The early days of e-commerce were a far cry from what we now know online shopping to be in 2022. What began as merely a way to sell products over the internet evolved into a complex system of transactions and relationship-building between customers and brands.
As with most technology, e-commerce initially had a high barrier to entry. Over the years, however, it has become accessible to the everyday person.
No longer is the e-commerce space the playground of prominent brands with massive budgets. Even individual hobbyists looking to sell some of their goods can carve out spaces of their own on platforms such as Etsy, and plenty of up-and-coming retailers have started small businesses on Shopify.
The relative accessibility of e-commerce is wonderful for those new to the market, but it also has a major implication for retailers: you’re going to have to compete a lot harder for market share.
Leading brands now use personalization to stand out, targeting customers on an individual level and building loyalty over time. But how did this change come to be and why is building a strong personalization strategy so important in the industry today? Let’s take a look.
A brief look at e-commerce’s history
The concept of electronic commerce has been around for nearly as long as the internet has. While several smaller technologies paved the way, e-commerce is believed to have truly kicked off in the early 80s when Michael Aldrich connected a modified domestic television to a multi-user transaction processing computer with the help of telephone lines.
A few years later, early e-commerce platforms began to emerge, including Minitel, which, at its peak, had terminals installed at over 7 million homes before reaching a decline.
In the early 90s, the World Wide Web arrived and brought many changes to online commerce. URL, HTML, HTTP, and security protocols were developed, warming customers up to the idea of transmitting data over the internet. This is when Amazon, which remains one of the biggest e-commerce platforms today, emerged as an online store selling books.
The e-commerce industry grew rapidly from this point on. Following Amazon, eBay debuted in 1995, and Etsy launched in 2005. These brands remain well-known amid the countless online shops that have emerged since.
The impact of the coronavirus pandemic on e-commerce
Towards the end of 2019, COVID-19 was classified to be a worldwide pandemic and changed our lives as we knew it. Retail businesses everywhere scrambled to adapt because if they didn’t, they faced elimination.
A major adjustment many brands made was adopting a digital-forward approach to selling. Using technology to future-proof e-commerce sales channels helped brands not only survive but make room for new opportunities through sales diversification.
Looking back on the data from this period, we can observe a boost in global retail e-commerce sales from 2019 to 2020, as well as a steady 8% growth forecasted through to 2024.
One device to rule the others
Pandemic or not, selling online isn’t restricted to a single channel. Customers can place orders and process payments on a variety of devices, including desktop computers, tablets, smart home voice assistants, and even wearable personal devices. The popularity of each device has shifted through the years, but it isn’t surprising that one type of device is by far the most utilized: smartphones.
According to PWC’s 2021 Global Consumer Insights Pulse Survey, 41% of respondents used mobile devices to place online orders on a daily or weekly basis—a 2% increase from 6 months prior and a 12% increase from 5 years prior.
While in-store shopping still holds the top spot in popularity, mobile shopping is just a few percentage points short of closing in. There’s no better time to focus your efforts on mobile and deliver a superior customer experience through e-commerce personalization.
Despite the fact that mobile e-commerce is a necessary investment in 2022 and beyond, customers expect omnichannel personalization. You can create more touchpoints and future-proof customer relationships by using social features to seamlessly tie mobile app channels to web, social media, in-store, and more. This ensures your brand is ready to weather any industry changes that may arise in the coming years.
Creating meaningful customer experiences with personalization
Companies have access to more data and tools than ever before, and because of that, buyer expectations are changing. Brand loyalty is not always stable, but you can earn loyal customers by providing them with personalized, meaningful shopping experiences.
Most retail businesses default to transaction-based rewards like cashback rewards and discount vouchers to build loyalty. However, research shows that 64% of consumers find a good customer experience to take precedent over prices. The money they save isn’t the only thing that matters!
People want to build meaningful relationships with the brands they frequently purchase from—including retailers. That’s why using a personalization strategy to make a great impression at every possible touchpoint will do more for long-term engagement than cashback schemes ever will.
