In one year, retailers that are all in with personalization will outsell companies that aren’t by more than 30 percent.
That single Gartner Research stat should be enough to make retailers realize personalization isn’t just a cool thing they could do—it’s necessary for today’s consumer.
“Personalized shopping experiences have drastically changed the way consumers want to shop and engage with retailers,” a new whitepaper by personalized experience management firm Certona noted. “Consumers now expect individualized experiences at each phase of their shopping journey, which is why you now need to rethink your approach to digital commerce.”
Shoppers are expected to spend as much as 12 percent more, or $440 billion, on online retail buys this year, and personalization will further fuel that growth.
According to Certona, there are six levels of personalization capabilities companies should be considering: collaborative filtering, customer segmentation, rules based, real-time profiling, predictive modeling and data integration.
Collaborative filtering
Not so much focused on the individual shopper, collaborative filtering records behaviors and preferences from a group of shoppers and then drives recommendations based on how the crowd interacts with certain items.
“Although collaborative filtering does not personalize at the individual level, it is a useful approach for unknown or first time visitors,” Certona said. “It allows you to immediately provide a more relevant shopping experience by leveraging contextual data and blending it with the ‘wisdom of the crowd’ to present relevant content and products versus having no personalization at all.”
Customer segmentation
With customer segmentation, shoppers are split by subsets based on perceived common behaviors and interests. They can be divided into subsets by demographics, geographics, active lifestyles or the fact that they buy sneakers. Segmentation then allows the retailer to target those subsets based on specific demand and attributes.
“Segmentation on its own can be very targeted, but when combined with individualized behavioral profiling and predictive modeling, it takes the shopping experience to a whole new level,” Certona said.
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Rules based
Shopping experiences can also be influenced based on business objectives, like showcasing products from a related category or cross-selling high-margin items.
“This gives you extended functionality to meet the standards of shoppers but also internal business strategies,” Certona noted. “This flexibility in functionality allows for an art and science approach that enables business goals while still delivering a 1:1 personalized shopping experience.”
Real-time profiling
If brands can collect behavioral information as it happens and accommodate what could be in-the-moment needs, personalization can happen in real-time.
“Real-time profiling allows you to profile anonymous and known shoppers by observing shopper behaviors and identifying contextual information within 3-4 clicks on a site,” according to Certona. “This information enables better predictions of the shopper’s intent and allows the personalization engine to serve up the most relevant experience in real time during the active browsing session.”
Predictive modeling
With predictive modeling, brands can collect behavioral data on shoppers, using techniques like data mining and artificial intelligence, and use it to predict their next moves.
“By leveraging predictive modeling, you can become extremely targeted when it comes to presenting what your shoppers are looking for,” according to Certona. “From increasing engagement and loyalty to more strategic promotions and offers, predictive modeling allows you to deliver the most relevant, in-the-moment shopping experience to a segment of one, across the different digital retail channels.”
Data integration
Data integration pulls information from multiple sources, like points of sale, personal account preferences and product reviews, to create a well-rounded picture of the consumer and enable deeper targeting. And doing so could allow retailers to provide their customers with richer, more relevant engagement.
“Data is the fuel for personalization,” Certona said. “The more information you can incorporate about each shopper, the more individualized the experience will be.”
What’s next for personalization?
The transformation of digital retail won’t slow anytime soon, and personalization is the competitive advantage retailers will need at a time that bankruptcies are almost as common as the cold.
“Personalization is more than just product recommendations,” Certona reiterated. “It creates a completely individualized, in-the-moment shopping experience.”