The Personalization Payoff: The ROI of Getting Personal

Personalization is a symbiotic relationship. On one side you, the marketer, are providing a spot-on experience for consumers that makes them feel understood, valued, and connected. It’s a positive engagement that’s borderline electric for the visitor. Don’t you get a little jolt when you’re served up an article, product recommendation, or email that’s perfectly aligned with your wants and needs?

On the other side are the consumers who, in exchange for this warm and fuzzy experience, reward you with more meaningful engagement, quicker conversions, higher cart values, increased spend, and ongoing loyalty. They’re happy with the relevant experience you’ve delivered. They dive in deeper. You collect more data points and create greater relevance. The cycle continues. That’s the personalization payoff.

The payoff for brands and organizations

Cross-channel consumers expect relevance when they come to your site. Nearly nine in ten consumers say that personalization has some impact on their purchasing decisions. Overall, nearly two-thirds of companies that are outpacing the competition leverage automation systems. That’s not a coincidence, either—nearly 80 percent of high-performing marketers indicated that these systems have boosted revenue. We saw similar results in our 2014 Digital Marketing Optimization Survey, which polled more than 1,000 respondents globally. The top 20 percent in terms of performance experienced conversion rates of 4.5 percent or more, 1.7 times the 2.6 percent average across the group.

That’s just the tip of the personalization payoff iceberg. Leaders in this digital transformation are reaping unparalleled benefits, winding up 26 percent more profitable overall, with a 12 percent greater market capitalization.

The personalization payoff is massive. However, even if you’re already engaged in some level of relevance delivery, be it ad hoc or deeply integrated, you could likely be doing more: one-third of consumers want greater personalization in their e-commerce experiences. Nearly two-thirds of loyalists—consumers with strong brand relationships and affinities—cited “shared values” as their core reason for deep engagement. But just 23 percent said they have a relationship like that with a brand.

For any digital brand, meeting existing consumer demand—increasing personalization efforts and delivering more relevant experiences—is far more profitable to your bottom line than acquiring and cultivating new ones. Reducing attrition by just 5 percent can boost profits by 25 percent to 80 percent. Sears Holding Corporation loyalty members account for 70 percent of sales, and the brand experiences a 25 percent growth in cross-channel sales annually.

Your brand likely has a 5–20 percent chance of selling to a new prospect versus 60–70 percent for an existing consumer. Compound that with the fact that, on average, 55 percent of marketing budgets are spent on new customer acquisition, and it’s no surprise that increasing loyalty among existing users can reduce costs by as much as 10 percent.

Go one step further and implement automated approaches for fueling personalized experiences and you’ll more successfully generate 50 percent more leads—at a 33 percent lower cost, on average. And businesses that automate the lead-management system see a revenue increase of 10 percent or greater in 6–9 months. Another cost savings? Marketing creative. Automation is estimated to save brands 15 percent on creative production.

Getting started

So if the payoff is so great, what’s holding brands back? Differing data sources and metrics remains a major issue, as does simply not knowing where to start or not having the time to implement. Benchmarking is a good place to begin, and we’ve got a solid self-assessment tool to help you with that.

Another challenge is overcoming the initial hurdle of getting to know the customers. My advice? Just ask them what they want. Sixty-four percent of marketers agree that there’s been a shift toward increased consumer willingness to provide personal information in exchange for targeted offers and relevant benefits.

Getting started can be much simpler than you’re anticipating. Businesses of any size and scale can integrate geolocation, serving up relevant recommendations based on a visitor’s location. It’s simple, but it’s highly effective. One company utilizing Adobe technology—an investment content site—realized a 579 percent return on investment (ROI) by implementing just this strategy.

Another Adobe partner—a popular travel site—reports seeing a 62 percent increase in bookings among existing members by simply personalizing banner content when they returned to the site. Another partner reports increasing cross-sell conversions by 450 percent by using data to drive personalized offers. A leading outdoor company boosted revenue per visitor (RPV) by 4 percent by personalizing recommendations on the homepage. Taking it a step further, an electronics manufacturer used automated personalization to determine what to show visitors in their prominent homepage hero spot and shop modules, and reports realizing a 109 percent increase in average RPV across all product categories.

The payoff for consumers

Personalization doesn’t just benefit the organization. Users feel empowered, appreciated, and understood. More than three in five consumers feel more positively about a brand when the promotional outreach and marketing messages they receive are personalized. Nearly 60 percent agree that e-commerce sites that personalize consumer experiences make it “easier to find the products that are most interesting.” Read: most relevant_._

That should come as no surprise in this relationship era of digital marketing. Consumers want convenience, comfort, and a sense of belonging—that’s the real payoff for them. From a convenience end, serving up relevant content or product recommendations is great, as is capturing shipping, billing, and payment information so they can zip through checkout when they do convert. Sixty percent of shoppers like when an e-commerce site remembers that information. Take it a step further and offer an even easier path to conversion, such as Amazon’s “Buy now with 1-Click®” button. ­

Brands looking to get started need to understand consumers’ priorities when it comes to personalized experience. Nearly 70 percent indicated email was a key spot for personalization—and two in five say they buy more from brands that send them personalized emails—followed by 44 percent who flagged personalized social media experiences as a must. If you need to sort your promotional roll out, these are both critical platforms, and can deliver those key short-term wins that drive greater institutional buy in.

Looking out across the digital marketing landscape, nothing right now seems to be as relevant as relevance—creating it, harnessing it, leveraging it, and finding the sites that offer more of it. Brands that can tap into this relevance are reaping the major benefit that almost always comes with it: the personalization payoff. It’s a two-way street, for sure, a highly cooperative brand-to-consumer relationship. The organization wins with increased ROI; and users win with bigger, better, faster, more spot-on experiences that keep them coming back. And the payoff continues.