Benefits of personalization in e-commerce
Gregory Ng, CEO of Brooks Bell, an experimentation consultancy, states that customers have come to expect personalized, responsive engagements throughout multi-touch, omnichannel purchasing experiences. To put it simply, customers want their brand experiences to be curated specifically for them. With the data now available at companies’ fingertips, it’s possible to target people on an individual level and offer dynamic content that drives deep, lasting connections.
Creating personalized experiences that change based on individual demographics and preferences allows you to build customer loyalty in a way like no other. Happy customers and better conversion rates are a given, but there's more. Here are a few reasons to deliver a personalized shopping experience:
1 - Create a sense of belonging
During the online purchasing process, shoppers have to give up quite a bit of personal information. In return, they want to be treated as individual customers with unique characteristics and preferences.
E-commerce personalization strengthens business-customer relationships and helps shoppers feel like they’re a valuable part of your community. Social features go a step further to encourage interaction between e-commerce sites and their customer base.
Once personal bonds are built, that sense of belonging grows and users are more inclined to stay loyal to your brand (and the community that comes with it!).
2 - Make data-driven decisions
You can gather an incredible amount of information every time a consumer consults data points before purchase, including:
- The products, services, or offers that are most enticing to a customer
- Customer characteristics (i.e. age, gender, location, income range, interests, buyer history, etc.)
- Contact information (email, address, phone number)
- Preferred payment avenues
- Previous purchases
- Purchasing factors
- Customer feedback
The information can then be used to make a series of informed decisions such as which products are best for cross-selling, when to offer personalized recommendations, and who are the most valuable customers. You can even differentiate between cold leads who are unlikely to return and lapsed customers who you can win back with a carefully crafted campaign.
E-commerce data is a goldmine of insights that can help kick your brand’s growth into overdrive. You can use social features to gather insights that help you reduce the guesswork without having to rely solely on third-party data. Being able to understand what works well and how you can meet your audience more intentionally helps you set better goals for your brand while giving clear direction to your team.
3 - Target customers on an individual level
Research indicates that personalized experiences drive both long-term customer loyalty and revenue—a fact reflected by current user expectations. When browsing e-commerce sites, customers now expect to receive product recommendations, communications, social engagements, and offers that are relevant to them on an individual level. Thankfully, this is possible with the help of personalization.
Retail brands can use social features to make the online shopping experience more personal, and in doing so, give themselves a significant competitive advantage. E-commerce personalization is difficult to imitate and makes online shoppers feel acknowledged as individuals, rather than just a part of one of your customer segments.
4 - Ensure consistency across channels
Today’s retail brands have to exist on multiple channels—web, mobile, social, and email, among others—and it isn’t uncommon for customers to interact with you across more than one. Social features can personalize the experience no matter which channel is being used, creating consistency.
Consistency is important because it makes your brand more memorable. When you’re able to deliver an exceptional experience and people remember it, they’re more likely to return to do more business with you. And to create that personalized experience, brands must use marketing automation to engage customers at different touchpoints, avoid overexposure, and factor responses across channels.
This is where your personalization efforts come into play.
Customers don’t want to be bombarded with an irrelevant offer in their phone notification center, only to find the same product in their email inbox and your e-commerce website. Personalization helps you to deliver the most relevant offers to each individual customer, making it much more likely for them to take action!
If a customer interacts with a chatbot and indicates interest in an item but doesn’t complete the checkout, e-commerce personalization also factors response in and reminds them via other channels. In doing so, the customer may remember their interest and finalize their order.
Throughout all of these events, personalization ensures each individual is recognized so they aren’t driven away by uninteresting offers, irrelevant products, and disorganized communication.
5 - Reduce buyer distractions and time through sales funnel
Given the sheer number of competitors most e-commerce brands deal with, the sales funnel can be rather long. Successful sites must develop a strong understanding of each buyer's journey and how they can optimize the funnel, complete transactions, and drive repeat sales.
