The Significance of Real-timePersonalization

Kuliza Social Technology Quarterly Issue 07

Real-time enables e-commerce companies

to efficiently handle shopping cart

abandonment through relevant offers,

recommendations, and marketing that can

improve conversion rates.

by Suresh HarikrishnanPhoto Credit: schizoform

According to econsultancy’s latest report on conversion rates, optimization in e-commerce companies and conversion rates are falling and are at 3.8%, down 8.4% year-on-year. Approximately, only 10% of your visitors add products to their cart when they are on your store, yet, about 70% of them do not complete their purchase. This is both a huge opportunity and a problem at the same time.Shopping cart abandonment is a key issue e-commerce retailers encounter. Users visit your e-commerce websites but leave without buying. No amount of marketing budget is likely to fix this. In fact, your ROI on marketing spend will only come down as you spend more. Research shows that the two biggest reasons for people abandoning their shopping carts are: 1) they find it difficult to make up their minds and 2) pricing. People who have abandoned their carts have already expressed their interest by adding products on your store, so it only makes sense to understand and engage these customers. E-commerce majors have used a variety of solutions to address these, including - integrating with social networks through their widgets, offering discounts, reducing the number of steps in the checkout process, email reminders, and so on. You can improve the effectiveness of these in leaps and bounds by making these relevant and real-time.Real-time marketing can make a huge difference to your conversion rates. Most customers are used to discounts and deals online; these hardly make a big difference to your conversion rates. However, when these promotions are personalized to different visitor segments, and offered when they are browsing on your store, you are bound to see much better conversion rates. Consider this case study of one of our customers.The customer is an e-commerce store that sells baby care products

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Real time provides a unique opportunity for brands and retailers to influence pre-purchasing decisions. Real-time personalization is about focusing on drawing the right visitors and making offers and deals that are relevant to them. By doing so, digital marketers and brands are making a radical shift in the way they sell. As brands understand more about how customers purchase, real-time personalization is key to maximizing sales.

Photo Credit: xavi talleda

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online. Their cart abandonment rates were about 65 percent. Over a month, real-time promotions resulted in over 1,200 purchases. But the most important fact here is that, cart abandonment rates dropped to as low as 25 percent when customers were shown real-time promotions. Therefore, there can be no second thoughts on the effectiveness of in-store marketing that is both relevant and real-time.So how do you get started with real-time personalization? There are two parts to this. First, it boils down to understanding your customers. Once you understand your customers, you need to put the insights into actions by personalizing sections of your store for better conversions. Let us look at these in detail.

Understand CustomersIt is easy to understand customers’ behaviours in the physical retail world. You cannot do this in the online world. But this is where analytics tools facilitate better sales. Using analytics tools like Google Analytics, you can build conversion funnels and understand which segments of your customers are likely to drop out without completing their purchase. Understand how these visitors find your store, what they are looking for, and at what stage do they drop out of your conversion funnel. Do they drop out after they begin the checkout or is it before? If they are returning customers, what might have stopped them from buying? Do you find people abandoning more items in certain categories of your product line? Answering

Photo Credit: net_efekt

these questions will help understand and identify target segments of customers to engage. Ensure these segments are neither too small nor too big - smaller and bigger groups are difficult to analyse and test your personalization efforts.

Real-time Actions, Just More RelevantOnce you have identified your target segments, identifying relevant marketing is your biggest challenge. In an age of social networks and smart phones, context plays a key role. What are your target customers looking for? Do you know what category of products they are interested in? Do you know how much they are likely to spend? If these customers are visiting your store via a paid marketing channel, do you know what their acquisition costs are? All these play a part in choosing a relevant action. Whether you choose to use promotions, ads or recommendations, make sure it is relevant to your target visitor. Relevance comes not just from the right marketing tool, time too plays a significant role. Remember, we are talking about real-time - can you offer these promotions just when a customer is deciding on the purchase instead of offering it beforehand? The best time for these actions differs for each visitor segments. While it is better to use these for new customers, it might make sense to delay it as long as possible, when targeting returning customers. Use analytics tools to gauge the best time to bring up these marketing.The process does not stop here, in fact, this is the beginning. There

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is no reason that whatever personalization you choose will work. A culture of analysing, testing, and fine tuning these changes are critical for better conversions. Major e-commerce companies use A/B testing as a way to choose what works best for them.

A/B Testing to Measure FeedbackGone are the days when you can rely on your survey and support tools for customer feedback. Most customers neither have time nor motivation. Set goals and A/B test your changes and measure what works best. There is no better feedback than measuring how effective your customers are in meeting their shopping objectives on your store. There is an unprecedented amount of consumer data available to marketers these days. Through this data, it is easy to understand what causes customers to drop out before completing a purchase. The question then is how willing are companies to understand their target audiences better: ranging from their demographics, psychographics, interests, opinions to their intent. As a believer in a personalized e-commerce world, I can vouch that relevant in-store marketing can go a long way in improving conversions on your store. As more shoppers move to a social, personalized world with proliferation of smart phones, tablets and social networks, shopping needs to be equally convenient and personalized. E-commerce stores seem to be caught up in legacy in how the stores are built and used online, and real-time personalization can go a long way in making shopping a fun and social experience that it is. In a highly competitive market that it is, real-time personalization is critical to stand out.

ReferencesMoth, David. “Basket abandonment: case studies and tips to help improve your

conversion rates.” Econsultancy: Digital Marketing Excellence, 26 Nov 2012.

Nicholls, Charles. “The Science of Shopping Cart Abandonment.” SeeWhy. The

Conversion Academy.

Shuki, Idan Dr. “The Impact of Real Time Promotions in Digital Service

Offerings.” Better Marketing Center. Pontis, 09 Jan 2008.

Gunning, Paul. “Real-Time Marketing is Upon Us - Here’s How Advertising

Needs To Adapt.” Fast Company.