This time of year, predictions on what’s to come in the year ahead abound. But no matter what 2018 predictions article you read, personalization and AI are among the year’s hottest trends in retail. With artificial intelligence (AI) shaping a bigger share of everyday consumer experiences — from trusting Siri for navigation to asking Alexa to buy more toothpaste — it’s clear that AI will drive the next big wave of change.
Personalized digital experiences aren’t new. But the extent to which these experiences will be personalized will reach new heights in 2018. For example, I was recently amazed to learn how Netflix personalizes show artwork to help catch viewers’ eyes: “The artwork may highlight an actor that you recognize, capture an exciting moment like a car chase, or contain a dramatic scene that conveys the essence of a movie or TV show. If we present that perfect image on your homepage (and as they say: an image is worth a thousand words), then maybe, just maybe, you will give it a try.”
With personalized experiences becoming the rule, not the exception, many retailers are getting ahead of the machine-learning curve and applying these technologies throughout customers’ touchpoints, including unique product recommendations, dynamic email and website content, and personalized pricing.
Based on an analysis of the shopping activity of 150 million shoppers across 250 million site visits, we see that personalized product recommendations have emerged as one of the best tools in a retailer’s toolkit for driving revenue. Take a look at data from Salesforce’s Personalization in Shopping report to wrap your mind around what you need to know about personalization for 2018. Here are key takeaways:
#1 Personalization is a revenue powerhouse
Back in 1999, Amazon gave customers book recommendations based on previous purchases, giving many online shoppers their first taste of digital personalization. But product recommendations have come a long way since then.
These “you-might-also-like” suggestions might be the unsung heroes of the product detail page. The numbers prove it:
Product recommendations drive revenue. Ecommerce site visits where a shopper clicked a recommendation comprise just 7% of all visits — but that small portion of visits drove 24% of orders and 26% of revenue.
Shopper spend soars with personalization. The per-visit spend of a shopper who clicks a recommendation is five times higher than those who do not click on a recommended product
Recommendations lead to longer shopping visits. Shoppers that clicked a product recommendation spent an average of 12.9 minutes on-site vs. just 2.9 minutes for those that didn’t click recommendations.
Bottom line: personalization drives sales. And for ecommerce sites with unwieldy product catalogs browsed by distracted shoppers, that’s great news.
#2 Personalization wins across devices
In micro-moments — those brief and recurring blips of time between activities when a shopper checks her phone — personalization connects on-the-go shoppers with ideally-suited products in short order on small screens.
Fortunately, our data shows that personalization gets results across devices: Mobile shoppers that click recommendations complete orders at a higher rate than desktop shoppers (25% vs. 23%, respectively). And although tablet sales and usage has slowed in recent years, tablet shoppers that clicked a recommendation accounted for 30% of total tablet orders and 33% of revenue, despite comprising only 9% of total visits.
Still, visits by computer shoppers that click recommendations are strongest when it comes to visit duration (15 minutes on average), conversion rate (9.8%), and their propensity to create a shopping cart (24% do so). Every device benefits from a personalization strategy.
#3 AI-powered personalization is in reach
If you’re not already realizing the benefits of intelligent recommendations, you’re missing a major revenue opportunity. Even if you’re using recommendations, you can probably improve your strategy. Here’s how:
Start with clean data. This isn’t a one-time effort; make data quality priority #1 over the long term.
Lean on AI for tactical execution. Despite the headlines, AI isn’t here to replace humans. Instead, allow tactical and micro-level decisions to be made by machine learning so you can focus on strategy and problem-solving.
Optimize for mobile. Make sure product recommendations are easily visible and engaging on small screens. With 7% of visits driving 26% of revenue, you don’t want this powerful tool at the bottom of a mobile page.
Think outside the “you might also like” box. For example, outfitter Johnston & Murphy adds a fun twist on recommendations with, “Recommended by Em, our style expert.” Use copy and design to help these recommendations jump off the page.
Incorporate recommendations outside the PDP. Seek other places to show customers personalized suggestions: category pages, empty cart, emails, social ads, and beyond.
AI is changing the game for meeting shoppers’ needs in an intuitive, inherently 1:1 way. Because intelligence grows over time, you’ll be offering even smarter shopper journeys a year from now. That is, if you start today.
Download our Personalization in Shopping report for more details on crafting seamless and intelligent journeys, no matter what the future of AI holds.
A version of this article originally appeared in Retail Touchpoint’s report AI and Retail: 4 Factors That Will Influence Adoption.