In an ever changing world of e-commerce with so many options for customers, it’s quite hard to build loyalty. Therefore, how can you stand out and keep customers coming back? The answer is personalization.
Personalization is about offering your customer a tailored experience made for them. It’s not just using their name in an email and sequencing where to send products they already bought. It’s about looking after their needs and likes and giving them something that’s meaningful to them. The reason why brand loyalty is so important is because it turns first time buyers into repeat customers.
According to Salesforce research, 84 percent of customers say it’s critical to be treated like a person, not a number. A customer is more likely to remain loyal to your brand if you make them feel understood.
Table of Contents
I. How personalization builds connections?
Personalization works for the simple fact that it taps into natural human behavior. For instance, as with many things, the Endowment Effect illustrates that people value what they own more than what they don’t. One version of the Reciprocity Principle holds that people like to return favors. This is key to the idea of personalizing the customer experience, and building stronger, more emotional connections between the brand and the customer.
The results are clear. As Epsilon discovered, a personalized experience can result in an 80% customer retention. Personalization is not just a gimmick, it’s the proven way to create loyalty and ensure continued business with customers.
II. Key personalization strategies for e-commerce
Now that we understand why personalization is such a big deal, let’s uncover how you can get your business in on the action. These strategies are simple to execute and can make a difference to customer loyalty.
2.1. Personalized product recommendations
Suppose you are looking for a pair of running shoes and haven’t decided which one to buy. And you may begin to wonder if there isn’t something better out there. Then the website suggests a few other shoes based on what you’ve already looked at. These recommendations seem made just for you, giving you exactly what you need.
Similarly, personalized product recommendations can do the same for your store. Customers are more likely to discover more of what they want if you suggest products using customers’ browsing or purchase history. For example, Amazon’s recommendation engine is perfect. That way, it accounts for 35% of their sales because it helps customers find products they’re likely to buy, without having to search for them.
It’s good because this also increases the likelihood of customers making a purchase and it makes them feel like you’ve personalized for them for their tastes. It increases confidence, connection, trust, which ultimately increases conversion rates and repeat purchases.
2.2. Dynamic pricing and offers
Pricing can be a great e-commerce tool. What if you could give your customers a discount or special offer based on what they’ve done before like a deal on something they’ve been eyeing for a bit longer? Dynamic pricing and offers are the idea behind it.
Let’s say a customer has shown you that they’re interested in one product (which they haven’t bought), you can use personalization to send them an email or popup offering a discount. According to Campaign Monitor, email revenue can increase by 760% through segmented promotions such as these.
This strategy will increase sales without having to reduce prices on your store as a whole. It tells your customers that you notice they are interested and you want to give them something for coming back. Not only does this improve sales but it also helps to build the customer relationship and to build loyalty.
2.3. Customized email campaigns
Personalized emails are a great way to connect with your customer. That means instead of sending out generic offers you can send messages that read like they were created specifically for them.
For instance, Spotify sends out their annual “Wrapped” campaign that gives each user an overview of what their most played songs, artists, and genres. This is a simple yet powerful method allowing you to reflect the customer’s own individual music tastes. They are personalized, make users feel special and would encourage them to share their results on social media. This campaign brings users back to the platform, even the ones that haven’t used it for a while.
Sending personalized emails based on what a customer has purchased in the past, what they’ve browsed, what they like – this can have the same effect on your store too. When your customers see that you know what they want, they tend to engage with your brand more often. Sending these emails will boost your customer retention and encourage repeat purchases. In addition, social media strategies can serve to create loyalty and strengthen long term relationships with your customers.
2.4. Personalized loyalty programs
Having loyalty programs is always a good solution to keep your customers coming back. If the program is the same for everyone, it’s not going to feel all that special. What if, instead, you could create a loyalty program that was created for each customer based on their buying behaviors? Say, if a customer often purchases the same product, you may provide a personalized reward regarding that product.
With their Rewards App, Starbucks does this well. It tracks your purchases and gives you rewards for what you buy. Starbucks may give you a discount or free item if you regularly order a certain drink. This will make your customers feel valued and will make them come back again.
Personalized loyalty programs create trust and provide more reasons to keep your customers loyal to your e-commerce store. The more you understand what they want and reward them for it, the more likely they are to keep coming back and be your brand for the long haul.
III. Real-life success stories: Brands that got it right
In this blog, we discussed earlier how personalization can enhance the shopping experience and build brand loyalty. Let us take a walk through how ASOS, one of the biggest online fashion retail websites in the world, performs this strategy to increase customer loyalty and sales.
