Why Personalization Has Become an eCommerce Necessity in 2020

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Srinivas K

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Why Personalization Has Become an eCommerce Necessity in 2020

17/06/2020 Categories: ARTICLES

The study of human psychology and behaviors has been invaluable to the field of sales and marketing. Most of us have some familiarity with the work of Abraham Maslow from high school AP Psych or college Psych 101 classes, but here’s a quick refresher: His landmark paper, “A Theory of Human Motivation” was published in 1943 and was subsequently included in his book “Motivation and Personality,” published in 1954. His ideas of a hierarchy of needs can be applied to consumer psychology as well.  Online shoppers generally have met their fundamental requirements for survival. No one needs another lipstick or a reflective dog leash. But you can leverage this pyramid to persuade your customers that your products meet the higher-level needs, providing feelings of fulfillment. In the world of eCommerce, the more distinctive treatment you provide to your customers, the more likely they are to feel these feelings of self-actualization in association with the product. Personalization is key to matching your products to your customers’ sense of well-being and projected satisfaction.  What is Personalization and Why Is It Helpful in Ecommerce? Personalization is not a new concept; it has been in the service industry for years. A simple example would be a waiter in the restaurant who knows the customer by name, greets them personally, knows their food preferences, and keeps their favorite table at the ready. This is possible because the customer is a repeat customer, and the restaurant has gathered enough information about the customer to personalize their experience. The idea is to replicate this level of personalization online for your customers. The best way to do this is to present relevant offers to a specific customer at the right time and place of the shopping journey. These practices can help you edge past your competition. Be mindful not to offer too many choices to customers, or they will feel choice fatigue, or “analysis paralysis,” which can lead to product or cart abandonment. You can learn more about the psychology of consumer choice from Columbia University Professor Sheila Iyengar, who pioneered research in this field.  Personalization's Appeal to Customer Behavior The Fogg Behavior Model, developed at Stanford University by Professor BJ Fogg,  shows that three elements must converge at the same moment for a behavior to occur: Motivation, Ability, and a Prompt.  Prompts in the world of eCommerce are named Calls-to-Actions, or CTAs. They can link to the specific product(s) that appeal to the customer(s), promotions and specials, discounts, coupons, and many more. Traditionally, merchants group customers based on impersonal data such as age, gender, income level, preferences, etc. Personalization is about tailoring the eCommerce experience to the unique preferences of your customers.   Data - The Foundation of Personalization Personalization can be complicated due to the multitude of ways customers shop and the subtle ways they express preferences. The foundation for a successful personalization algorithm is based on user data. Customer-specific data is gathered in various forms like surveys, asking specific questions in the registration process, partnering with other companies, and many more. There is one vital thing to remember: You need to prize the data security and privacy of your users above all else. Customer data helps create personalization, but it is unethical to collect data without your users’ knowledge or consent.  Here are some useful data points to collect to build custom personalized experiences for your customers:  Customer Data Gender Birthdays Location Anniversaries Sports Preferences Hobbies Response to Brand Notifications Subscription to Email Notifications Shipping Convenience Aggregate Site Metrics (current &

Psych or college Psych 101 classes, but here’s a quick refresher: His landmark paper, “A Theory of Human Motivation” was published in 1943 and was subsequently included in his book “Motivation and Personality,” published in 1954.

hierarchy of needs

His ideas of a hierarchy of needs can be applied to consumer psychology as well.  Online shoppers generally have met their fundamental requirements for survival. No one needs another lipstick or a reflective dog leash. But you can leverage this pyramid to persuade your customers that your products meet the higher-level needs, providing feelings of fulfillment. In the world of eCommerce, the more distinctive treatment you provide to your customers, the more likely they are to feel these feelings of self-actualization in association with the product. Personalization is key to matching your products to your customers’ sense of well-being and projected satisfaction. 

personalization graphic

What is Personalization and Why Is It Helpful in Ecommerce?

Personalization is not a new concept; it has been in the service industry for years. A simple example would be a waiter in the restaurant who knows the customer by name, greets them personally, knows their food preferences, and keeps their favorite table at the ready. This is possible because the customer is a repeat customer, and the restaurant has gathered enough information about the customer to personalize their experience. The idea is to replicate this level of personalization online for your customers. The best way to do this is to present relevant offers to a specific customer at the right time and place of the shopping journey. These practices can help you edge past your competition. Be mindful not to offer too many choices to customers, or they will feel choice fatigue, or “analysis paralysis,” which can lead to product or cart abandonment. You can learn more about the psychology of consumer choice from Columbia University Professor Sheila Iyengar, who pioneered research in this field. 

