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Expert opinion

Growing ecommerce sales through data-driven personalisation

Monday 8 January 2018 | 09:36 AM CET

Jennifer Polk, Research Director with Gartner, explains in which way can personalisation optimise the customer experience in ecommerce

As customers interact more with digital technologies, they expect a higher level of personalization when shopping online. Sophisticated websites, mobile devices and applications, as well as social media are key factors that drive the demand for personalised digital commerce services.

Ecommerce businesses who use data-driven personalisation to tailor their products for specific customer segments can expect increased customer conversion and higher sales volumes. That is why data analysis has become an essential tool for optimising marketing strategies through personalisation.

Consumers demand a higher level of personalisation

Apart from quality services and products, a consumer expects to build a relationship with their favourite businesses. Customers assume that companies will provide a personalised buying journey with special offers and tailored content that caters to their needs and preferences. Companies can use real-time data from beacons and wearable devices to contextualize content and offer commerce experiences across digital channels.

Segments and personas to enable personalisation

Data and content are the building blocks of every personalisation experience. Ecommerce marketers can group and aggregate data about their customers into segments and personas. This will allow them to develop further marketing strategies and organise content around their targeted groups.

Segments represent groups of customers, prospects or audiences that share similar attributes. These attributes are collected and assessed through demographic, transactional, behavioural and certain psychographic data.

Personas are fictional user archetypes that are based on segments with added dimension, such as emotion. Marketers have to use psychographic and ethnographic research to further divide segments into different types of buyers based on their human qualities and their underlying motivation for making a purchase.

Segmentation is the first step towards personalisation

Ecommerce businesses should build their personalisation strategies starting with segmentation. The goal is to find out who the customers are and how they buy. To achieve this, businesses can use demographic, transactional and behavioural data.

Transactional data can be used to assess a customer’s or prospect’s relation with the business: are they new or recurring customers? What is their shopping history? What is their purchase frequency? Transactional data can help an ecommerce business improve its email marketing campaign. For example lapsed customers can get promotional offers to trigger interest, while new customers will receive an email featuring personalised product recommendations based on their recent purchases.

Behavioural data can tell a business how its customers shop. By using real-time data, an analysis team can find the appropriate channels to market and target specific customer segments. This suite of data answers questions like: Who visits the website? How do they interact with content on the website (such as digital ads)? Who are the cart abandoners and what are they doing once they leave the ecommerce website? Behavioural data can help ecommerce businesses identify cart abandoners and analyse their search behaviour during and after the session on the website. This enables merchants to tailor digital ads to their visitors’ needs.

The why question

Demographic, transactional and behavioural data can help a business know who their customers are and how they buy, but personalisation requires going one step further and uncovering the reason why consumers shop for certain products.

To assess this, ecommerce businesses will have to employ different sets of data: psychographic and ethnographic research. Psychographic data shows the values, beliefs, opinions, interests, aspirations, attitudes and lifestyles of a particular segment, all of which contribute to the motivation of a customer for buying a certain product.

Ethnographic research can be difficult and costly, but it allows businesses to observe their customers while shopping for a product and interpret their behavioural within the context of their life.

Steps to implement personalisation strategies

Once a business knows who its customers are as well as how and why they buy, it can implement a strategy to deliver personalised content and experiences to each segment and personas.

1. Define an objective for personalisation. How will personalisation help increase digital sales and deliver greater value to customers?

2. Determine the right level of personalisation. What degree of personalisation do customers expect? Responding to customers’ needs is essential because too much personalisation can alienate customers.

3. Map and organise data. After defining a strategy, the next step is mapping the necessary points of integration between different systems as well as integrating disparate data sources, along with second and third-party data.

4. Assess technology needs and evaluate providers.Ecommerce businesses need to assess their current data marketing technology provider’s capabilities and see whether they support multichannel campaign management and digital commerce personalisation.

Personalisation requires cross-company collaboration and outside resources. An analytics team is required to map the data a company has and needs, data sources, and points of integration. Ecommerce businesses will also need to use technology to integrate data sources, analyse data, and apply insights across digital marketing and digital commerce channels.

Personalisation is an ongoing exercise that is never “done.” Customers move in and out of segments due to changes in their lives or progression through the customer life cycle and can even inhabit multiple personas at once. This means that segments and personas become more valuable with continual refinement through data analysis that shows changes in behaviour patterns.

This editorial was first published in our Online Payments and Ecommerce Market Guide launched on 1 November 2017. The guide features several important thought leadership editorials from ecommerce and payments industry professionals, which makes it a top-reference source for anyone involved in the payments ecosystem.

About Jennifer Polk

Jennifer Polk specializes in digital commerce and advising marketing leaders on how to align multichannel marketing to the buying journey and use techniques like customer journey analytics, data-driven segmentation, personalisation, mobile and social commerce to drive digital commerce results.

 

About Gartner

Gartner is the world’s leading research and advisory company. The company helps business leaders across all major functions in every industry and enterprise size with the objective insights they need to make the right decisions.

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