Survey Shows Personalization Benefits, With AI-Based Personalization on the Rise
When it comes to delivering top-notch customer experiences, one size doesn’t fit all. And what motivates one shopper to convert may be completely off-base for another.
This isn’t news to retail marketers. They’ve long acknowledged the importance of treating customers like the individuals they are, and delivering cohesive, personalized experiences across touchpoints. It’s important, though, that these goals inspire thoughtful, actionable strategies.
So how well are brands executing? At Evergage, we look at questions like these every year in our “Trends in Personalization” study, conducted with Researchscape International. This year’s report, which contains insights from 314 marketers surveyed, shines a light on why brands are deploying personalization, along with challenges encountered and results achieved.
Why Deploy Personalization?
Consumer expectations have played a role in personalization’s evolution from a nice-to-have to a need-to-have technology. Nearly nine out of 10 marketers surveyed (85 percent) said their customers expect brand interactions specifically tailored to them.
Marketers are deploying personalization to meet those expectations — and for a host of other reasons. Our study found the primary drivers were delivering better customer experiences (88 percent), increasing customer loyalty (59 percent), and generating measurable lift/return on investment (50 percent).
So while retailers realize a range of tangible benefits from personalization — increased conversions, average order value and loyalty, to name a few — it’s important and telling that personalization is primarily linked to customer experience initiatives. Marketers seem to recognize and appreciate that being helpful, making shoppers feel recognized and removing points of friction are simply good for business.
The Power of AI
Experiences aimed at the customer-segment level are still the predominant form of personalization, with 68 percent of marketers deploying manual, rule-based personalization — i.e., “If a shopper falls into this segment, then show experience X.” In retail scenarios, segments can be as broad as first-time visitors or shoppers in a particular geography.
How much more powerful is it, however, to know that the shopper from, say, the East Coast, tends to buy only with discounts, prefers garments from specific brands and in certain colors, and has a low-inventory sweatshirt in her cart? Selecting a personalized experience that factors in all that information using rules would be incredibly labor-intensive and completely unscalable. Instead, marketers are increasingly using artificial intelligence (AI), and its subset machine learning, to process and act on data like this in real time. They're using algorithms that keep getting smarter, enabling brands to deliver experiences that resonate at the one-to-one level.
Impressively, the percentage of marketers using machine learning personalization (40 percent) jumped 54 percent from last year’s results, highlighting a commitment to putting the individual person at the center of personalization. Notably, marketers using this approach were more satisfied with their efforts and saw appreciably higher lift than their counterparts.
Overall, companies still aren’t connecting the dots by linking each customer’s activities across channels into a single, accessible and actionable “big picture.” In fact, three-quarters of marketers (74 percent) say their company has “a few” or “no” channels connected, preventing customers from “picking up where they left off.” While this is on par with last year’s results, there are some bright spots. For example, those organizations with “no” channels connected at all dropped to 21 percent from 27 percent last year.
For many retailers, omnichannel needs to be more than a buzzword, and our survey results highlight that there’s room for improvement.
Making the Grade
Marketers feel they’re still just scratching the surface with personalization. Sixty-five percent give their company’s personalization efforts a “C” grade or worse, and 68 percent think the industry isn’t getting personalization right.
Still, those implementing personalization see impressive benefits, including:
- advanced customer relationships (98 percent);
- increased conversion rates (61 percent); and
- increased visitor engagement (59 percent).
A Look Ahead
Working with companies across industries, we’ve found retailers tend to be among the most agile and forward-looking in their approach to personalization. And as retail marketers continue to delve deeper in their efforts, benefits like the ones above will only increase.
Taking an incremental approach to personalization — pursuing initial, easy wins, then moving onto larger projects with greater confidence — often leads to the greatest success.
For more insights from the personalization study, I encourage you to download a free, ungated copy here. In the meantime, good luck with your personalization initiatives!
Andy Zimmerman is the chief marketing officer at Evergage, a leading personalization and customer data platform (CDP) provider.
Andy Zimmerman is the chief marketing officer at Evergage, a leading personalization and customer data platform (CDP) provider. Andy has more than 20 years of experience heading marketing, sales, business development and alliances at leading software companies, and is a frequent speaker at industry events.