3 Tips for Turning Clicks Into Conversions
The competition for gaining market share is heating up in the e-commerce space. As a result, brands and retailers are struggling to improve their revenue and profitability. While conversion rate remains one of the most important metrics for measuring success, not enough importance is placed on improving it. Here’s how that can change:
Let’s Start With the Basics
Personalization has been one of those buzzwords in e-commerce for years now, with many online retail executives recognizing the importance of promoting products and offers to shoppers uniquely tailored to their preferences.
In spite of the hype, online retailers still have a long way to go if they're going to deliver on their promise of providing consumers what they say they want when shopping online. Brands aren’t consistently delivering e-commerce personalization, even in the richest data-driven environments.
This leaves hundreds of millions of dollars in incremental revenue on the table. That’s a big miss, given the ample evidence that personalization — when executed effectively — can result in dramatic increases to conversion rate, average order size and revenue per visit.
Tip No. 1: Deliver 1:1 Personalization
In today’s e-retail landscape, experts say that individual shopping behavior — not demographic makeup or “segment” — should dictate how products with the best-matched attributes are served up to online shoppers.
A recent study found that 84 percent of customers confirm that being treated as a person, and not a number, is critical to winning their business. That’s why retail is leading global spend on artificial intelligence (AI) this year, with the category projected to invest $5.9 billion on solutions such as personalization platforms. If retailers want to earn the loyalty of customers, they need to demonstrate that they know their preferences, shopping history, and interests — and act on them.
All too often, traditional segmentation approaches are far too broad and dependent on averages. This approach doesn't focus on individuals, and what may appeal to one segment member may not work for another.
For example, if a retailer collects basic demographic information on Jane Smith and determines she's a woman in the 26-34 age range with a $75,000-plus income, it makes assumptions based on what others in her group have purchased. In the retailer’s mind, she's likely to buy blazers with trendy boots for work or boho ensembles for outdoor music festivals.
On the other hand, an individualization-based approach personalizes for shoppers at an individual level and identifies their distinct qualities and preferences. If you pay more attention to Jane Smith’s personal clickthroughs and previous purchases than her demographic, a retailer may discover that she's actually an avid hiker who frequently needs to replace her worn boots and has recently developed an addiction to garden planters and an affinity for red windbreaker jackets. In reality, she may turn out to be a very different shopper than her overgeneralized “segment” would suggest.
Therefore, by recognizing your customers’ unique traits at a one-to-one level and making them feel as if they're being taken care of by a dedicated shopping assistant like they would be at a high-touch brick-and-mortar store, a retailer’s conversion rate would certainly improve.
Tip No. 2: Make it Relevant in Real Time
Digital media technology is advancing at a frenetic pace, and this has impacted human behavior significantly. Scientists have found that the human attention span — at six seconds to eight seconds — has become less than that of a goldfish (nine seconds). This is why real-time engagement is a dramatic step in the evolution of personalization.
Retailers whose e-commerce websites do not show relevant products in real time are falling behind. Customers want and need information in the moment, or else they’ll go to the next site. Shoppers value relevant experiences in micro-moments — i.e., those short periods of time between activities. Real-time personalization can connect on-the-go shoppers with the best product for them in the shortest amount of time.
Indeed, delivering relevant choice in real time is both a challenge and an opportunity for brands and retailers. The more retailers can deliver relevant and individualized shopper experiences in the moment, the greater their conversion rate will be.
Tip No. 3: Tap Multilayered AI
A known issue with e-commerce sales performance is that shopper behavior continues to change across seasons, geographies, demographics, and much more. As a brand or retailer, it’s impossible to manually respond to changing shopping behaviors at scale. However, AI and machine learning (ML) capabilities can handle this challenge with ease.
Retailers and brands should take note that the term “AI” has often been marketed and used generically in e-commerce and the retail industry recently, resulting in a somewhat clouded understanding. When improving personalization strategies, it’s important to realize that not all AI technologies are created equally. Advancements in AI/ML — especially deep learning — empowers retailers to tap into individual networks that consider individual visitor profile, demographics, recent visits, session intent, and the customer's propensity to buy.
AI algorithms constantly listen to shoppers’ behaviors across all digital touchpoints, and convert them into shopper insights. Behind the scenes, the AI engine discovers hidden links between product attributes and shopping behaviors, and intelligently responds to shopper’s purchase intent in real time.
For maximum conversion effectiveness, the AI engine should traverse multiple layers. First, the contextual layer can cover variables like geo-location, season, time of the day, incoming traffic source, and device. Next, the cohort layer can take advantage of trending and similar interests at an aggregate level.
Moving on, at the individual layer, the AI engine can take preferences for price, style, size and color into consideration. Finally, the business layer can factor in margin, revenue, and manually specified boost, bury or pin rules that merchandisers may specify per business needs.
In this way, by leveraging advanced AI and ML capabilities, retailers can scale up their e-commerce personalization for each and every online shopper across the world. Doing this enables them to improve conversion rates across seasonality as well as future-proof their business.
To thrive in today’s competitive world, retailers need to do a lot more than offer a basic e-commerce website with first generation segment-based personalization. Modern retailers need to deliver on the promise of e-commerce personalization by implementing strategies that will improve conversion rates. By executing on the tips presented, retailers will help form an emotional connection with the shopper, improve conversion rates — all while being two steps ahead of the competition.
Amede Hungerford is chief marketing officer at Reflektion, a real-time intelligent personalization platform.