating and supplying the machine with the data.

Examples of personalization tools:

• Nosto
• Personyze
• Proof

Select the system based on your business personalization goals and carefully review the capabilities of each one.

Choose the agency that offers professional personalization

The much simpler way to provide personalization is to work with a personalization agency. It might also look like a more expansive option, at least it may require a higher upfront investment. This way, time (trial-and-error process) can be reduced as well as personalization can be established faster and more professionally, which in the long run will help improve the customer's shopping experience and also achieve higher conversion rate, loyalty and profits.Once the technical requirements are clear and the budget is determined, choosing the right partner for the task is the next logical step. The agency Kenner Soft GmbH has many years of experience in the e-commerce sector. We offer our clients professional personalization based on tools such as Doofinder AI and Econda, including: Store personalization, personalized search experience, user behavior tracking and analysis, data protection, unique shopping experience creation, etc. We are also happy to support you with complicated online store development. Don't forget that it is very important to find a qualified personalization provider who can fully manage the project.

6 functioning personalization examples

Use the recommendations for product detail pages

Recommendations on product detail pages show customers similar or complementary products to those they are already interested in. Such recommendations can not only encourage customers to buy more, but also to buy more expensive products. For example, ZARAHOME shows a similar style, but some of them are higher-priced products.

In addition, it can allow users to draw attention to related product categories and purchase complementary products. On the ZARA website, for example, customers can also see the matching jeans and sandals when looking at the shirt

The PDP recommendations drive shopping and create convenient shopping conditions that save time searching or viewing.

Offer the "Continue shopping" function

The function to continue at the same point where you left off is very popular on websites for films and series, where the user can continue watching with one click. But it is also one of the most powerful and useful functions, for example to reach customers who have left the site without making a purchase. This approach also includes recently viewed products and reminds users of products or categories they have previously viewed and also helps them to easily return to them.

Amazon

Use the bestsellers or the most popular products

Bestsellers or most popular products are intentionally attractive because many people have already rated them positively. You can display the products that have been purchased most frequently in the last 24 hours and achieve a click-through rate of almost 50% or improve the conversion rate of such pages

Sephora You can go even further and display the most frequently rated products by location. For example, users from France, as opposed to users from the UK, can search for different items of clothing for the summer

Personalized pop-ups and ads

Interstitials are a good approach to personalize purchases. However, the pop-ups and ads should be intuitive and relevant. You can run pop-ups based on the user's behavior during the session, both in the past and in real time (search behavior, shopping cart value, etc.). Or show the special offers only to new users.

Retargeting

Based on previous user behavior, it is easy to perform retargeting. In such a case, you will remind customers of the viewed product or prevent them from buying from competitors. To save on retargeting costs, it is important to split it according to the time the user was last on the page. For example, select the period "The user has been on the website in the last 5-10 days" and work with that.

Personalized e-mails and SMS

Do you have customer emails or phone numbers and still aren't sending them cart abandonment emails or the "Order Follow-Up" messages? You are losing a lot. Such techniques like cart abandonment emails help to reach out to the customers who abandoned or forgot a cart with products in a hurry. And follow-up messages help you recommend products to users based on their previous orders.

Conclusion

Today, the customer's shopping experience is at the forefront of e-commerce. It is no longer enough to have a good product at a good price. As competition grows by the day, online sales are being made in more innovative ways, for example via AI and social networks, and customers are becoming increasingly demanding. Users are getting used to personalized experiences when shopping online, this is natural. They will keep coming back to find more like a good store where the salesperson is attentive and knowledgeable and the purchase is almost certain. Even though the price can sometimes be higher, users tend to order where the experience and service is best and least stressful. If the online store can handle these tasks, the goal is achieved - that's why personalization is so important.