On a Q4 2015 earnings call held on September 22nd, CEO Don Grimes had some exciting news. The luxury retailer, currently preparing to go public, sold $1.3 billion online in fiscal 2015, an increase of 13% year-over-year. Web sales accounted for 25.5% of the company’s 2015 sales of $5.095 billion, up from 23.9% a year earlier.
On the same day, Daniel Neukomm, the CEO of La Jolla Group—parent company to surf apparel retailer O’Neill Clothing Company—had his own exciting results to share in an interview with Internet Retailer. In the last two years, smartphone revenue has increased 111.15% and smartphone conversions increased 15.28%. This improvement is good because, according to Neukomm, about 50% of O’Neill’s traffic stems from smartphones.
But these two CEOs share far more than some exciting sales numbers and a little press coverage. Each man credits the same foundational web experience strategy for his success: Personalization.
What They Did
At Neiman Marcus, the focus was on the on-site customer experience. From a personalized editorial homepage that provides customers with relevant content in the homepage main image to personalized site search based on buying or browsing behavior, Neiman Marcus hoped to capture high-end fashion buyers by serving the brands they love in a variety of ways. They also launched the ability to customize and personalize merchandise on the website and added a variety of advanced search filters so people can customize their experience even further.
With such high smartphone traffic, customer activities that took place outside of the O’Neill website became just as important as what happened when they got there. Using analytics data to track the buyer journey, O’Neill’s personalization engine took everything from ad clicks to location to even the type of device the customer had to serve more personalized results.
In a recent interview, they described the process saying “the new approach to personalization can tell that a consumer is visiting the site on a smartphone in Orange County, Calif., from a Google search for men’s board shorts. Using this information, the featured products on the home page can dynamically change to men’s board shorts that are performance oriented for surfing.
The personalization technology guessed that because the consumer lives in a costal, warm climate region, he was more interested in technical board shorts, rather than leisure swimming shorts, which it might recommend to a consumer in Minnesota in July.”
Why They Did It
1. Customers Demand It
According to a recent survey conducted by Yahoo and AgilOne, 79 percent of U.S. shoppers said they want brands to deliver some type of personalized experience, whether it is an alert about a new product that matches their interests, a refill reminder or VIP customer recognition. More than half of U.S. consumers expected e-commerce sites to remember their past purchases and dynamically tailor content accordingly.
This number climbs even higher when looking at consumers aged 18-34 (the so-called “millennials”). This group was more likely to appreciate all forms of personalization. 52% expect brands to remember their birthday, as compared to only 21% of shoppers aged 65 and older. Frequent readers of this blog will know that Millennials—the largest consumer demographic since the Baby Boom—represents over $1 trillion in purchase power. These consumers have repeatedly indicated in surveys like this one from Eventbrite that they value experiences over things, and expect an experience in all consumer interactions. Personalization is a huge part of reaching this crucial demographic
2. It Works
The numbers we cited above are staggering. For Neiman Marcus—a company that generates $5.095 billion in sales per year—a 13% increase in ecommerce sales is massive.
Their success may have influenced and emboldened their competition. In March, Barney’s announced a site re-launch aimed specifically at creating a more personalized experience. This re-launch contained personalized editorial such as lookbooks, exclusive designer interviews videos. It also included a more personalized design for The Window, the retailer’s popular editorial site. The relaunch has already paid off. Officials claim customers who engaged with Barney’s more personalized editorial content spend 40% more than the average visitor and are converting at 4-5 times the rate of their average consumer.
For O’Neill, optimizing the purchase journey meant increased engagement as well as increased sales. Bounce rate—the rate at which people leave your site after viewing just one page—plummeted during the pivotal Back To School shopping season, while smartphone traffic shot up by 65%. Overall engagement with the desktop site increased 85%.This led to sales. Desktop conversion rate increased by 46% since July 2013. Desktop average order size increased 17%.
3. It Improves Brand Loyalty
But perhaps the most important improvement marketers can expect by increasing personalization is brand loyalty. Bond Brand Loyalty recently conducted an online survey of 11,316 North American consumers. 74% agreed with the statement that a personalized experience “makes my overall experience with the brand better” and 75% agreed with the statement that these experiences “make me more loyal to the brand.”
While personalization has broad appeal to consumers of all ages, there is evidence to suggest that Millennials value a personal experience more than any other valued consumer group. According to a 2014 survey of 1,300 millennial consumers conducted by online publisher Elite Daily, Millennials list a good customer experience as the second-most important factor when sharing brand info online, second only to product quality. As the survey writer puts it, “Brand loyalty is important to Millennials and is earned based on product quality, a good customer experience and support for society.”
Millennial brand loyalty can also be seen in data sharing. According to numerous studies, sharing data with brands has become a common practice. But while their parents frequently demand more immediate quid pro quo benefits for this data like discounts and the ability to control what is shared, Millennials are more interested in a personalized brand experience that can be used across their various devices. One study links this to the way Millennials consume media, pointing out that 57% of Millennials stream movies on a weekly basis. Among those with a streaming subscription service, the majority of people bought it because they like that it allows them to view content whenever they want (74%), wherever they want (66%), and without commercials (71%). Streaming services are highly personalized, tracking the user’s every move to make suggestions for what to watch next. This is a comforting experience that works and is now expected behavior across brands Millennials love.
Are you ready?
1. Take It Slow
The number of implicit and explicit data sources for personalization & targeting can grow quickly, creating thousands of permutations of the user experience. Modelling them out is tedious and “rule conflicts” can create sub-optimal experiences. By starting with a few simple tweaks to key elements, you can see what works and what doesn’t. Many businesses start with the homepage, personalizing elements like site search and featured product offerings.
2. It’s all about Context
Personalizing content requires three core ingredients, the right content, served at the right time, in the right context. Context can be the weather, location, device, persona, segment, etc. O’ Neill used context to target content that would best resonate with the consumer.
3. Test And Test Again
Barneys did all personalization testing in-house and released a beta to a small group of customers and retailers to get feedback. O’Neill reduced products on its mobile homepage from 6 to 2 so customers wouldn’t have to scroll, resulting in better returns. Personalization creates a high number of variables. Creating the best experience will create some headaches. Make sure you have a plan for testing and factor it into time and revenue projections.
4. Vet A Modern Content And Experience Management Platform
Does your web content or customer experience platform include a data aggregation layer that is actionable and easy to work with? If your CMS does not offer this feature, consider a replacement or look to third-party data aggregation tools that can serve in this capacity.