Studies show that there are anywhere between 12-24 million eCommerce stores around the globe. In other words, online shoppers have lots of choices. If you’re running an eCommerce store, chances are that users can find products similar to yours on hundreds of other websites. So how can you make yourself stand out from the competition?
One surefire way to do so is by providing users with personalized shopping experiences. First off, 66% of consumers expect companies to understand their needs and expectations. Second, 89% of businesses already invest in personalization.
But here’s the thing: only 15% of eCommerce retailers have successfully implemented their personalization strategies.
Although personalization is widely adopted among eCommerce businesses, these statistics tell us that you can still gain the upper hand and overcome your competitors. But to do that, you’ve got to come up with a plan.
That’s why today we will talk about how to build an effective personalization strategy.
The foundations of personalization
The first step in building a successful personalization strategy is nailing down the basics. You’ve got to figure out your goals, set clear objectives, establish key performance indicators, and most importantly, gather insights based on extensive research.
Furthermore, your plan should contain the following steps: segmentation, ideation, prioritization, implementation, and optimization, which we’ll discuss later in this article. Last but not least, your personalization strategy needs to include three elements: data, insights, and goals.
Let’s discuss these in more detail.
Data sits at the core of your personalization strategy.
Without it, you won’t know much about different segments of your audience, and thus, you wouldn’t know what to personalize in the first place.
That said, you’ve got to gather data. Lots of it!
You need to know your audience through and through. From their geographical location, background, values down to more personal details, like their pain points, likes and dislikes, and even hobbies.
It might seem like a lot, but this data sits right beneath your nose. You just have to use the right tools to find it.
For example, website analytics tools, like Google Analytics, reveal crucial information, like where your visitors live, what pages they visit the most, how much time they spend on each page, whether they browse on mobile or desktop, etc.
Tools like Hotjar provide you with heatmaps and recordings that show how users behave on your website.
You can also use SEO tools like SEMRush to see what keywords drive the most traffic to your website, and this can reveal what products your audience is most interested in.
And don’t forget to ask your customers for feedback. This will allow you to see what they like about your store, their preferences, etc.
After you’ve gathered all that data, it’s time to draw some conclusions. This is a crucial part of your personalization strategy. That’s because after analyzing the data, you get to understand the different segments of your audience. Consequently, you’ll be able to form a general idea of how your personalization strategy will take place.
Let’s take a look at an example.
According to your data, a customer purchased products from the sportswear category four times last month. From there, you can tell that this specific customer likely leads a healthy lifestyle. Thus, you can personalize his shopping experience by displaying products related to a healthy lifestyle, like sports equipment.
Besides your website, you can gather insights from other channels as well. Your email open rates might reveal the time of day your audience is most active in. Or your social media analytics can tell you where the target audience comes from, their average age, gender, and what catches their attention based on their engagement levels.
Next, you’ll need to figure out what you want your strategy to achieve. At first glance, this may sound simple. But it’s a little more complicated. Let’s say your goal is to improve the conversion rate. Sounds great, right?
The question is: How?
That’s where setting your objectives comes in. Think of those as minor achievements that lead to fulfilling your goal. In our case, this could mean reducing loading times, improving page design, optimizing CTA buttons, etc. These objectives need to be sharp, and they have to showcase the precise steps you have to take in order to achieve your goal.
Furthermore, they need to be concise. Create short statements of what you’ll achieve, when you’ll do it, and how. When setting your goals, it’s best to follow the SMART criteria.
Lastly, you’ve got to know when you’ve achieved your objectives. For this, you’ll need to set your Key Performance Indicators (KPIs). In short, KPIs are specific performance measures that indicate the progress towards achieving your objectives. In our example, a good KPI would represent an increase of CTA click-throughs by 15%.
How to Plan the Personalization Strategy
Now that we’ve covered the essentials, let’s discuss how you’ll create and implement the personalization strategy.
1. Audience Segmentation
No two customers are the same, and that’s why you need a personalization strategy in the first place.
That said, you’ll have to segment your audience. This is the process of dividing a target audience into multiple subgroups based on specific criteria like demographics, psychographics, user behavior, etc.
This allows you to create messages that cater to each specific segment. Thus, your messages will become more effective, and more users will likely purchase your products.
These criteria vary in complexity. So, if you’re just getting started, segmenting your audience based on location or demographics like age, gender, occupation and income will probably be less complicated.
That’s because you’ll have an easier time gathering the data.
After you’ve segmented your audience, it’s time to figure out how your personalization strategy will cater to each specific group. For example, if you were to segment your audience psychographically, you may find out that some of your customers are adventure-seekers while the others are homebodies.
Consequently, you now have the opportunity to create separate marketing materials that fit their personality types and recommend products that suit their lifestyles. You could also consider creating landing pages specific to your audience’s culture and location. In that case, consider working with a custom web design company.
Or, you could give new customers a discount code to entice them to make another purchase. Whereas for loyal customers, you could showcase a progress bar towards a prize or send out newsletters regarding new product releases. Incentives encourage both new and loyal customers to return to your website.
During the prioritization phase, you’ll need to consider both your segments and your ideas. For starters, you have to figure out which one of your segments has the potential to be the most profitable. In terms of ideas, identify which ones suit a specific segment the best and which ones may bring them the most value.
If you have difficulties putting everything together, you can use the following prioritization methods: the PIE framework, the PXL model, or the ICE score. The PIE framework stands for Potential, Importance, and Ease.
For example, you can use this method to figure out how much you can improve specific product pages, how important the traffic they bring is, and how easy it is to implement the changes. The ICE score covers Impact, Confidence, and Ease. In other words, think about what kind of results your project will bring, how confident you are that it will work, and how easy it is to implement.
Finally, the PXL model asks specific questions, like: Are your changes removing or adding an element? Can they be noticed within the first five seconds?
After all of that, it’s finally time to design and implement your project. This process is highly dependant on your KPIs, objectives, and goals.
In other words, there’s no general-purpose solution. Instead, you’ve got to spend some time and think about a personalization campaign that fits both your and the target audience’s needs the best.
But, as a general idea, if your goal is to reduce bounce rates, consider decreasing loading times, adding a sticky navigation button, showcasing social proof on product pages, etc.
Or, if you want new visitors to convert, you can encourage them to sign-up for your newsletter in exchange for a small discount. After that, you could recommend products related to their browsing history via email.
Implementing your project is not the end of the road, though. You still have to determine how well your personalization strategy is doing and see where there is room for improvement.
Consider doing A/B tests from time to time. This is the process of comparing two different versions of the same page to see which one performs the best. But, remember to only change one variable at a time. This will allow you to pinpoint what’s working and what’s not.
In the eCommerce industry, personalized shopping experiences are becoming a must rather than a nice-to-have. As customers now expect it, more and more eCommerce websites have started implementing personalization strategies. If you want a piece of the pie, you should follow suit.
Personalization will not only help you keep up with the competition. Tailored offers or messages will likely bring you a boost in profits.
Travis Dillard is a business consultant and an organizational psychologist based in Arlington, Texas. Passionate about marketing, social networks, and business in general. In his spare time, he writes a lot about new business strategies and digital marketing for DigitalStrategyOne.