Personalization plays a crucial role in turning a visitor into a paying customer. In fact, it has a part in all steps of the funnel, from awareness to interest to desire to action. When utilized properly, recognizing and treating each lead as an individual can reduce the time they take to move through the sales funnel.
Applying personalization to the sales funnel
Here is a brief look at how personalized marketing and individual-level messaging comes into play during each stage of the sales funnel:
- Awareness: The very first stage of the funnel is where customers become aware of your brand whether due to an organic search, a paid ad, or even a recommendation from a friend. They may not have signed up or given you any personal information yet, so e-commerce personalization is limited. If they’ve come across your brand online in some way, however, you have some idea of their user behavior and can deliver relevant content.
- Interest: In the next stage of the funnel, customers start to seek out information about your brand or products of their own volition. You have more data now, and perhaps even direct access to them. If you have personalized tools or landing pages that will help jumpstart a potential customer’s desire for a product, chances are that they’ll enter the next stage soon!
- Desire: Customers now want what you’re selling. They’re not quite ready to seal the deal, but they’re almost there! Desire is clear when customers start to take actions like communicating with a chatbot to get information about shipping, return policies, or price matches. When you’re aware the desire phase has been reached, personalization comes in to rapidly answer any queries and perhaps even offer customers discount codes.
- Action: In the action stage, the customer has finally made the decision to buy. It’s your job to remove all barriers to the process and get them to the finish line. A personalized checkout not only ensures everything they want is in the cart, but it can suggest other items the buyer might be interested in.
Distraction is one of e-commerce’s biggest enemies. By personalizing the entire experience, you’re providing buyers with only the products and offers most relevant to them while avoiding irrelevant diversions that may cause them to leave. Combined with a streamlined user interface, transparency, and optimized checkout, individual-level marketing can turn first-time visitors into buyers much more quickly.
Using social features to make friends with your customers
There’s a reason the global loyalty management market size is projected to hit $6,955 million by 2023 and maintain a CAGR (compound annual growth rate) of 20.8% from 2017 to 2023. Loyalty is incredibly difficult to get right. And while e-commerce personalization will play an invaluable role, you’ll need to apply it to a friendship-building strategy that gives you a competitive advantage.
Building a personalized customer experience involves gathering browsing history data, visualizing the customer journey, setting up customizable templates, and doing a myriad of other things to truly treat each person as a separate individual. It’s no surprise that some newer online retailers or ones with tighter budget constraints struggle to personalize, despite the accessibility in this area.
If you’re looking for a place to start that will cover the most bases, however, social features are what you should be investing in. In-app social engagements allow for easier customer data collection and help to deliver personalized experiences to buyers.
The friendship formula
The very same concepts Jack Schafer, former FBI behavioral analyst, uses to explain how friendships are made can be used to illustrate the process of building brand-customer relationships. By making adjustments to different elements of the formula, marketers, product managers, and developers can create an environment primed for relationship building.
Schafer’s friendship formula is as follows:
Friendship = Proximity x (Frequency + Duration) x Intensity
Social features can be used to intentionally create trust with new customers without scaring them off. And aside from being an excellent way to build community, social makes personalization natural. As proximity, frequency, duration, and intensity are slowly increased over time, the brand-customer bond only grows and loyalty is established.
Let’s visit each building block of the formula and the social features that tie to them.
A relationship cannot be built if the distance between two parties isn’t reduced. Customers need to come into contact with your brand—slowly narrowing the gap over time—in order to develop interest. Contact can range from a glimpse of one of your product pages to a conversation with a customer service agent.
A word of caution: Much like with in-person proximity, there is a fine line between intriguing someone enough to maintain a pursuit and overwhelming them with your presence. Small, quiet actions will do more initially than big, threatening calls to action.
Social features that increase the proximity between brand and customer
Since there are more than a few ways to interact with a customer online, the key is being present on a variety of channels. Building a new relationship with a lead starts with just enough closeness for them to know you exist.
