For Dramatic Lift, Here’s What Your Personalization Strategy Needs
There's a lot of research covering how specific personalization tactics have driven return on investment, but what about quantifying the cumulative effect of personalization across the customer journey? In our most recent Ecommerce Quarterly, Monetate’s researchers analyzed more than 1 million online shopping sessions across our retail customers. The goal was to see whether a session featuring multiple personalized experiences — versus both single-page optimizations and entirely nonpersonalized sessions — impacts metrics like conversion rate, add-to-cart rate and cart abandonment rate. The results were very exciting.
We began with the following question: Does the number of personalized pages that a viewer is exposed to in a session, regardless of the techniques applied, change the way that they interact over time? At the highest level, we found that when customers are exposed to 10 personalized page views, conversion rates and add-to-cart rates increase dramatically (+1,859 percent and +679 percent, respectively). The research ultimately confirmed marketers shouldn’t be designing their personalization strategies as a series of one-off tactics, but rather as a comprehensive overlay across a full session.
Below I’ll highlight some opportunity areas for marketers looking to build and execute this type of comprehensive personalization strategy.
Focus on Customer Loyalty
Although it’s tempting to pursue (and focus measurement efforts on) short-term wins, building loyalty and lifetime value really does pay off for marketers. Monetate’s recent Personalization Development Study revealed companies with the highest ROI are focused on customer lifetime value. In fact, companies with the highest ROI are 50 percent more likely to focus on customer loyalty than companies with low ROI, and nearly twice as likely to focus on increasing customer lifetime value.
The research shows that 86 percent of companies getting the highest ROI reported personalization accounted for 21 percent or more of their marketing budget. With this, companies that exceeded revenue expectations in 2018 set personalization-specific financial incentives nearly 25 percent more often than those that fell short of revenue goals. Personalization strategies lead to better relationships with customers due to the tailored methodology that a fully functioning personalization stack takes on.
Create Strong Connections Between Your Acquisition Channels and Website
As marketers, we spend a lot of money and focus on improving the effectiveness of our acquisition channels. However, a small tweak further down the funnel can prove to have as much or more of an impact on that acquisition budget. Monetate’s latest Ecommerce Quarterly found that referral channel performance changes when there’s a depth of personalized experiences across the owned destination — i.e., a steady delivery of personalized page views can transform an audience segment into a top performer. For example, Facebook was the worst performing referral channel for our retail customers, until those visitors were exposed to several personalized pages and it became the top performing channel. In an era of fast-increasing customer acquisition costs, knowing personalization can improve channel performance will help brands ensure their ad dollars are going towards strong engagement and conversion rates, not just expensive bounces.
Build Cross-Functional Processes for Success
Of businesses that exceeded revenue goals in 2018, more than 77 percent have a documented personalization strategy, compared to the less than 50 percent of businesses that missed revenue expectations. It's vital for you to know your personalization tech stack in and out in order to make the most of the technology that's at your fingertips.
Finally, once best practices are in place, Monetate’s reports revealed that it's most critical to document the strategy that drives the greatest success in order to reference back to, share with other teams, re-create, and use as a case study or learning for the future. Many of our customers with more complicated, global structures have seen success in building internal personalization centers of excellence to provide guidance and best practices across teams.
Andrew Koperwas is director of product marketing at Monetate, the leading personalization platform for e-commerce brands with an end-to-end solution for discovery, segmentation, testing, measurement, and optimization.