How Ecommerce Personalization Will Prevent Low ROIs

4 min read

Getting traffic is only the beginning. You need to convert those visitors to customers after they arrive on your site, otherwise the return on investment (ROI) won’t be worthwhile.

Unfortunately, many ecommerce stores fail to do this. High expenses on marketing get harder to justify if it doesn’t yield the desired results.

Luckily, this common problem is getting easier to deal with as technology advances, with artificial intelligence (AI) and machine learning allowing online stores to offer an improved user experience.

This comes down to ecommerce personalization.

Not only does it engage site visitors and foster loyalty through personalized product recommendations that they actually want, but it can even enhance customers’ lives.

Research by McKinsey concludes that ecommerce personalization can potentially reduce lead acquisition costs by 50%, and boost revenue by up to 15%.

It’s clear that it is a crucial tool for ecommerce in the digital age, which can conquer the problem of low ROI in marketing.

But to get those real results, we must understand how to use personalization to great effect.

How Personalized Product Recommendations Impact Your ROI

You might think it’s just about offering a customized experience based on data insights, such as past purchases, interests, and site behavior.

But that’s not all there is to ecommerce personalization.

Studies show that 53% of online consumers spend increased time with the brands that offer them personalized product recommendations based on their behaviors and interests.

This loyalty extends to ads and emails too, with up to 48% of people being more responsive to companies who send personalized emails.

When we consider that almost 40% of online shoppers leave stores because they get frustrated with the irrelevant offers and options, it demonstrates just how much there is to be lost from ignoring ecommerce personalization.

What many people don’t realize, is that it isn’t confined to the product pages of a store. It starts long before that.

Ecommerce Personalization Guides the Customer Journey

In ecommerce, there is a lot of competition, which means less time to stand out.

There are many reports that put our attention span alongside that of a goldfish, giving ecommerce companies about 7-8 seconds to actually grab the attention of prospects.

As soon as visitors arrive, it’s important they receive real-time personalized product recommendations that are relevant. But that’s not where the journey begins.

Social media today is about much more than staying connected with friends from afar. Its widespread popularity has paved the way for businesses of all sizes to grow their audiences.

From niche interest groups, to breaking news stories, to paid advertising, social media is a powerful tool for any marketer. And now, so many are learning just how to use that to their advantage.

Social proof drives online sales, as the psychology of FOMO kicks in, making everyone want to keep up with the times.

Content marketers are able to use social media to connect with their audiences, instilling personalized messages before many of these prospects have ever visited their website.

Here are four ways that ecommerce personalization can be used to increase ROI on marketing spend.

  1.  Buyer Personas Provide a Solid Foundation

With buyer personas, companies are able to serve their customers’ needs more precisely. Social media is the perfect ground to research potential customers and learn about their habits and interests.

Smart ecommerce personalization will also consider their competitors’ content, gaining insights from social media posts and blog comments to learn more about their target audience.

This information will ensure that marketing efforts are focused on the right pain points, so that prospects aren’t offered irrelevant products.

  1. Omnichannel Marketing Enhances the User Experience

Many customers will interact with brands through several channels. Prior to making a purchase, they might visit the site multiple times, check out blog posts, social media pages, forums, and respond to emails and ads.

Companies can use ecommerce personalization to make this journey seamless, with customers enjoying smooth progress from one touchpoint to the next, regardless of the platform or device they are using.

The only way to do this is by taking a customer-centric approach to marketing.

In order for that to happen, you need to adopt a customer-centric approach, based on the concept of a single customer view.

Online stores who incorporate this method in their ecommerce personalization will build stronger bonds with their customer base.

  1. Personalized Product Recommendations Drive Online Sales

AI allows online stores to quickly analyze the habits, purchase histories, and interests of their site visitors and customers, and then respond rapidly with dynamic product recommendations.

With the data insights on hand, it’s much easier to offer the most relevant products, which in turn will stand a higher chance of getting conversions.

Data insights and AI can also combine to offer relevant upsells and cross-sells, making recommendations at every touchpoint to increase the average order value.

  1. Targeted Content Encourages Loyalty

Ecommerce personalization makes it easier to offer targeted content to all visitors on your site, first-timers, and returning visitors.

The more a business learns about its customers, the better it can serve them. Over time, they can get more accurate with recommendations.

With time and data, customer bases can be broken down into smaller segments, and extremely targeted content can be offered throughout the customer journey.

Ultimately, this will breed trust in your customers, making them come back for more, time and time again.

Studies from DemandWare show that:

  • Online shoppers who click a personalized product recommendation are almost twice as likely to return.
  • 37% of first-time visitors who clicked on a recommendation came back to the site again.

Personalized Product Recommendations Are Vital to ROI

Although the majority of visits to ecommerce sites don’t result in clicks on recommendations, the visits that do yield clicks turn out to be very productive.

The same study from DemandWare found that although only 7% of site visits produce clicks, it is enough to produce 26% of a company’s revenue. In the digital age, to ignore AI and data insights is to deliberately offer an ecommerce service that is not tailored for your target audience. It is leaving potential profits on the table, which is damaging to the ROI from all marketing efforts. Ecommerce personalization can be used at every touchpoint in the buyer’s journey, from social media and advertising, to the pages of their website and online store.

Companies who do this will skyrocket their ROI and build a loyal customer base in the process that guarantee sustained success.

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