Social features like live stream commerce and activity feeds are excellent ways to start off with a low, non-threatening level of proximity. They allow customers to engage indirectly and avoid taking action if they choose not to.
When someone decides they want to narrow the gap a bit further, social features like live chat can be valuable. One-on-one live chat allows potential customers to directly interact with a chatbot or a support agent and gather any additional purchasing information they need.
Message coordination is a key part of increasing the proximity between you and your customer—and it’s crucial to e-commerce personalization! Retailers must plan experiences across different channels while delivering relevant, non-conflicting messages at every touchpoint.
Frequency & duration
The concept is simple: the more time two people spend together, the more influence they will have over one another. In the process of developing a relationship, buyers and brands must go through a series of interactions, growing in frequency and duration.
Frequency and duration have an inverse relationship. The more often a brand and customer come into contact, the less time each encounter requires. If interactions are few and far between, however, the duration of each contact must increase.
Another thing to keep in mind is that it’s impossible to build customer loyalty if online shoppers aren’t engaged beyond checkout. E-commerce marketers must have a plan for keeping people engaged even after they’ve purchased products, otherwise, they become lapsed customers.
Social features that increase the frequency & duration of interactions
Most e-commerce platforms only have brief customer encounters, and if the same is true for your business, you’ll have to amp up the frequency. Delivering personalized content is a great way to engage your audience without having to spend too long on each interaction. And unlike billboard or TV ads, you aren’t just throwing things at the wall and hoping something sticks.
Activity feeds provide users with the most relevant updates that they can interact with, all the while making the environment feel tailored to their needs. Customers can post comments, leave reactions, and even send messages to your brand and other people in the community.
Because e-commerce personalization must occur at scale, a chatbot is another excellent way to create a high-touch experience without overwhelming your support team. They aren’t obtrusive, but rather able to meet customers where they are and streamline their shopping experience.
There’s a reason chatbots are an emerging retail trend this year. Unlike humans, technology can be available all around the clock. They also cut down wait time to an average of 45 seconds and can effectively assist customers with simple inquiries. In the fast-paced e-commerce landscape, chatbots are a game-changing social feature to integrate.
The final relationship building block is intensity: how strongly are you able to meet customer needs? Using personalization in e-commerce can increase the intensity of interactions.
If you are able to provide customers with more meaningful interactions, less proximity, frequency, and duration are required to maintain a strong relationship. However, developing intensity in a retail setting can be difficult and even seem forced without a human component. That’s why community-building is so important.
Social features that develop the intensity of a customer experience
Building a strong brand community that customers want to be a part of is the absolute best way to increase the quality of each interaction while sustaining a personal component. And the best part is that e-commerce personalization helps to meet each member’s needs on a consistent basis without requiring too much intervention on your part.
Features like social commerce transform in-app shopping into an engaging experience that customers can actively participate in. In-app live streaming and chat features work in tandem to capture interest and meet shoppers’ needs while allowing them to interact with other consumers, potentially increasing their average order value! Such an interactive experience is high in intensity and goes a long way to developing brand-customer relationships.
How to build customer loyalty with the friendship formula
As with most aspects of e-commerce marketing, relationship building requires a delicate balance. The four building blocks of the friendship formula—proximity, frequency, duration, and intensity—can be adjusted to best meet your customers’ needs.
Increasing proximity, extending duration and frequency, and boosting intensity with customers on each of their personalized journeys will help to retain customers beyond checkout and build lasting brand loyalty.
Social SDKs: Making e-commerce personalization easy
Highly personalized customer experiences enable retailers to set themselves apart with a difficult-to-imitate competitive advantage. Using social SDKs to personalize the experience allows e-commerce brands to deliver value and generate hype, advocacy, and positive word of mouth.
The online shopping experience doesn’t have to (and shouldn’t) start and end with a purchase. With social features, you can make every visitor's experience their own and build engagement that turns casual shoppers into returning customers.