In the world of retail, we’ve reached a consensus: eCommerce personalization is crucial to success. But providing a personalized shopping experience isn’t as simple and straightforward as it may seem.
Consider the following scenario:
You’ve just moved into a new apartment and you can’t wait to furnish it. You go to the website of a reputable home decor brand, but you struggle to find any products that match what you’ve been picturing. For example, even though you are searching for a blue loveseat sofa, the product recommendations you get mostly feature sofas in other styles and colors. And although you set the price filter to exclude any sofa above $1,000, most of the recommended items cost more.
Since the recommendations aren’t connecting you to the right products, you just ignore them. Instead, you scroll through several pages to find what you’re looking for. But after a while, the eagerness and motivation you felt before have faded away, and you exit the site.
This is a common example of poor personalization. The site failed to understand or act on your taste and preferences, and therefore, the products you encountered were irrelevant. No wonder you didn’t buy anything!
In contrast, a highly personalized shopping experience makes consumers feel seen and understood. It connects them to products that inspire them, and makes them more motivated to buy. Not only that, but it helps build a better customer experience and supports customer retention in the long term.
According to McKinsey, 80% of consumers desire personalized experiences from brands and retailers. Another 84% are willing to pay more for it. For companies, a highly personalized customer experience can lead to a 10-15% boost in conversion rates and reduce marketing costs by 10-20%.
In short, providing a truly personalized shopping experience is the key to success.
In this guide, we will answer all of your burning questions about eCommerce personalization, and explain how to provide a personalized shopping experience to every individual who comes to your website.
What is Personalization in eCommerce?
If you want to master eCommerce personalization, the first step is covering the basics.
eCommerce personalization definition:
In the world of online shopping, eCommerce personalization refers to creating an experience that tailors product discovery, the user experience, and communication to the individual tastes, preferences, and current contexts of every shopper.
The digitalization of commerce and the emergence of new shopping channels have changed the ways in which brands and retailers interact with shoppers. However, the fundamental “how-to’s” of providing a personalized experience will always remain constant.
There are five things you need to cover in order to deliver true personalization.
- Know your customer. Today, most eCommerce sites have troves of basic demographic information about their shoppers (including age, gender identification, and region). But beyond that, you need a way to understand your shoppers’ styles, tastes, and preferences.
- Understand (and anticipate) their needs. True personalization is providing the right product recommendations, content, or assistance at the right time. By assessing factors like personal attributes, prior shopping behavior, seasons, holidays, and trends, you can better react to and anticipate your shoppers’ needs.
- Keep up with shifting contexts. Shoppers’ intentions and motivation can change numerous times within a session, depending on their needs, wants, mood, or a variety of other factors. A highly personalized shopping experience stays attuned to these shifts and responds accordingly.
- Understand how your shoppers prefer to shop. Shoppers’ preferred modes of finding products can vary. For example, shoppers who know exactly what they want will desire a high level of personalization on search results pages, while those who are just browsing casually will benefit from personalized carousels that spark inspiration.
- Prioritize ease-of-use. Friction and barriers along the customer journey, including irrelevant products that consume valuable on-site real estate, work against efforts for personalization. Your goal is to connect shoppers to the right products as fast as possible, with as few clicks as possible.
When all of five of these components are part of your approach to eCommerce personalization, you will be poised to deliver a customer experience that inspires long-term confidence, loyalty, and growth.
How Does Personalization Affect eCommerce?
The eCommerce market is crowded and competition is rising every day. As a result, traditional methods of differentiation, such as through product selection and sales, have lost their effectiveness. Competitors can easily match or beat you on these.
Today, the customer experience has become the last true differentiator for brands and retailers.
In the digital age, brands live and die by the customer experience they offer—and personalization is the foundation of customer experience excellence.
Think about how nice it is when your local coffee barista remembers your name and your usual order, or when your Discover Weekly playlist on Spotify is totally on-point. When you get eCommerce personalization right, you can give shoppers that same feeling.
By building your customer experience strategy around personalization, you can:
- Become more competitive. When you have what it takes to delight shoppers, you’ll cultivate a brand that is known for being reliable, engaging, and always “on-point.” You’ll become shoppers’ first choice when they want to make a purchase, which means a lot when they have thousands or even millions of options to choose from.
