E.l.f. Cosmetics found that revenue per user increased 4.2% after adding product recommendations to item detail pages. Dynamic Yield, an AI-powered personalization platform, released the results in a case study that was emailed to Retail Dive.
Adding a "You May Love" section of recommended products garnered a lift in click-through rate of more than 23%, per the report.
The beauty company saw a 17.6% increase in mobile menu clicks after personalizing the menu based on users' past shopping behavior. New users were shown high-level categories, while previous customers were shown the category and subcategories they had viewed in the past.
While this report is a case study from e.l.f's personalization vendor, it illustrates the growing importance of personalization to attract consumers. A 2018 survey by Accenture and the Retail Industry Leaders Association found that 63% of consumers are interested in personalized recommendations, and the majority are willing to share data in exchange for benefits that come alongside personalization, such as earning loyalty points.
And listening to that request from consumers can pay off for retailers: 93% of businesses with advanced personalization strategies increased their revenue in 2018, according to a survey of various sectors in North America and Europe.
But can AI personalization meet the needs of customers? In previous reports, consumers have said getting personalized service from a store associate is a factor that guides where they shop. And a survey from real estate firm Coldwell Banker Commercial Affiliates found that half of respondents would give up lower prices online in exchange for personalized assistance or advice from an associate in store.
There may also be larger struggles ahead for the cosmetics market. In August, Ulta announced it lowered its guidance in Q2 because of weak cosmetics sales. In Ulta's most recent earnings, CEO Mary Dillion said that the U.S. makeup category was in a "down cycle." Yet, Ulta's loyalty membership accounts for more than 95% of sales, and the chain noted in August that it's focusing on AI-powered personalized recommendations to boost its marketing efforts.