Study: Personalization should be priority in e-commerce upgrades

Dive Brief:

E-commerce businesses could increase their revenues by as much as 6% by focusing on personalization-related upgrades to their websites, rather than making cosmetic changes and alterations related to navigation and function buttons, according to Qubit’s analysis of more than 2 billion user journeys and 120 million e-commerce purchases.
The report sheds light on how some website optimization and personalization strategies impact online revenue such as scarcity, urgency, or social proof messaging. These types of techniques perform functions like displaying current stock levels for products being viewed, or alerting shoppers when a sale is ending soon. The report also highlights areas where e-commerce businesses may be allocating resources to lower-performing strategies.
A Qubit survey of almost 250 marketers also found that about 26% of brands spend more than $51,000 on website testing and optimization tactics, and of those, about 8% spend more than $100,000 annually, highlighting the importance of making the right decisions about the best ways to optimize websites.

Dive Insight:

Jay McCarthy, vice president of product at Qubit, was a bit bolder and more direct about the bottom line results of this study in an e-mail to Retail Dive. "In sheer numbers of site changes we see, far too many of them are of a cosmetic nature that have been found to drive no revenue."

That's exactly what you would expect a company that enables e-commerce site personalization to say — that adding more buttons or re-casting your navigation bar is a wasted exercise — but Qubit has a lot of numbers to back it up, with PwC endorsing the methodology Qubit used. Also, one didn't need to step too far onto the IRCE show floor in Chicago earlier this month to hear someone talking about the importance of personalization techniques to retailers today — it is the topic du jour.

The point of releasing the data was to help retailers decide for themselves how they want and need to spend the resources they allocate toward upgrading their web sites, noted McCarthy. "There's a time and place for a variety of tactics we discuss, [but] we also know that retailers face a real lack of resources. In light of that, we would certainly argue that a shifting of budget towards more revenue generating optimization and personalization projects makes sense."

Consumer sentiment sure seems to be leaning toward personalization, at least according to Qubit's survey. About 50% of those surveyed said they enjoyed receiving product recommendations that fit their interests or preferences, while another 49% said they were willing to share their preferences with a business in order to receive a better shopping experience. Also, 81% said it was either "very important" or "somewhat important" that a website provide targeted promotions based on the customer's own preferences.

Qubit's theory on personalization is a relatively simple one — that people who have shown interest in certain items might be motivated to buy those items if they know there are few left (scarcity), or they might be motivated by social media influence and social sharing among people they know (social proof), and that a ticking clock could force a purchase decision one way or another (urgency.)

It seems to be working for Arcadia, the company behind brands like Burton, Dorothy Perkins, Evans, Miss Selfridge, Topman, Topshop and Wallis. Simon Pritchard, group digital director at Arcadia, said in a statement, “Personalization is helping us build relationships with our customers that translate into increased engagement, loyalty and revenue."