- Increase customer loyalty. Consumer loyalty is flakier than even. According to McKinsey, 40% of Americans have changed brands since the Covid-19 pandemic started. Gen Z and millenials are even more apt to switch, with 44% moving from one brand to another. Today’s shoppers demand highly personalized experiences, and they won’t hesitate to abandon you for a more individualized experience with another brand or retailer.
- Create individual experiences for each shopper. With thousands or millions of shoppers visiting your website each month, building one-on-one relationships with each of them is impossible. But with the right personalization tools, you can offer an experience that feels equally as personal, intuitive, and engaging.
How Do You Use On-site Personalization in eCommerce?
As we mentioned above, one of the biggest challenges for brands and retailers today is finding a way to stand out in the eyes of consumers. A personalized customer experience is the key, but what does that look like in practice?
The way to transform eCommerce personalization from a concept into action is to focus on personalized product discovery.
Personalized product discovery is a customer-centric approach that enables customers to get what they want the way they want—quickly, effortlessly, and intuitively. It streamlines the eCommerce journey by seamlessly connecting shoppers to the right products while addressing shoppers’ individual needs, preferences, and shifting contexts.
Here are some examples of how you can embed personalized product discovery into each step of the customer journey.
Before you can offer meaningful personalization on the homepage, consider what types of shoppers will start their journeys there. Here are some potential shopper personas:
- A repeat-shopper who is familiar with your store and used to navigating your site
- A first-time shopper who discovered your store via word-of-mouth recommendation
- A casual browser, who is simply in the mood to peruse
While shoppers who already have a clear idea of what they want are more likely to start their journey on a product category page or PDP, those that begin on your homepage need a little extra inspiration to get them to start clicking. This is where eCommerce personalization is key.
A great way to inspire shoppers is by showcasing highly aesthetic visual content. By dedicating prime real estate on your homepage to inspiration boards, product collections, new or popular items, and even user-generated content, you can trigger that “I love that!” feeling in shoppers who only showed up to look around.
Tailoring this content so it matches each individual user’s unique style and taste is even more effective. For repeat shoppers, you can use historical behavioral data to anticipate what products the shopper would be interested in seeing.
For new shoppers, try to display a variety of styles to make sure something will pique their interest. Once they click on an item or collection, your personalization engine will learn more and more about their taste, preferences, and current context, and provide a visually led, personalized journey that supports continual discovery.
Product listing pages
PLPs or category pages offer great potential for personalization, though they often don’t get the attention they deserve. eCommerce professionals often overlook opportunities for optimizing PLPs, focusing instead on product detail pages.
However, by adding more personalization to your PLPs, you can guide product discovery and ultimately encourage shoppers to buy more products.
For example, you can prioritize each product’s placement on the page according to the specific details a shopper has indicated they like. For example, if they previously searched for “floral sundress,” and then later navigate to your “What’s New?” page, you’d be wise to place all of your new floral sundresses in the first row.
On top of that, you can even change the order and placement of filters according to criteria that’s important to a shopper. If he or she frequently searches by brand, place the “brand” filter on top. If they usually sort by price, make this option front and center.
Another way to personalize PLPs is with product recommendation carousels. By placing curated recommendations at the top of the page, you can draw shoppers’ attention to the items that will best match their styles and current contexts.
Product detail pages
If a shopper has clicked through to a PDP, it’s safe to assume they are fairly high-intent. They have gone beyond browsing and are now looking for additional details on a specific product, examining more images, and checking to see if their size is in stock. Although the shopper may already be inclined to buy the product they are viewing, on-point eCommerce personalization can nudge them to add even more products to their cart.
By including a “You May Also Like” recommendation carousel, you can introduce the shopper to complementary items based on their style and current context. For example, a shopper who has been browsing denim shorts on your site could be motivated to add tanktops to her cart. By also displaying a few different tops that match her style, you could motivate her to purchase a whole outfit.
Personalized, on-point recommendations can help give your AOV a boost while providing a better, more individualized customer experience. Just make sure you give thought to how you position them on the page.
For example, you won’t want your recommendation carousel to distract shoppers from the item they meant to learn more about on the PDP. By placing the carousel below the product details and images, you can make sure they are within view without causing shoppers to veer off the page before clicking “add to cart.”
Personalizing search results is crucial for converting users. Think back to a time you tried searching for a product on a retailer’s website, only to see dozens of pages of irrelevant items. When this happens, the act of searching feels pointless and frustrating. But by ensuring your search results surface relevant and desirable products, you will create a better overall CX and significantly increase the likelihood of converting shoppers.
