Retailers could add as much as 6% to their online revenues by focusing on three basic but effective optimization and personalization techniques, according to a report from Qubit:
Scarcity: Highlighting items that are low in stock (2.9% average uplift);
Social proof: Leveraging the behavior of other users to provide information about currently trending and popular products (2.3%); and
Urgency: Using a time limit to promote completing an action before a deadline (1.5%).
Retailers have to leverage these techniques in the highly competitive online environment, where 73% of online consumers spend most of their money at just one to five web sites. There are opportunities to “steal” some of these customers: only 16% of consumers say that they would remain loyal to their preferred stores if they fell behind in quality and value of service.
Personalized Experiences Produce Up To 14X Revenue Increases
Programmatic and personalization experiences that tap into customer, product or business data are providing anywhere from 2X to 14X more incremental revenue per visitor (RPV) than traditional optimization efforts, which focus mainly on cosmetic changes such as colors and location of buttons. Conversely, experiences like popups or buttons that take a user back to the top of the page can have a negative impact on revenue.
Customers value data-driven personalization, with 50% saying they enjoy receiving product recommendations that fit their interests or preferences, while 49% said they were willing to share their preferences with a business in order to receive a better shopping experience.
The study also finds that businesses that engage in targeted personalization based on user behaviors and preferences can expect a 3X better result than untargeted marketing tactics.
However, the effectiveness of personalized and programmatic strategies tends to decline with overuse, and trust can quickly be eroded if customers suspect that low-stock messaging and other scarcity prompts are not genuine. As many as 72% of respondents agree that tech vendors could be more transparent about the effectiveness and measurement of their solutions.
The Qubit study used data from more than two billion user journeys and 120 million transactions.