Why is E-Commerce Personalization Important? Top 7 Benefits

Why is ecommerce personalization important?

Head over to your favorite coffee shops, and be asked, do you like your usual?….

Relatable, right?

This is personalization, and customers love it.

And gone are the days when e-commerce businesses follow the one-size-fit approach, now customers crave more. That approach works no more to give customers the ultimate satisfaction that they want.

Today, businesses come up with personalized strategies to stay ahead in the competitive e-commerce industry. These personalized approaches consistently offer enhanced online shopping experiences for their shoppers.

In this blog post, we’ll gonna discuss the top reasons why e-commerce personalization should be merchants’ peak priority.

So, let’s dive in.

What is ecommerce personalization?  

E-commerce personalization refers to a tailored shopping experience for each customer based on their individual preferences, behaviors, and their shopping journey. This involves using a system and giving product recommendations, content and offers to make the customer shopping experience smooth.

Following are a few key aspects of doing personalization on an e-commerce store:

  • Product recommendation
  • Customized content
  • Targeted offers and promotions
  • Personalized search results
  • Dynamic website elements

45% of consumers say they are more likely to shop on an eCommerce site that offers personalization. (Source: Dynamic yield)

Why personalization is important in ecommerce? Top 7 Benefits

Let’s talk about a few reasons why personalization matters in e-commerce for your targeted audience:

Enhanced customer experience

Is it difficult to click off-site in an e-commerce store? it’s not, right?

Relevant suggestions and personalized recommendations keep users engaged and give them an enjoyable shopping experience.

That’s why it’s so important to add personalized recommendations to effectively attract customers so they don’t click off from your website.

Ultimately it leads to higher conversion rates and customer loyalty. When it comes to customer retention, people feel like, “This store knows me and my choices” which highly affects their shopping decisions.

Customers don’t remember a neutral shopping experience, they keep in mind a smooth experience that keeps them coming back to the store.

What about you? do you remember a search bar that worked exceptionally or something that was a pain in the neck?

Increased conversion

Personalized searches improve customer acquisition and retention which leads to boosting conversion. Customers get satisfaction, make repeat visits, and repeat business drive conversion and high business growth.

91% of consumers are more likely to shop with brands that provide relevant offers and recommendations. (Source:Coniq)

Now, let’s discuss a few points that need to be done for high conversion through e-commerce personalization:

  • Targeted Product recommendations
  • Reduced decision fatigue
  • Behaviorally triggered emails
  • Dynamic website element
  • Increased customer loyalty

Enhance customer retention

To grow a business consistently, retaining customers is as important as acquiring new ones.

Acquiring new customers costs five times more than retaining the old one, yes, it’s true.

Moreover,

Increasing customer retention by just 5% can boost profits by 25-95% (Source: Harvard Business Review).

Personalization plays a crucial role in retaining customers ensuring customers keep visiting your store again and again.

Here are a few reasons that become the base of customer retention when merchants implement e-commerce personalization:

Building emotional connection

It’s personalization that makes an emotional connection between customers and the brand. When customers come to your stores, and you already know what they usually buy from your stores and what kind of products they often buy, they feel valued. This kind of emotional bond makes customers loyal and they keep coming back.

Real-Time Experience:

Netflix

What’s Netflix’s strategy? It recommends shows based on users’ viewers’ choices. It keeps users engaged and they become regular episode-watchers on Netflix.

Sephora

If we talk about a prime example of how personalization can enhance customer retention, Sephora will always be at the top of the list. Sephora’s app and website provide beauty product recommendations based on customer experience and preferences.

They also offer a virtual tool that helps users to use products virtually, creating a unique shopping experience. This level of personalization helps Sephora to build a loyal customer community and they keep coming back.

High average order value (AOV)

High average order value (AOV)

In e-commerce, personalization is a driver of high average order value (AOV).

E-commerce businesses that use advanced personalization strategies see an average increase in AOV by 10-15%. (Monetate)

This kind of boost is important for overall business improvement and growth.

Why does personalization increase average order value (AOV), let’s have a look:

  • Tailored product recommendation
  • Bundling and cross-selling
  • Dynamic piercing and discounts
  • Satisfy customer experience

Real-Time Example: Stitch Fix

What does stitch fix do? It uses customer data to carefully select the products and display them on the homepage. However, Stitch Fix is an online personal styling service. Looking at how they display products on the homepage gives an excellent example of how personalization can enhance customer satisfaction and ultimately lead to high AOV.

Reduce cart abandonment

Why do shoppers leave their carts?

A crucial question haunts many retailers…..

As shoppers’ this behavior leads to potential sales slipping through retailers’ fingers.

Cart abandonment is a significant issue with an average abandonment rate of nearly 70% across the industry. (Source: Baymard Institute, “Cart Abandonment Rate Statistics”).

Cart abandonment happens for various reasons like unexpected costs, complicated checkout processes, or simply getting distracted. For retailers, it means wasted efforts to bring visitors to the website.

E-commerce personalization helps to reduce cart abandonment, and here’s how:

  • Personalized reminders
  • Tailored offers and discounts
  • Customized checkout experience

Data-driven insights

Personalization provides valuable data that merchandisers use to refine their product categorization. E-commerce platforms analyze vast amounts of customer data, including engagement patterns, purchasing history, and browsing behavior.

This data provides deep information about users’ buying habits and trends. It lets merchants make informed decisions. Merchants do product placement, and inventory management based on data-driven insights.

Let’s take an example, if data shows customers are buying certain products a lot, merchants can categorize and display these products on top. It makes it easier for future customers to buy them. It drives sales and improves the overall shopping experience.

Companies that implement personalization strategies through data drive insights Outperform 85% in sales growth and 25% in gross margin. (Source: McKinsey & Company, “The Power of Personalization in Retail”).

These are a few points that show how personalized data-driven insights help to optimize store categorization:

  • Identify popular products
  • Dynamic reordering
  • Creating relevant categories

Real-time example: Spotify

Spotify gains deep analysis of users’ listening habits to create personalized recommendations. That’s why listeners keep engaged with trendy and relevant music.

Competitive advantage

Standing out from the crowd is more challenging than ever in the e-commerce world. E-commerce businesses that implement personalization strategies get a competitive advantage.

Personalization creates a unique shopping experience for users that meets the specific needs of every individual.

Following are a few advantages e-commerce businesses get through personalization that make them competitive:

  • Give customers a unique shopping experience
  • Increase customer loyalty
  • Higher customer engagement
  • Improved brand perception

Retailers who invest in personalization technologies and strategies will be better positioned to anticipate and meet customer needs, keeping them ahead of competitors who fail to offer the same level of personalized service.

Implement personalized solutions today- With Convertopia!

To wrap it up, personalization is everything when it comes to e-commerce. Retailers who implement personalization can expect not only higher sales but also earn customer loyalty.

Effective personalization requires data such as browsing history, purchase history, demographic information, and customer preferences. This data can be collected through website interactions, customer profiles, and engagement with marketing communications.

Incorporating personalization into your e-commerce strategy can drive significant improvements in customer satisfaction, loyalty, and sales. Start your e-commerce personalization journey with convertopia today.

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