Understanding the Power of Personalization Engines: How to Create a More Relevant and Engaging Ecommerce Experience
July 26, 2023

Understanding the Power of Personalization Engines: How to Create a More Relevant and Engaging Ecommerce Experience

Let's face it, we all love a little personal touch. Whether it's your favorite barista knowing just how you like your coffee, or a website suggesting products based on your browsing history, personalization is the key to a satisfying user experience.

Nowhere is this more evident than in the rapidly evolving world of eCommerce, where personalization engines are changing the game and how people shop.

What is a Personalization Engine?

That's a great question!

A personalization engine is a tool that businesses use to collect and analyze customer behavior and data to create a user experience​ that's personalized to their customers.

In the big, wide world of eCommerce, these "engines" are responsible for things like special offers, product recommendations, and automated marketing efforts.

Think of an engine like having a virtual concierge at your service, that intuitively knows your preferences and provides just what you need, exactly when you need it. OR, like the digital decision maker who shows you exactly what it thinks you're looking for.

Understanding Personalization in Greater Depth

"Personalization" isn't just a buzzword; it's a process that creates a relevant, individualized interaction between two parties designed to facilitate an easy transaction and enhance the customer's experience​​.

Think about a brand like Saucony shoes. As a runner, I can tell you that choosing the right shoe for your running style can be a daunting task. This is where personalization engines come in.

With the help of conversational commerce software like Humankind, Saucony can collect rich customer data through quizzes and surveys that allow a personal shopper or running expert from the brand to make recommendations tailored to the runner, the distances and events that they'll participate in, and the shape and size of their foot.

In the case of Humankind's personalization solution, the product expert can then deliver recommendations on beautifully designed custom landing pages that empower you to make a purchase with just a few clicks, simplifying the purchase process and allowing Saucony to better serve busy customers on the go!

Think of it as a conversation between a customer and a brand, where the brand is learning, adapting, and responding to the customer's needs in real time.

How Personalization Engines Work

Without going into the 1s and 0s of coding an entire platform, it's hard to understand how a personalization engine really works, but let's take a stab at it!

When a customer enters a brand's eCommerce store, sets up a profile, fills out quizzes or surveys on a website, or interacts with marketing commutations, the "engine" registers all the data points as indications of a customer's preferences. These Personalization engines use the information that they gather to create custom profiles which are enhanced with additional first- and third-party data, such as real-time behavior, transactions, geography, and even more.

By merging customer data from different channels, these engines can offer relevant content, boosting user engagement and customer satisfaction (CSAT) through personalization.

A personalization engine operates in a similar fashion to social media channels like Facebook, Instagram, and TikTok that only put content that's relevant to you based on your previous interactions and preferences.

Examples of Personalization Engines

Many successful eCommerce brands use CDPs, Marketing Automation Systems as personalization engines to deliver tailored experiences to their customers. The biggest challenge for many up-and-coming brands is the cost and technical knowledge required to make them effective. 

If you’re trying to achieve a similar result or create personalized experiences for your customers, using conversational commerce software by Humankind will help you achieve the same goal…

For instance, imagine shopping on a site like Taylormade Golf, REN Skincare, or OLAPLEX Haircare. If you have a question or would like help choosing a product, you can click the little icon that says, "Text with an Expert" to access a real human personal shopper who can guide you through the entire shopping experience - this is Humankind.

These experts use Humankind to access data collected through quizzes, surveys, and real-time conversations with the customer to offer product recommendations based on your past behavior, preferences, and even the time of day you're shopping.

Which means, they're creating a personalized shopping experience just for you.

The Benefits of Personalization Engines

The benefits of personalization engines go well beyond improved conversions. For one, they can help businesses market more effectively without bombarding users with irrelevant content - which means that they reduce choice overload. Eliminating this "noise" can help customers find relevant content faster, thereby delivering a more satisfying user experience.

Plus, personalization engines can be valuable tools for testing what works and what doesn’t in your marketing strategy. These engines can track your customer's responses to different strategies and provide insights that help "fine-tune" your approach.

The Role of Personalization Engines in E-commerce

In the context of e-commerce, personalization engines play a particularly vital role. The modern consumer expects a personalized shopping experience, one that caters to their preferences and shopping habits. With a personalization engine, an e-commerce platform can deliver this level of personalization, thereby enhancing the user experience and driving sales.

For instance, imagine you're browsing an online clothing store. A personalization engine could analyze your browsing history, past purchases, and other data to recommend products that align with your tastes. It might suggest a pair of jeans to go with the shirt you just added to your cart, or remind you of a jacket you viewed last week. This level of personalization can make the shopping experience more enjoyable for the customer, while also boosting the retailer's bottom line.

Personalization Engine and Omnichannel Marketing

One of the most powerful applications of personalization engines is omnichannel marketing. An omnichannel approach aims to provide a seamless customer experience across all channels, from physical stores to online platforms to mobile apps.

A personalization engine can be integrated with omnichannel platforms to create more relevant, customized journeys across these different channels and devices.

