Leveraging personalization in your e-commerce strategy: should you bother?

However, there is a critical existential question that almost none of the businesses embarking on this journey stop to ask themselves: should we bother?

It’s so easy to get caught up in the data and technology that many businesses fail to think of personalization from either a strategic or a customer experience (CX) perspective.

Netflix is essentially a massive database of content to which you subscribe and might visit daily. Unless you can quickly and easily find content that you love, you’re probably going to cancel your subscription. The content that you love is incredibly personal to you. Therefore, personalization makes enormous strategic sense to Netflix: the more they can understand you and your needs, and cater to those needs, the more money they make. Personalization is the DNA of the business.

Conversely, consider an online retailer specializing in sofas. People don’t buy sofas very often so they will likely have limited repeat visits to their site. The retailer won’t know anything about their visitors other than what they’re doing on the site right now. They also have a fairly small range of products that are easy to browse. What are they going to personalize? At best, they might do something like remember what color of sofa you viewed and then show you that color again on your next visit. While it’s not impossible, this would likely have very little impact on conversion rate – nobody is going to revere a brand for remembering a color.

Although these are extreme opposites, the majority of businesses sit somewhere in between and have equally ambiguous relationships with the concept of personalization. They all run astray with their personalization efforts for one primary reason: they are going after personalization for the sake of it.

This is what happens when something becomes a buzzword. First it becomes a ‘trend,’ and then a tonne of vendors and tech startups start selling it. Everyone thinks to themselves, ‘we need to be doing personalization,’ but really they are simply following the herd. Does anyone seriously stop and ask themselves: what value is it going to bring? How does it fit with my customer strategy? Is the effort worth it, or are there other things that we should nail first?

What’s the solution? The answer is to approach the problem from the standpoint of both strategy and CX. I believe the starting point for this is a series of questions:

• What are the ways in which individual customers (and potential customers) can be differentiated in terms of what they want and need from your product? For example, people who like watching movies can have very different tastes in films; some people don’t like to eat the crusts on sliced bread; the most important thing to my wife in a car is heated leather seats, but to someone else, it’s fuel economy.

• Do you or could you ever know these differences based on your opportunities for interaction with them?

• Do you already know that about them based on how they show up? If not, can you ask them, or would that be weird?

• Can you tell their preferences from the way they use the product? Does it send any data?

• If you can, is there a significant opportunity for you to serve tailored products or experiences? Would that actually represent a competitive advantage or would it go unnoticed? Is it operationally practical?

Let’s take my previous example of the sofa retailer. People like different colors, styles and shapes of sofas and this might depend on which room they want to put it in, so yes, we can identify different customer needs. We can tell what they’re interested in by the products they look at, we could even ask them, then we can serve products that they want. However, what we have described here is simply e-commerce – having a range of products so that people can find something they want. This is not and does not require ‘personalization.’

The answers to questions like the ones above not only tell you whether you should bother but, if the answer is yes, how you should do it. You are, therefore, starting from a place of understanding what needs to happen across the business in relation to data, product and operations in order to achieve it.