Tools like visual AI empower brands and retailers to correctly interpret shoppers’ styles, preferences, and current contexts. With this insight, you can automatically “curate” your search results pages so that the most relevant items appear at the top. With less scrolling, there’s less friction and more efficiency for the shopper.
Just like on PLPs, having the ability to filter search results by size, style, brand, price, and availability can also help eliminate friction and increase the relevance of the items on display. By personalizing the order of filters on the page, you can make it even easier for shoppers to narrow down search results to just the items they would consider buying.
On the cart page, a shopper is only a few clicks away from making a purchase. However, personalization can help make that purchase even bigger.
When adding product recommendations to the cart page, you must be careful not to distract the shopper from actually checking out. But by adding a few strategically placed recommendations, you can encourage a last-minute additional purchase that increases the overall order value.
For example, below the list of items currently in a shopper’s cart, you can recommend more products that complement the ones they already plan on buying. The more accurately they match the shopper’s style and intentions, the more effective the recommendations will be. Again, by going beyond “Here’s what shoppers like you bought,” and aiming for “Here are more products that are so YOU,” it’s possible to generate even more inspiration and motivation.
How Does Big Data Enable Personalization in eCommerce?
Big data plays a fundamental role in personalization for eCommerce. It is what feeds personalization platforms, informs product recommendations, and even helps boost customer support.
With more and more people shopping online (think: 2.14 billion people) there are vast amounts of data on shoppers’ habits, demographics, and preferences. With so much valuable information available, brands and retailers have been eager to use this data to enhance personalization efforts and improve product discovery.
Unfortunately, that’s not what usually ends up happening.
Big data and the emergence of AI technologies promised to enable better personalization—and it still has the potential to do so. However, the personalization platforms that most brands and retailers rely on are not equipped to deliver individualized recommendations. Instead, they end up churning out generic ones that could apply to thousands, or even millions, of shoppers.
While brands and retailers often believe their personalization engines are delivering results, consumers don’t share the same perception.
According to a survey by Bain & Company, 80% of companies believe they deliver a “superior experience,” from the customers’ point of view, only 8% got what they were looking for.
Here’s how conventional personalization engines use big data:
Conventional personalization engines use big data to make generalizations and assumptions about shoppers without accounting for what the individual behind the screen really wants.
They start by taking demographic data (such as shoppers’ age, location, and gender) and run it through statistical algorithms that were developed based on big data from thousands of other customers. It then runs the data produced by a shopper’s on-site activity (such as clicking on an item, saving it for later, or adding it to their cart) through these algorithms to identify items that overlap.
For example, if you are a 47-year-old man from Los Angeles who adds a navy blue graphic t-shirt to your cart, you will end up seeing recommendations for more products that were liked or purchased by other LA men in their forties who also bought that t-shirt.
But that doesn’t mean you will like those other products.
If your approach to personalization is to make recommendations based on the statistics of countless others, that’s not personalization at all—it’s actually the opposite. At best, you offer a good guess at what could be relevant for a given shopper. At worst, you fail to make them feel seen as an individual and drive them away.
The other issue with this approach to eCommerce personalization is it creates an “echo chamber” of products. Since recommendation engines continue to promote the same popular items, it increases the likelihood that new customers will also buy them. As a result, you end up creating a cycle that reinforces the “success” of some items over others, just because they got more exposure.
Traditional personalization engines will never recommend an item that was never purchased before, even if that’s the product that would best suit the individual shopper currently browsing your site.
Brands and retailers that rely on conventional personalization engines are not providing personalized experiences, they are simply segmenting their shoppers.
As a result, they:
- Lose out on opportunities to convert shoppers and increase revenue
- Create unmemorable or frustrating customer experiences
- Face weaker customer retention and advocacy
- Fall short against competitors
How to fix personalization in eCommerce: Visual AI + big data
Big data plays a fundamental role in personalization. To get the most out of it, brands and retailers must combine statistical algorithms based on demographic big data with real-time, individual data produced by each unique shopper.
True personalization—or hyper-personalization—must also incorporate:
- Contextual clues about a shopper’s real-time goals
- Indicators of their personal style and taste
- Their preferred method of product discovery
Visual AI-based personalization engines give brands and retailers the unique ability to do all of these and generate new moments of want. Visual-based personalization displays only the products that will truly resonate with an individual shopper, even if they aren’t popular.