For instance, a customer might browse products on a retailer's mobile app, then switch to their desktop to make a purchase. With a personalization engine, the retailer could ensure that the customer's browsing history and preferences are carried over between devices, providing a seamless shopping experience no matter where they shop.

Another example would be when a customer shops online and adds their contact information at checkout. This information could be an email or phone number that a brand can use to send messages when new products drop, items go on sale or follow up after an event.

Creating a Personalization Engine

You might be thinking, "This sounds fantastic! But how do I create a personalization engine?" Well, my friend, it starts with customer data.

KYC is an acronym used primarily in the banking industry, but it's starting to take hold in others as well. Beginning as a set of simple questions about customers' information, KYC (Know Your Customer) has evolved into a comprehensive exercise in collecting detailed data on a customer so you can predict many aspects of their behavior.

Personalization engines like Humankind offer a human component, and Dynamic Yield the Ai component to collect rich data so that you "know your customer." This data can be combined with powerful AI and machine learning algorithms to create the backbone of a personalization engine that can offer tailored content, personalized product recommendations, automated marketing campaigns, and more - which in turn collects more data.

Unifying all of this customer data from different channels, analyzing user behavior, and making sense of consumer data are key steps. But remember, it's not just about data; it's about understanding your customers on a deeper level - so now that you have a foundation, what tools do you need to build a personalization engine?

First, you need a robust customer data platform to collect, process, and analyze customer behavior. Tools like Microsoft Azure's Personalizer can help you optimize user experiences by boosting conversion and engagement​​ since AI-driven engines can select hero content, optimize layouts, and personalize offers.

Second, you need a conversational commerce platform like Humankind, that can collect rich, first-party customer data and develop deep connections with customers through 1:1 human interactions.

Finally, you need to embed these solutions into your existing website or mobile application so that you can serve up personalized content and product recommendations in real-time.

Personalization, Technology, and AI

Artificial intelligence (Ai) is a hot topic on the market today, and it seems like everyone is saying, "The future is Ai." But after working with several Ai companies, I would say the future is personalization.

There's no doubt that artificial intelligence plays a significant role in personalization technology as AI-driven personalization tools make up more than 80% of the current market, but as PwC found in a recent study, more than 8 out of 10 of your customers want real human interactions in their shopping experiences. You heard that right, 82% of your customers want to buy from real people…

And technologies like machine learning algorithms and Ai make personalization at scale possible. This way, each user gets a tailored experience, which leads to increased customer satisfaction, retention, and repeat purchase rates.

Things to Think About While Building a Personalization Engine:

Critical Capabilities for Personalization Engines

Gartner, a renowned research and advisory company, has outlined some critical capabilities for personalization engines. These include the ability to manage large volumes of data, deliver real-time personalized experiences, and integrate with other marketing tools.

Personalization engines should be able to measure the impact of personalization efforts on key metrics like average order value (AOV) and conversion rate (CVRs) - tracking these will show you if your personalization efforts are paying off or not.

How Personalization and Conversational Commerce Meet

Imagine if you could pair the power of personalization with the connection of a 1:1 human conversation.

That's where Humankind Conversational Commerce Software comes in.

We provide a platform for brands to create that coveted 1:1 human connection with their customers. We're currently integrating Ai, NLP, and LLMs into our platform to supercharge human interactions without replacing the human touch - we believe a natural hand-off between human connection and Ai interactions is the future.

Connecting the Dots: Personalization, Marketing, and Business Growth

I hope it's clear to everyone reading this that personalization is not just a nice-to-have in today's competitive eCommerce landscape; it's a must-have.

With more than 2.5M stores in the US alone, competition for customer attention is at an all-time high... and it will continue to grow.

Personalization engines are the magic behind those tailored recommendations and engaging user experiences that drive growth in eCommerce.

If you're a marketer for an eComm brand, and you haven't considered personalization, you're missing out…

For marketing teams of all sizes, personalization engines offer an unparalleled ability to understand and engage with customers. They also help marketers create marketing campaigns that resonate with their audience, resulting in increased customer engagement and satisfaction.

The Future of Personalization in E-commerce

Looking ahead, it's clear that personalization will continue to be a key trend in e-commerce. As personalization engines become more sophisticated, they will be able to deliver even more tailored experiences, improving customer satisfaction and driving sales.

And, new additions like Apple's Vision Pro will make every new innovation even better! Imagine being able to walk through a store virtually, guided by a personal shopper (who's also wearing an AR/VR headset), that can walk you through purchasing decisions, allow you to virtually try-on clothes, get personalized recommendations, and so much more.

The possibilities are endless - personalization and conversational commerce have the potential to revolutionize how we do business!

In Conclusion...

In the end, it's all about the customer. Whether you're a marketing manager, director, VP of Marketing, or CMO, your goal is to create a memorable, engaging experience for your customers. Personalization engines are a powerful tool to achieve that.

Remember, "Marketing is not about the stuff that you make, but about the stories you tell." - Seth Godin. With personalization engines, you're not just telling stories; you're crafting unique experiences for every individual customer that makes them feel like they're the only one.

To see how Humankind can help you create a 1:1 human connection with your customers, book your demo today!

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