Gartner : Can Personalization Impact Digital Commerce Performance?

In recent years, we've observed a significant pivot towards 'digital commerce' as a key strategic priority - something that was accelerated by the global pandemic. In Gartner's inaugural Digital Commerce Survey, 86% of marketers stated that getting digital commerce right is going to be the key to driving commercial performance. The question is… 'how'. More specifically, how can brands get the most out of their digital commerce efforts and seize what appears to be a really interesting growth opportunity.

Of all the levers being considered, the most promising appears to be focused on 'improving the customer experience'. More specifically still, personalization appears to be a really interesting digital commerce enabler within that.

This does makes sense. The more customer data can be acquired and used, the better brands can offer more timely and relevant experiences. This can be done through the delivery of real-time delivery, customized content and a more connected journey overall.

However, we are seeing that getting personalization right is increasingly difficult for two reasons. First, operationalizing personalization is getting tougher. It's always been hard to acquire and use customer data in the first place, but in recent times that mountain has gotten even bigger due to growing data complexity, regulations, and privacy concerns.

Second, delivering personalization requires a delicate balance. On one hand, bad personalization can have a hugely detrimental impact on customer experience. But on the other hand, so too does doing it so well that we deliver messages that come across as invasive or creepy. In fact, Gartner 2022 Personalization Survey found that the consequence of over-personalizing was significant, with 37.5% of customers more likely to stop doing business with a brand upon receipt of "creepy" communications versus "irrelevant" ones.

One Approach That Works

Whilst getting personalization right appears to be more and more challenging, the good news is that the benefits to be realized do appear to be significant if we get it right.

Gartner's latest personalization study - which included over 20 interviews marketing leaders and a global survey of ~1500 customers who interacted with a personalized digital experience - revealed effective personalization has the potential to drive commercial performance, with a potential uplift of over 30% against Gartner's commercial benefit index (a measure that tracks brand intent, purchases, repeat purchases and growth).

However, of all the different approaches currently being used to designing and deploying personalization, only one generates the benefits outlined above… an approach we have come to call 'tailored help'.

Tailored help is an approach grounded in helping customers in their path to purchase in a brand agnostic fashion using only a very limited amount of customer data. It requires brands to understand their customer needs and deliver an experience that provides customers with easy to use, actionable help. Ultimately, our research revealed a simple truth: that the more that we (the brand) can help customers explore their needs in a way that makes them feel in control and capable of making the right choices for themselves, the more likely they will reward us for it.

Reversely, the least effective messages were ones perceived by customers to be highly customized but lacking any sense of help. In other words, messages that demonstrated a great deal of customer knowledge but that also appear to communicate a message that "We know you…". This type of message also runs the risk of being perceived as 'creepy' by customers if a vast amount of customer data has been used.

Some Noteworthy Exceptions

Our research also reveals some small but important differences in terms of customer appetites and preference with regards to personalization.

First, despite a very similar patterns of results across all industries assessed, some sectors do seem to enjoy greater comfort levels in terms of what data (both volume and type of data) customers are willing to share with them. In financial services for examples, we found that consumers are nearly 70% more willing to share their personal information compared brands in other industries (see '4 Key Consumer Personalization Findings Critical for Financial Services CMOs').

Second, the world of B2B does appear to be more open to a higher degree of personalization than B2C. Furthermore, our research indicates that B2B customers are also more comfortable sharing most types of data for the purpose of receiving a more personalized experience overall. However, the risk of getting personalization wrong also appears higher, with a higher proportion of B2B brands indicating that they would stop doing business with brands that poorly and/or over-personalize.