Here’s how it works:
- A shopper starts interacting with products on your site, such as through clicking on them, saving them for later, adding them to their cart, or actually buying them.
- After every action, the visual AI engine gathers new, specific information on his or her tastes and style, as well as their current inspiration.
- The visual AI engine begins to learn from the details in the images of the products shoppers interact with to produce a highly sophisticated web of recommendations based on specific visual similarities. (For example, visual AI knows that you aren’t just searching for dark wash high-waisted jeans, but the jeans must also be tapered and hemless at the bottom).
Visual AI-powered personalization engines don’t replace the big data that conventional personalization platforms depend on. It still “cares” about what’s popular to others, but is better equipped to cater to the unique needs of each individual shopper, regardless of how popular they are to others. This is what true personalization looks like.
What Business Value Does Personalization in eCommerce Offer?
When you provide a truly personalized shopping experience—one in which shoppers feel understood, valued, and taken care of—you are poised to reap a wide range of business benefits.
Here are some of the benefits of personalization with the biggest impact on your bottom line.
When a shopper receives product recommendations, content, and support that feels tailored to their unique style and intentions, they are far more likely to convert. According to McKinsey, a personalized shopping experience can increase conversion by 10-15%. However, that gain can be even higher with hyper-personalization.
With visual AI-enabled personalization solutions, brands and retailers have been able to achieve a 4.12X CVR uplift.
Of course, when every item a shopper encounters along their journey seems to perfectly match their taste and needs, they will feel more inspired and motivated to buy more. It will be easier for shoppers to fall in love with more items, and harder to pass them by. While conventional personalization solutions will still have some level of impact on average order value, a visual AI solution enables eCommerce companies to boost AOV by 9.8%.
Better overall CX
As we’ve mentioned throughout this guide, personalization has become table stakes in the customer experience. While personalization allows you to quickly and more effectively connect shoppers to the right products, it also shows shoppers that you care about their unique needs and wants. It demonstrates empathy—something that has become increasingly important to consumers over the last two years.
According to Salesforce, 68% of customers expect brands to demonstrate empathy. The extent to which a brand or retailer can tend to a shopper’s individual needs and preferences is also the mechanism through which they can demonstrate empathy.
Simply put, a highly personalized experience yields 20% higher customer satisfaction rates, according to McKinsey. More satisfied customers spend more — and come back: According to Adobe, 40% of online revenue comes from returning customers, who represent only 8% of site traffic on average.
Stronger brand image
Brands and retailers that deliver truly personalized shopping experiences benefit from a stronger brand image. These companies will become known for providing reliable, on-point recommendations and frictionless experiences, which helps build a positive buzz and attract new shoppers.
How Does Personalization Help Reduce eCommerce Bounce Rates?
A bounce rate is the percentage of shoppers who leave your website after just visiting one page. According to data from CXL, the benchmark bounce rate for eCommerce sites is between 20%-45%.
A personalized customer journey is the most effective way to keep potential customers on your site. By continuously introducing shoppers to relevant products that fit their taste and needs, you can keep them engaged and make them eager to discover more.
In comparison, sites that offer an impersonal shopping experience will suffer from higher bounce rates.
The best way to prevent this from happening is to include opportunities for personalization at every touchpoint. For example, a visitor who lands on a PDP via a Google search knows exactly what she or he wants. By making it as easy as possible to inspect the item, read the description, and add it to their cart, you can prevent them from bouncing due to frustration. In the event that the shopper decides against the product they’re viewing, you can seamlessly connect them to similar items that better match their criteria with product recommendation carousels.
Shoppers that go directly to your website and begin their journeys on your homepage are also prone to bounce. But by providing highly visual and engaging content (such as featured collections, inspiration boards, or showcasing popular items) you can immediately pique their interest and motivate them to browse.
Master eCommerce Personalization and Thrive
Today, it’s easy for competitors to imitate your aesthetic, prices, promotions, and collections. The last true way of differentiating your brand or store is by providing a customer experience that feels as on-point and individualized as being helped in a store.
eCommerce personalization—at least, true personalization—is difficult to achieve without a solid strategy and advanced tools. But by heeding to the tips and insights outlined above, you can position your brand to stand out, delight your shoppers, and keep them coming back time and time again.