Personalization's Appeal to Customer Behavior

The Fogg Behavior Model, developed at Stanford University by Professor BJ Fogg,  shows that three elements must converge at the same moment for a behavior to occur: Motivation, Ability, and a Prompt. 

fogg behavior model

Prompts in the world of eCommerce are named Calls-to-Actions, or CTAs. They can link to the specific product(s) that appeal to the customer(s), promotions and specials, discounts, coupons, and many more. Traditionally, merchants group customers based on impersonal data such as age, gender, income level, preferences, etc. Personalization is about tailoring the eCommerce experience to the unique preferences of your customers.  

data personalization

Data - The Foundation of Personalization

Personalization can be complicated due to the multitude of ways customers shop and the subtle ways they express preferences. The foundation for a successful personalization algorithm is based on user data. Customer-specific data is gathered in various forms like surveys, asking specific questions in the registration process, partnering with other companies, and many more. There is one vital thing to remember: You need to prize the data security and privacy of your users above all else. Customer data helps create personalization, but it is unethical to collect data without your users’ knowledge or consent. 

Here are some useful data points to collect to build custom personalized experiences for your customers: 

Customer Data

Gender Birthdays Location
Anniversaries Sports Preferences Hobbies
Response to Brand Notifications Subscription to Email Notifications Shipping Convenience

Aggregate Site Metrics (current & historical)

Number of repeat visitors Number of orders
Average order value Which category sells best

Customer Metrics (Per Customer)

Days since the first transaction Days since the first visit Total amount spent
Days since the last transaction Days since the last visit Cart abandonment rate

4 Rs of personalization

Recognize: Recognize both known and unknown customers with the data at hand. A “known” customer is a repeat customer or a customer that has visited your site multiple times. An “unknown” customer is a brand-new lead or visitor to the website that bought or attempted to purchase something for the first time. 

Remember: Remember a customer’s choice so that we can understand why the decision was made in the first place—present options to the customer based on that choice. 

Relevance: The timing of the recommendation is critical. No points are scored when presenting winter jackets in summer. The timing of a recommendation should consider factors like weather, major life events, social events, location, and other factors. 

Recommend: Recommend the most logical choices to your customers at prices that appeal to them. You can manage this via online visits, directly at your physical location, email campaigns, or sending abandoned cart follow-up emails. 

personalization graphic 3

Where Can Personalization be Implemented?

To help close the blog, here are some examples of where personalization should be implemented. 

  • Use personalized webpages based on shopping experiences and make sure customers know about it.
  • Use customer Stories to create shoppable posts.
  • Present a continuity of shopping experience across devices. Many brick-and-mortar stores are setting up an online presence in which offline and online customer experiences complement each other. Information gleaned from either experience should be used to obtain insights.
  • Personalize transactional emails by using production recommendations, upsells, cross-sells, and personalized subject lines.
  • Use personalized recommendations on "abandoned cart" emails.
  • Track customer responses and non-responses to campaigns. A change in incentive for a non-response can bring back the customer into action. 
  • Customer service can never be 24/7. However, using chatbots can help in providing readily available information. This provides the answers to common questions, and the CSR can focus on more complex issues facing customers. 
  • Personalization of search results. Search results should consider the customer's past behavior, wish lists, and location information. Results can be presented in a personalized search result page.
  • Provide category/product-specific offers in the form of coupons & discounts.

The Success of Personalization (Key Performance Indicators)

  • Product Views per Unique Visitor
  • Click Depth Bounce Rate.
  • Average Session Rate.
  • Increased Customer Retention

personalized guy

Final Thoughts

Personalization is a serious business with great rewards. It helps in building brand loyalty, generating traffic, and the ultimate prize: converting visitors to buyers. Personalization is a continuous operation. Data gathering, data organization, and data presentation are all critical tools in this process. There are many personalization tools available in the eCommerce market that can tie into your eCommerce platforms, all of which can help you finetune and improve your customer’s shopping experience. If your eCommerce website already enjoys high repeat visitors, multiple visits before purchase, and top mobile traffic, then you are an ideal candidate for personalization. So, make personalization a priority now, and you will see the benefits quickly. 

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The study of human psychology and behaviors has been invaluable to the field of sales and marketing. Most of us have some familiarity with the work of Abraham Maslow from high school AP Psych or college Psych 101 classes, but here’s a quick refresher: His landmark paper, “A Theory of Human Motivation” was published in 1943 and was subsequently included in his book “Motivation and Personality,” published in 1954.

hierarchy of needs

His ideas of a hierarchy of needs can be applied to consumer psychology as well.  Online shoppers generally have met their fundamental requirements for survival. No one needs another lipstick or a reflective dog leash. But you can leverage this pyramid to persuade your customers that your products meet the higher-level needs, providing feelings of fulfillment. In the world of eCommerce, the more distinctive treatment you provide to your customers, the more likely they are to feel these feelings of self-actualization in association with the product. Personalization is key to matching your products to your customers’ sense of well-being and projected satisfaction. 

personalization graphic

What is Personalization and Why Is It Helpful in Ecommerce?

