By: Sarah Peterson, Namogoo team
Personalized marketing might bring to mind things like customer segmentation, understanding your target consumer’s psychographics, and hyper-specific targeting strategies on social media.
And these are all cornerstones of personalization in marketing and advertising.
But personalized marketing spans beyond the basics of market segmentation and targeting in eCommerce. And ensuring the customer experience is tailored for each individual user you are hoping to attract is not only best practice in this new era of eCommerce; it’s expected.
What is Personalized Marketing?
Personalized marketing is a strategy where brands create a tailored experience for their audience based on the information they gather about who an individual is, including their behavior, preferences, and location.
Just like you might tell a friend or coworker about a book or product based on things you know they like, personalized marketing helps brands target, convert, and retain their most valuable customers.
Unlike traditional marketing which targets users broadly, personalized marketing tailors the experience to customers on an individual level based on specific data gathered from a variety of sources:
Customer segmentation types:
Psychographic segmentation
Behavioral segmentation
Demographic segmentation
Customer intent signals
Brands that engage in personalized marketing then deliver a tailored customer experience based on the data collected, unique to each user.
While plenty of companies use personalized marketing, it’s particularly effective for eCommerce brands looking to stand out from the competition, and improve eCommerce team KPIs and metrics.
Why Personalization is Crucial in eCommerce
The internet is a busy place.
Between social media, email, streaming videos services, and websites, the average consumer sees more than 5,000 ads a day[*]. As a result, most internet users are learning to tune marketing messaging out and digital marketing strategies like paid ads are becoming less effective.
Personalization helps breakthrough “ad blindness” by delivering customized offers, messaging, and creative that consumers actually care about.
It is incredibly effective for eCommerce brands, with 61% of online shoppers surveyed stating they would be more likely to buy from a personalized offer that is customized to their needs and interests.
Established, savvy online retailers understand this, too.
We surveyed 100 senior eCommerce executives in the US and beyond, all of whom work in companies with online annual revenues ranging from $15M to $1B and more, and 55% cited improving onsite personalization as a top priority for increasing eCommerce revenue.
Not sold yet? Here are a few more reasons why personalized marketing is crucial for eCommerce growth.
#1. Personalized Marketing is Cost-Effective
Personalized marketing tends to be more effective, but it also costs brands less, too. Recent studies found using personalization can reduce acquisition costs by as much as 50% and increase marketing spend efficiency by 30%[*].
So while you might spend a bit more setting up and launching a personalization campaign, your ad spend will go further in the long run. However, personalization is not a silver-bullet strategy; it should be part of a multi-channel marketing strategy that draws customers in and keeps them coming back for more.
#2. Customers Spend More With Personalized Marketing
Personalized offers and campaigns provide targeted offers to customers based on their past browsing behavior and other personal data. This makes the offers far more relevant, increasing sales by offering customers items they are most likely to be interested in.
In fact, nearly half of all shoppers report making an impulse purchase after receiving a personalized recommendation from a brand[*]. More than 20% of shoppers say they spent more than $50 on a single purchase from a personalized offer, and 7% spend more than $100. Even more impressive, 85% of impulse shoppers were satisfied with their purchase, with just 5 % of shoppers returning their items.
This means in addition to increasing eCommerce sales as a whole, personalization increases customer lifetime value and average order value.
#3. Personalization Drives Customer Loyalty
It’s cheaper to keep the customers you have than to attract new customers, and personalization helps brands do just that.
Personalized marketing provides consumers with a personal connection, which was long a part of traditional shopping in places like markets and department stores. While eCommerce shoppers have far more options today, many still want that personal touch.
People are becoming more accustomed to the customer personalization they receive in their social media news feeds and on sites like Amazon. Delivering exclusive campaigns and personally suggested products gives customers the personal experience they crave and can drive loyalty.
#4. Individualization Creates a More Personal Connection
Today’s eCommerce experience is not just about transactions; it’s about relationships.
With so many options and competitors, you can’t win just by creating products and launching your store. To be competitive, stores need to humanize their brand and find ways to develop deeper connections.
Personalized marketing shows customers you care about them on a personal level. That connection can help you build a stronger connection for months and years to come.