Personalization has been a big part of marketing discourse since the advent of digital marketing (and even a bit before). Now, with access to more customer data and more marketing technology than ever, brands are able to achieve truly unnerving levels of personalization. The question remains though, are marketers actually reaching their full personalization potential, or are they wasting resources on ineffective tactics?
Qubit, the marketing personalization technology company, sought to answer these questions by conducting a massive study on the effects of personalization in eCommerce. The study analyzed more than 2 billion user journeys and 120 million purchases to find out how much more revenue ecommerce businesses can expect as a result of their personalization efforts, and how much UX optimization can impact the customer journey.
The study found three key techniques at the cross-section of UX optimization and personalization that can grow a business’ revenue per visitor (RPV) by more than 6%: scarcity, social proofing, and urgency.
“It’s been known for some time through the great work of people like Dr. Robert Cialdini that factors like scarcity or social proof can have a strong psychological effect on persuasion. Because these tactics, among others, tap into our need to take short cuts to decision making they are effective on their own,” says Jay McCarthy, VP of product marketing at Qubit. “When you use these responsibly to the benefit of groups of users who can most benefit from these persuasion techniques, everyone wins.”
The report defines scarcity as highlighting relevant items that are low in stock, and found that this tactic generates a mean lift in RPV of 2.9%. Social proofing is defined in the report as leveraging the behavior of other users to provide information about currently trending and popular products, and generates a mean 2.3% RPV lift. Urgency generates 1.5% RPV mean lift, and is defined in the report as using a time limit to promote urgency to complete an action before a deadline.
“While most of the tactics that we discuss in the analysis can be done in a blanket way, they can also be done in a more targeted way to improve the impact. For instance telling all runners that other visitors are looking a particular shoe is fine, but telling other marathon runners that other distance runners are buying a particular shoe is much different,” McCarthy says.
The study found some interesting divergent trends as well. For instance, many marketers approach UX on their sites through a series of cosmetic overhauls. This can include A/B testing various creative aspects of the site or product, including button sizes and colors, placement of assets, and any number of layout changes — all of which can be personalized to an individual user’s behavior. However, the study found that these cosmetic changes are often not only ineffective, but can even be detrimental to the user journey.
“While our study doesn’t go into “why” these cosmetic changes are less effective, we might guess that the standard for UX has been raised to a level where we’re now seeing diminishing returns for cosmetic changes. Many of these cosmetic changes are also taken on “gut feel” and subjected to less rigorous analysis before changes are made,” McCarthy says.
Instead of cosmetics, the study finds that marketers should invest in programmatic and personalization experiences that tap into the individual customers themselves, the products they’re buying or researching, and the data the business has on these individuals. This approach drives from two to 14 times more incremental RPV compared to cosmetic changes, the study found.
Additionally, 26% of brands are spending more than $51,000 of website testing and optimization tactics, and 8% of those are spending more $100,000 annually. But the study found that this is not money well spent, and as these companies come to this same conclusion, 64% of them change optimization and personalization technology within a year.
Finally, the study found that mobile isn’t actually a great driver for eCommerce, contrary to what many in marketing believe.
“What we’ve found is that small screen eCommerce faces a particular set of challenges beyond that of desktop or tablet shopping,” McCarthy says. “We would also note that personalization and optimization projects on mobile web environments have lagged behind and/or failed to address some of the unique challenges such as product discoverability.”
The main takeaway here is that personalization, like anything else a modern marketer does, is surrounded by data. Marketers need to use that data to optimize the performance of the tactics they employ, and this study shows that that’s not often the case when it comes to personalization.