3.1. Personalized recommendations
Data is used by ASOS to make people’s shopping experiences more personalized. For instance, the Profile Builder feature is used to allow customers to share style preferences. So ASOS suggests products that they think will suit their tastes. If that customer wants simple clothing, they’ll gravitate toward simple designs over bold ones.
This customized representation provided shopping becomes straightforward and customers come in the future for a repeat experience. That is, when customers feel understood they are more likely to stick with a brand.
3.2. Buy the look
In addition to personalization, ASOS uses “Buy the Look” (BTL) feature. Instead of offering a list of individual products ASOS recommends entire outfits. It includes everything such as dresses, shoes, and some accessories that go well with respect to style, color, and Occasion. Take ASOS, for instance, when a customer is looking for a dress, ASOS offers to provide matching shoes, bags and jewelry to complete the look. This approach allows customers to more easily find what’s needed, which increases sales.
ASOS is a case study in how personalization got them through tough times. ASOS increased global sales by 19% but profits rocketed by 329%, when many retailers found themselves falling short. This proves that if you give the customers what they want they’re more likely to stick with your brand. Personalization decreases effort, thus making it a more pleasant experience.
Personalized experiences like these strengthen customer relationships. Customers will find what they want quickly, become more loyal, and make better sales.
IV. Measuring the ROI of personalization for brand loyalty
In order to understand if your personalization efforts are having any impact on brand loyalty, you need to track it. This helps you to focus on key metrics that will tell you how well personalization is building lasting relationships with customers for you.
4.1. Customer retention rate (CRR)
The Customer Retention Rate (CRR) passes judgement over the percentage of customers that return to your store. Customers stay loyal to your brand if your CRR is high. Personalization can increase the customer retention rate by creating a more interesting and more relevant experience for customers.
For instance, sending tailored offers or suggestions will get them to come back. The simplest way to track CRR is just to count how many of the customers buy from you more than once in a certain time. This is good, however if CRR increases after personalizing it means your efforts are working.
4.2. Repeat purchase rate (RPR)
Repeat Purchase Rate (RPR) is the measure of how often customers come back to buy again. The higher the RPR, the more likely the customer will buy again. We can enhance RPR by providing products that a customer is interested in.
Take for example, sending follow up offers or displaying related products will prompt customers to come back. RPR tracking shows you how your personalized marketing drives repeat buyers.
4.3. Average order value (AOV)
The Average Order Value (AOV) is a metric to measure how much does a customer spends every time he/she makes a purchase. By suggesting related, or higher value products, personalization can boost AOV.
For example, if you can display bundles or discounts to customers, it’ll encourage them to spend more in their cart. If you’ve changed AOV before and after personalizing, then comparing the before and after AOV will tell you if customers are spending more per order.
McKinsey says personalization can boost revenue by 10 to 15 percent. This shows the huge return on investment (ROI) that personalization efforts can provide.
4.4. Tools for tracking ROI
Web personalization platforms like Fragmatic are effective at helping track these metrics and measure ROI accurately. You can use these tools to understand how personalized experiences impact customer behavior and test CRR, RPR and AOV more accurately. Such tools allow you to make data powered decisions to increase brand loyalty and grow your revenue.
V. Common challenges and how to overcome them
Personalizing customer experiences is a challenge. Here are some common obstacles marketers face and ways to overcome them:
5.1. Lack of data or fragmented data sources
Many businesses suffer from fragmented or incomplete data. It’s difficult to get a unified view of customer preferences when their information is spread out across multiple platforms. Without data, personalization efforts can be a failure.
As a result, marketers can utilize web personalization tools that can combine data from several sources, including websites, social media, and CRMs. The tools aggregate data and allow for more personalized targeting by creating clearer customer profiles.
5.2. Balancing personalization with privacy concerns
Personalization can take us into unwelcomed territory by collecting data, particularly under GDPR and CCPA regulations. Not doing so can also generate fines, and perhaps most importantly, damage customer trust.
To overcome this challenge businesses should use personalization tools that comply with data privacy laws. When collecting data, it’s important to get clear consent from customers, and to tell them how what is obtained will be used. This provides marketers the ability to create personalized experiences that respect privacy and brands’ trust.
Conclusion
Building long term brand loyalty relies heavily on personalization. Through its tailored experiences, brands demonstrate that they know what customers need. It makes it easier to make connections and repurchase. The more e-commerce grows, the more important the ability to personalize at scale will become. Those who use data well and spend on the right tools will be seen as the marketers who stand out. If businesses deliver relevant and meaningful interactions, they will not only increase ROI, but also build long term relationships with customers.
Author bio
 | Vidhatanand is the Founder and CTO of Fragmatic, a web personalization platform for B2B businesses. He specializes in advancing AI-driven personalization and is passionate about creating technologies that help businesses deliver meaningful digital experiences. |