Personalization is not a new concept; it has been in the service industry for years. A simple example would be a waiter in the restaurant who knows the customer by name, greets them personally, knows their food preferences, and keeps their favorite table at the ready. This is possible because the customer is a repeat customer, and the restaurant has gathered enough information about the customer to personalize their experience. The idea is to replicate this level of personalization online for your customers. The best way to do this is to present relevant offers to a specific customer at the right time and place of the shopping journey. These practices can help you edge past your competition. Be mindful not to offer too many choices to customers, or they will feel choice fatigue, or “analysis paralysis,” which can lead to product or cart abandonment. You can learn more about the psychology of consumer choice from Columbia University Professor Sheila Iyengar, who pioneered research in this field. 

Personalization's Appeal to Customer Behavior

The Fogg Behavior Model, developed at Stanford University by Professor BJ Fogg,  shows that three elements must converge at the same moment for a behavior to occur: Motivation, Ability, and a Prompt. 

fogg behavior model

Prompts in the world of eCommerce are named Calls-to-Actions, or CTAs. They can link to the specific product(s) that appeal to the customer(s), promotions and specials, discounts, coupons, and many more. Traditionally, merchants group customers based on impersonal data such as age, gender, income level, preferences, etc. Personalization is about tailoring the eCommerce experience to the unique preferences of your customers.  

data personalization

Data - The Foundation of Personalization

Personalization can be complicated due to the multitude of ways customers shop and the subtle ways they express preferences. The foundation for a successful personalization algorithm is based on user data. Customer-specific data is gathered in various forms like surveys, asking specific questions in the registration process, partnering with other companies, and many more. There is one vital thing to remember: You need to prize the data security and privacy of your users above all else. Customer data helps create personalization, but it is unethical to collect data without your users’ knowledge or consent. 

Here are some useful data points to collect to build custom personalized experiences for your customers: 

Customer Data

Gender Birthdays Location
Anniversaries Sports Preferences Hobbies
Response to Brand Notifications Subscription to Email Notifications Shipping Convenience

Aggregate Site Metrics (current & historical)

Number of repeat visitors Number of orders
Average order value Which category sells best

Customer Metrics (Per Customer)

Days since the first transaction Days since the first visit Total amount spent
Days since the last transaction Days since the last visit Cart abandonment rate

4 Rs of personalization

Recognize: Recognize both known and unknown customers with the data at hand. A “known” customer is a repeat customer or a customer that has visited your site multiple times. An “unknown” customer is a brand-new lead or visitor to the website that bought or attempted to purchase something for the first time. 

Remember: Remember a customer’s choice so that we can understand why the decision was made in the first place—present options to the customer based on that choice. 

Relevance: The timing of the recommendation is critical. No points are scored when presenting winter jackets in summer. The timing of a recommendation should consider factors like weather, major life events, social events, location, and other factors. 

Recommend: Recommend the most logical choices to your customers at prices that appeal to them. You can manage this via online visits, directly at your physical location, email campaigns, or sending abandoned cart follow-up emails. 

personalization graphic 3

Where Can Personalization be Implemented?

To help close the blog, here are some examples of where personalization should be implemented. 

  • Use personalized webpages based on shopping experiences and make sure customers know about it.
  • Use customer Stories to create shoppable posts.
  • Present a continuity of shopping experience across devices. Many brick-and-mortar stores are setting up an online presence in which offline and online customer experiences complement each other. Information gleaned from either experience should be used to obtain insights.
  • Personalize transactional emails by using production recommendations, upsells, cross-sells, and personalized subject lines.
  • Use personalized recommendations on "abandoned cart" emails.
  • Track customer responses and non-responses to campaigns. A change in incentive for a non-response can bring back the customer into action. 
  • Customer service can never be 24/7. However, using chatbots can help in providing readily available information. This provides the answers to common questions, and the CSR can focus on more complex issues facing customers. 
  • Personalization of search results. Search results should consider the customer's past behavior, wish lists, and location information. Results can be presented in a personalized search result page.
  • Provide category/product-specific offers in the form of coupons & discounts.

The Success of Personalization (Key Performance Indicators)

  • Product Views per Unique Visitor
  • Click Depth Bounce Rate.
  • Average Session Rate.
  • Increased Customer Retention

personalized guy

Final Thoughts

Personalization is a serious business with great rewards. It helps in building brand loyalty, generating traffic, and the ultimate prize: converting visitors to buyers. Personalization is a continuous operation. Data gathering, data organization, and data presentation are all critical tools in this process. There are many personalization tools available in the eCommerce market that can tie into your eCommerce platforms, all of which can help you finetune and improve your customer’s shopping experience. If your eCommerce website already enjoys high repeat visitors, multiple visits before purchase, and top mobile traffic, then you are an ideal candidate for personalization. So, make personalization a priority now, and you will see the benefits quickly. 

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