The giant gap between the promise and execution of personalization

Man working at a laptop at a coffee shop
Retailers are not reaching their potential for online personalization. (Image: Public Domain)

It's no surprise that personalization is a growing priority for most retailers. In fact, 9 out of 10 U.S. retailers say personalization is at least somewhat important to their company's goals. However, what they perceive as personalization may not be coming across as a positive experience for many consumers. 

According to a recent eBook on personalization by Bazaarvoice, today's shoppers are "unimpressed" with the state of personalization, and they are hungry for better services to help them find products. Specifically, across industries, 51% of surveyed shoppers say a personalized home page showing products they are looking for would be useful, yet only 25% say they have experienced this. And not even 20% believe the product recommendations they are sent are even relevant. 

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"What’s surprising is the fact that an overwhelming majority of today’s brands and retailers have a personalization solution in place," Drew Giovannoli, Bazaarvoice’s product marketing manager said, referring to the small amount of consumers that found recommendations relevant. "This gap clearly shows that retailers are missing the mark and failing to deliver relevant content and recommendations to shoppers and poses a big opportunity for improvement."

The channel where consumers are the most underwhelmed is email, even though two-thirds of marketers, according to eMarketer, are personalizing emails. 

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eMarketer also points out that bad personalization is an expensive mistake, costing retailers about $756 billion in the U.S. and $2.5 trillion globally. In fact, finding relevant content and product recommendations is a big part of shaping the customer experience, as 38% of respondents won't return to an online retailers that recommends things that don't make sense. And 70% say a bad customer experience will push them to another site, ranked second behind high prices, 73%. 

So what's forming this gap? Bazaarvoice says two reasons: The lack of knowledge as consumers search across devices, and what is going on via a competitor's site. For example, 46% of those surveyed reported shopping around before making an online purchase, which can lead to irrelevant emails. 

Plus, retailers are expected to make recommendations based on data, but 25% of retailers believe their data is inaccurate. 

"Just because two individuals are the same age and gender or live in the same location, it does not mean they shop for similar products, but that is often how customer data is segmented for product recommendations,"  Giovannoli said. "Stereotyping who the shopper is doesn’t tell you what they’re shopping for. Madonna and Katie Couric are both women in the same age range, but it’s clear that they make different fashion and apparel purchases. Retailers should focus on data that is based less on assumptions and use data that stems from direct buying intent and previous purchase behavior in order to provide the best shopping experiences."