Customers are at the heart of any brand, whether making their first purchase or a life-long advocate; without them a business simply wouldn't exist. For an online retailer, this that means creating an engaging, relevant online experience is an absolute priority, to both convert and retain customers.
In the early days of online retailing, brands could significantly improve conversion and revenue growth through relatively simple A/B testing and site optimisation. Fast forward to the present day and the gains that can be achieved with these methods are diminishing, and coupled with a slowing ecommerce growth rate, many brands are in the position that they could be optimising a 'one size fits all' website until the cows come home, and still not achieve the business growth they want.
Marketers and ecommerce directors believe the key to achieving growth is personalisation. According to a survey by Deloitte and Salesforce, adoption of personalisation is key, with 92 per cent of brands either using personalisation currently or planning to in the future. But what exactly is personalisation and how should brands be measuring the value it brings?
At Monetate we view personalisation as knowing every consumer as an individual, and delivering them a unique and relevant experience across all channels. What this looks like in practice can differ from brand to brand depending on what they want to achieve.
For example, as brands start out with personalisation, one brand may prioritise the delivery of personalised experiences that take into account regional preferences and local weather conditions, whereas another may choose to focus instead on segmenting loyal VIP customers, from new visitors or target mobile customers with a more relevant experience, helping them find their favourite products quicker.
Wherever you start, using personalisation to generate a seamless multichannel experience regardless of device or channel, ensures customers' preferences remain at the heart of the shopping journey.
With varying approaches to personalisation, it is important not only to consider areas such as the return on investment for the technology itself, but also take into consideration the return on experience when quantifying its impact.
ROI: return on investment
One of the more traditional approaches to quantify the success of personalisation is the return on investment (ROI) of the personalisation platform as a whole. By taking a look at the overall return delivered by personalisation technologies, a brand can see solid evidence of the impact of personalisation and evaluate the investment against individual business goals.
Forrester Consulting recently undertook a 'whole life' analysis of the returns from incremental revenues and cost savings of personalisation for a large office supplies retailer. In this instance, they recorded an overall ROI of 595 per cent, with payback on the initial investment of one month.
ROE: return on experience
But it's no longer just as simple as monitoring ROI; for many brands the return on experience (ROE) can offer a more compelling and relevant metric that enables a business to gauge the effectiveness of personalising the customer experience much more swiftly.
This is because ROE gives laser focus to measuring the individual results that changes to the customer experience bring to positively impact customer life-time value and ultimately the financial well being of the brand.
Where brands are using personalisation to segment and target (e.g. via region, customer persona, gender, device etc.), or to differentiate experiences between multiple customer types (e.g., new / returning / lapsed / VIP), measuring the return on experience gives ability to individually measure and improve the experience for each segment.
Typical results we observe from this include decreasing bounce rates, increased conversions as well as increased average order values and repeat purchases, all of which in turn generate revenue and contribute to ROI.
For example Missguided, a leading fast fashion online retailer, has been using personalisation to target specific market segments and geographical regions with specific experiences. This multi-faceted approach saw an increase in conversion rates of 34 per cent and a total increase in revenues of 33 per cent.
As competition between retailers remains fierce, the customer experience has quickly become a key battleground, with success or failure the difference between purchase and an abandoned basket.
Personalisation is proving itself to be a game changing solution for retailers to create an individual journey for each customer. Brands can differentiate themselves from the herd and build a lasting relationship with the consumer that sees both a return on experience, and an overall return on investment.
By Mike Harris, VP EMEA at Monetate
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