What are the Benefits of Personalization in E-Commerce?



Personalization has become a major priority for most businesses, with 81% of customers saying that they now receive more personalized marketing messages than they used to five years ago. It is clear that

personalization is a trend in e-commerce

that showing no signs of slowing down, and with good reason.


We can easily put ourselves in the customers’ shoes. Imagine walking into a store where we are treated as individuals, like people with our own interests and preferences and a history of making decisions that reflect who we are. Now imagine walking into a store where you are treated as a shapeless mass and you have to keep telling the store clerk you have been shopping with for years that you don’t want the products he keeps offering you. Where would you rather shop? 


While personalizing your website and marketing strategies can seem like a daunting task, once you understand the benefits of personalization in e-commerce, it is likely that you will make it one of your business’ top priorities. 


More Clicks and Higher Conversion Rates

The statistics speaking to the benefits of personalization in e-commerce are overwhelmingly positive or negative, depending on whether your e-commerce store has adequately personalized your customers’ experiences. On the positive side,  91% of consumers say that they are more likely to shop with brands who recognize, remember, and provide relevant offers and recommendations. Moreover, personalization has shown to increase conversion rates by 51%. On the negative side, a survey found that 48 percent of all consumers have left a business’ website and made a purchase on another site or in-store due to the site not being adequately curated towards them, and on average, 71% of consumers feel frustrated when their shopping experience is impersonal. 


What do these statistics tell us? Well, they tell us that personalization is an essential practice for your e-commerce business; the thing is, not just any personalization is up to scratch. Basic personalization techniques are not meeting customer expectations anymore. 


To show this, we can use personalized email campaigns as an example, since email content is where the majority of e-commerce businesses are utilizing personalization. These businesses aren’t sending these emails out just for fun; they, like the rest of the e-commerce world, are sending these emails out in the hopes of increasing their conversion and achieving a successful ROI, but is it working?


"Studies show that personalization improves customer experience by 55% and, in  turn, improves brand perception by 39%."  -Click to Tweet-


According to one survey, 76% of companies responded that they incorporated customers’ first names and/or companies’ names into the message or subject line of emails they sent. This is compared to a mere 25% of companies that are personalizing their emails to the individual level by including product or content recommendations and tailored messaging and promotions. With 76% of companies utilizing the first approach, we might expect it to be very effective. Although some personalization is better than no personalization, we see that this is not the case: 


One survey shows that only 17% of customers find it appealing when they receive emails from companies containing their names. Another survey shows that only 8% of customers would be encouraged to engage with a retail brand if they addressed them by their first name and only 7% of respondents would be encouraged to do so if they received a birthday email. On the other hand, 50% of customers find it appealing when they receive emails with products related to their interests.  What this shows is that if you want to want to reap the benefits of personalization, you need to effectively tailor it to what the customers want. 


Of course, there are many marketers who understand the importance of personalizing emails but know how to do it effectively. In fact, one study shows that while 61% of marketers understand the benefits of personalizing online shopping, 51% of business owners don’t know how to implement effective personalization in email marketing. While furthering your research on effective email strategies is invaluable, some may want to consider the assistance of professionals to reap the most benefits.


We have been using email marketing as an example of personalization techniques because it is the most used by marketers, but of course, there are many other areas where personalization proves highly beneficial to your brand. One such area is web advertisements, where personalized display ads have a ten times higher click rate than traditional display ads. 




Improving the Customer-Brand Relationship

It's no secret that developing your brand, differentiating it from the competition, and marketing it to customers are essential steps in creating a successful e-commerce store. Once you’ve got your brand running, its all about creating relationships with your customers, and that's what personalization is all about. Just like you want your friends to remember your likes and dislikes, customers want their stores to know them and understand them. That's why some of the top statistics regarding the benefits of personalization have to do with improving the customer-brand relationship. 


Studies show that personalization improves customer experience by 55% and, in turn, improves brand perception by 39%. 


How might personalization improve customer experience? A great example is that it can make the process of buying something extremely easy. When someone is buying new jeans, they don’t want it to take as long as if they were buying a new house. Simply suggesting to a customer a pair of jeans they may like, and then already having their information in place (if they have already purchased from you) when they go to make the purchase, makes the process of shopping simple and efficient.


No wonder companies who have utilized personalization in their marketing and their promotions and have integrated personalized features into their website design and brand-experience saw customer engagement with their brands go up 55%. 


Again, we might wonder what a real-life example of personalization directly increasing customer engagement looks like. There are many, but one good example is provided some research done by Hubspot that shows that calls-to-action that were targeted to the user had a 42 percent greater view-to-submission rate than calls-to-action that were the same for all viewers. 


So there we have it: personalization in e-commerce is all about developing a better customer-brand relationship, and of course, the development of a better customer-brand relationship leads to more clients.




More Customer Loyalty

In fact, nearly half of all customers say that personalization makes them more loyal to a brand.


The benefits of creating customer loyalty cannot be overstated. Studies show that return customers spend approximately 300 percent more than one time customers in the long run. This may be because return customers are far easier to sell to than new customers and, ultimately, cost a lot less money to sell to. How much less? According to some metrics, it cost five times less to keep a current customer than to acquire a new one. 


Moreover, repeat customers are one of the biggest indicators of a company’s health. During the first month of a company’s existence, top-performing companies are already receiving roughly 20% of their revenue through repeat customers, while non-top performing companies receive 10%. Then, by the third year of a company’s existence, many top-performing companies get as much as 60% of their revenue from repeat customers. Of course, getting customers to purchase a second time is extremely difficult since 68% of customers never purchase from a business a second time. 


One of the most surefire ways to create repeat customers is through personalization, with 56% of customers saying that they are more likely to return to a site that recommends tailored products to them. 


How Much Is Too Much?

Okay, so this whole article, we have been talking about the benefits of personalization. But personalization requires collecting data on our customers so that we have the information required to know, for example, their shoe preferences or that customer x has just bought a laptop and might be looking for a nifty laptop mouse to go with it. At this point, a reasonable question might be...Are customers actually okay with that? 


The answer is yes but with one caveat. 


A study conducted by Accenture shows that a whole 83% of customers are willing to share their data to enable a personalized experience as long as businesses are transparent about how they are going to use the data and that, ultimately, customers have control over it. 


While the majority of customers say that they have not had any negative experience in this regard, the same study shows that there is, in fact, a line and that occasionally businesses do cross it. Of the customers surveyed, 27% reported a brand experience as too personal or invasive. Of these people, 64% say it was because a brand had access to information they did not share knowingly or directly, such as a recommendation based on a purchase they made with a different business. 


The benefits of personalization for your e-commerce business are substantial,

and to make the most of them, it is important to remember that brand-consumer relationships share many similarities with relationships between people: they require knowledge of the other’s preferences while fostering trust by showing respect for the other’s boundaries. New call-to-action



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