How personalization boosts customer engagement

Feb 27th 2024ecommerce

You land on your favorite retailer’s website, where everything seems to be attractively arranged just for you. Your favorite product lines are front and center, the pricing seems tailor made for your wallet, and you have a feeling of serene comfort. Before you know it, thanks to algorithms doing some sort of active listening in near real time as you’re browsing, you’ve spent an hour checking out a steady stream of ever-more intriguing items. Wow! You like some of the suggestions even more, and you wonder what else you might be shown.

For online retailers, this type of AI-aided personalization is nothing short of a godsend. In a digital era where choices are abundant and attention spans fleeting, it can generate positive customer interaction on your website (or in your app) and result in some significant improvements in your bottom-line metrics.

Personalization in ecommerce

Personalization in ecommerce is delivering tailored experiences to shoppers — whether they’re new customers or long-time loyal ones — by dynamically showing them relevant and timely content, product recommendations, and offers. Personalized content is usually created based on:

• Customer behavior: The way shoppers browse and navigate a site provides invaluable clues about their interests and intentions.
• Previous actions: Products they’ve viewed or added to their cart.
• Purchase history: What they’ve bought helps when curating product recommendations and offers
• Demographics: Age, gender, location, occupation. Such data enables the shaping of a winning customer-centric experience.
• Other customer data, such as device usage (mobile or desktop), the time of day, and even real-time weather conditions in the target-audience location could be considered.

4 key personalization benefits

Personalization is like having concierge functionality for customer interaction, guiding each shopper through the marketplace. Here’s why an approach tailored for customers’ specific interests can drive the best optimization and profitability.

Better insights

Imagine being able to read your individual shoppers’ minds and understand all the nuances of customer concerns. When it comes to your offerings, you know their desires, preferences, pain points. You can even predict, with a degree of accuracy, their next moves.

Personalization (without the mind reading, of course) makes that happen. By tracking and analyzing interactions as part of developing your customer relationships, you can uncover a trove of patterns and preferences.

For example, let’s say a number of your shoppers from a certain geographical area are wanting new products that are eco-friendly. This insight allows you to generate more-targeted marketing campaigns, boost stock-management efficiency, and deliver positive customer experiences. Bingo — you can optimize your inventory and marketing strategies for these shoppers, highlighting sustainable goods and ethical consumerism.

An enhanced user experience

When a shopper visits your site and sees a selection of products curated just for them, they may feel like they’re arriving at a party where everything has been arranged for their tastes. These are the understandably the types of customer interactions shoppers want. According to Adobe, if content is personalized, 51 percent of American consumers say they’re more likely to buy something and 49 percent are more likely to be loyal customers.

For instance, consider a shopper who’s previously browsed a marketplace site for fitness gear. They’re looking to keep up with their New Year’s goal and running partner. In terms of personalization, they might be greeted by a promo on the latest running shoes and workout apparel — how convenient. The stage is set for a positive experience on your site to follow.

More-loyal customers

Personalization is key for turning casual browsers into loyal enthusiasts and avoiding creating unhappy customers: when shoppers feel understood and valued, they’re more likely to stick around.

There are plenty of ways you can build and maintain customer loyalty. Personalized email marketing and push notifications are a great example. Let’s say you sell luxury handbags. You might send someone an email that starts with “Based on your love of Prada…” and recommends bags similar to those they’ve bought or looked at, perhaps offering a discount on their next purchase. This targeted communication demonstrates deep understanding of the shopper’s preferences, which can foster loyalty. And such personalization can be highly effective: some marketers have reported a 760% increase in their email revenue from both personalized and segmented campaigns.

Higher conversion rates

By presenting products and offers that strike a chord with your individual shoppers, you can, of course, increase the chances of conversion. The numbers back this up: McKinsey found that companies using personalization tactics generate 40% more revenue than those that don’t.

Let’s say a shopper has been looking at coffee tables on your home-goods site. Showing them a flash sale on similar items or offering a discount on matching end tables could be the nudge they need to hit Buy and convert. This targeted approach is likely to result in true customer satisfaction, because, as classic business strategy dictates, when you can meet your customers’ needs, more sales are invariably going to head your way.

Effective customer engagement strategies

Implementing personalization in ecommerce is akin to sewing an evening dress or suit: every measurement must be precise and every stitch exact in order to ensure the perfect look and fit.

Here’s how to apply personalization for the best results:

Collect and analyze

Collecting data from shopper interactions across your website, social media, and other digital touchpoints should be a straightforward process. Then, utilizing analytics tools to dissect these data points will highlight patterns, preferences, and trends, allowing you to begin to understand your audience.

For instance, an online bookstore manager might notice a surge in purchases of historical fiction. When looking at the data, they might see that it correlates with the release of a best-selling book in this genre. They might then highlight the genre on the home page and recommend similar titles to readers interested in history-related content.

Apply AI

Using artificial intelligence (AI) and machine learning can help you identify patterns that might easily elude the human eye. Over time, algorithms learn from each interaction, continuously refining and improving personalization.

A good example would be a fashion retailer offering highly detailed recommendations based on customer feedback and purchases. As the shopper makes purchases (maybe they like red shoes and they wear size 10) over time, they’re presented with items that reflect those parameters.

Be dynamic

Dynamic content is the chameleon of the ecommerce world, continually adapting to court the viewer. Whether it’s personalized product recommendations that change based on browsing history, tailored email marketing campaigns that reflect purchases, or a home page layout that displays recently viewed items or categories, dynamic content keeps the shopping experience fresh.

Maybe, for example, you have a health and wellness product site. When people search for yoga mats, leave, and later return, you can greet them with assorted yoga accessories, then send follow-up email touting similar items.

Personalize everywhere

Omnichannel personalization means that when a potential customer interacts through a mobile app, website, in person in a store, on a social media platform, or through some other communication channel, the experience is consistently personalized. This seamless integration across all your platforms enhances the customer journey by making each interaction feel thoughtfully curated. For instance, a shopper who adds items to their cart in your mobile app but then loses interest could receive a text reminding them about those languishing items, sweetened with the offer of a discount if they check out within 24 hours.

Protect privacy

Crafting great personalized experiences while not violating customer expectations by overstepping their privacy boundaries is walking a tightrope. With 63% of shoppers thinking companies aren’t honest about how they use personal information, adhering to privacy laws and implementing data-security measures can help you avert customer issues. In addition, transparency about your practices is essential: it’s important to openly communicate how you collect data and use it for shoppers’ benefit. One way to balance privacy with personalization is to provide a preference center, an interface that lets shoppers control what data they share and how it’s used.

Improve your customer engagement

Personalization in ecommerce is not just a powerful trend; it’s a fundamental shift in how companies are engaging with their shoppers. By providing personalized customer interaction, you can build loyalty and drive growth.

Algolia search and discovery technology understands shoppers as well as (better than?) you can. With our AI search personalization, you can give your visitors a shopping experience they’ll love, and prospectively one that brings them back time and again.

Ready to deliver successful customer engagement and boost your revenue? Book a demo and we’ll happily show you the ropes.