How Personalization Can Improve Your ROI

Today’s consumers not only want to get personal with the brands they engage with—they expect to. For the same reason a person is likely to seek out a brand they love on social media, they also expect to see emails from that brand addressed to them, specifically—not to “valued customer.” They want to be relevant. They want to connect.

73% of shoppers are more likely to spend their money with retailers that use their information in order to deliver a more personalized experience. They expect:

  • To see their names in emails they receive, as mentioned above
  • Replies to their comments, questions and complaints on social media
  • To see relevant ads and product recommendations and incentives based on their shopping history

More than this, failing to meet these expectations increases the likelihood that they’ll leave you and opt for a retailer that delivers a more personalized shopping experience.

There are a lot of ways you can use personalization, and the more you can do to personalize the way you engage with customers and prospects, the better. Every bit counts. According to McKinsey, personalization can generate five to eight times the ROI on marketing spend and increase sales by 10% or more!

Here are four key tips for improving your personalization techniques;

1. Use machine learning

Machine-learning algorithms make it possible to learn a lot about every person who visits your site. Using information such as their browsing and purchasing history, the amount of time spent on specific product pages and more, these algorithms make it possible for you to deliver automated, personalized incentives that are likely to entice your site visitors to buy. For example, using machine learning, you can create real-time offers for products the site visitors spent significant time reading about or that they put in their shopping carts during their previous visit.

2. Incorporate offers using behavioral economics principles

Marketers have discovered that analyzing behavioral and usage patterns is a golden key to driving the type of consumer behavior they’re striving for. Retailers can apply certain behavioral economics principles to design offers their customers will be more likely to engage with.

For example, shoppers are more attracted to bundles than to making multiple, separate purchases. If a visitor shows interest in product accessories but rarely purchases them, you can offer them together, as one purchase, instead.

Let’s say you sell jeans and belts, and you need to push sales of the latter. One way to do so is by offering the customer a $15 belt at checkout when she purchases a $50 pair of jeans. Or, you could offer a bundle which includes the jeans and a “thank you” belt at $65, offering the customer the option to return the thank you gift the store is offering them in order to pay a bit less. Behavioral economics also dictates that the likelihood of a customer returning a gift is slim.

There are other behavioral economics principles you can use as well. For example, if you offer a $300/year subscription service, and a segment of customers has a tendency to purchase at $50 or less. You might consider changing the way you feature your $300 annual membership fee to $25 a month, a price they’re more likely to find more reasonable.


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3. Use multivariate testing

With most marketing efforts, it takes some important testing before you find what works. Multivariate testing will help you determine the types of personalized experiences that resonate best with your customers.

Multivariate testing differs from A/B testing because you try combinations of a number of variables – not just one at a time.

For example, you’ve employed a pop-up coupon that appears on the screen after 2 minutes spent on your website, and the coupon contains a heading, text and an image. By performing multivariate testing on this coupon offer, you test combinations of at least two different headlines, texts and images. The resulting eight combinations will help you understand what type of coupon your site visitors respond best to. Beyond the variables we’ve already mentioned, you might also test different types of offers and varying discounts.

4. Use micro-segmentation

Micro-segmentation is the grouping together of customers based on certain characteristics they share. Because micro-segmentation focuses on very specific audiences, it allows companies to deliver highly targeted messages that resonate most with each specific segment—almost making it seem as though the message or offer were designed specifically for each person in that segment. Because of this, micro-segmentation is a great way to deliver relevant, personalized offers that your customers will be more likely to want.

For example, assuming you’re a children’s clothing retailer. You might segment customers based on their purchase history, and target specifically customers who purchased boys’ size 6 months clothing with offers for size 12 months when they return to the site after X number of months. This is one way that micro-segmentation allows you to design very targeted, specific offers that can be delivered in real-time to make your customers’ shopping experiences more personalized and enjoyable.

Not only will these types of offers increase sales—you’ll also find that properly targeted, personalized offers improve customer loyalty. While it’s always nice to attract new customers, it’s the loyal, returning customers who account for the most sales growth year after year. Studies have shown that repeat customers spend more on each purchase than new customers, and are 9 times more likely to make a purchase than a new customer.

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The bottom line is that embracing personalization will fulfill your customers’ expectations, differentiate you from your competitors, and help you improve your ROI.

Discover how much can you potentially increase your revenues after implementing Personali software.

Use our ROI calculator for retailers

To read more about the relation between behavioral economics and marketing,
and demonstrate how creative marketing organizations can leverage the fundamentals of behavioral economics
download our eBook: Behavioral Economics as a Key Marketing Driver