What is personalization? Precautions to be aware of when using and implementing

The EC rate of domestic B2C business has increased from 6.76% in 2019 to 8.08% in 2020 [personalization] , and competition in the EC market is intensifying. Under these circumstances, the concept of “personalization” has been attracting attention in recent years.

Personalization is a method of providing optimal information based on each individual’s attributes and action history, rather than sending uniform information . Users will be able to obtain products and services that match their preferences, as well as appropriate information, and as a result, their trust in the company will increase.

If you are suffering from sluggish sales on your EC site due to intensifying competition, why not try using personalization? Please refer to the 6 measures based on the mechanism and examples of personalization described in this article.

personalization

Table of Contents

Basic knowledge of personalization

Basic knowledge of personalization

First, let me explain the basics of personalization.

What is personalization?

Personalization is a method of providing appropriate services and content based on each person’s attributes, behavior history, and interests, rather than sending uniform information . Also known as “personalization”.

For example, if you access a specific product page on an e-commerce site, information such as “Recommended products for you” will be displayed based on your browsing history. In addition, news sites may deliver news that suits each user based on the trends in articles read in the past.

The difference between personalization and customization

One word that can easily be confused with personalization is customization. In both cases, the point remains that users can use services and content that suit their tastes. However, there is a big difference in “who” tries to match the user’s taste.

  • Personalization: “Companies” provide information that matches user attributes and preferences
  • Customization: Change the information provided by the company to suit the “user” to their liking

For example, Google Search is personalization because each user’s search and browsing history brings up different pages of results. On the other hand, the setting “disable personalization” in Google search is done by the user himself, so this is customization.

Customization works well when users know exactly what they need, but personalization works best when users don’t know what they need.

Why personalization matters in web marketing

According to the “Global Future of Marketing Survey” surveyed by Adobe in November 2021, the most common area for utilizing AI and machine learning is “content personalization (55%)  . So many marketers are aware of the importance of personalization.

So why is personalization so popular these days? I will explain the reason by dividing it into three points.

Customer relationship maintenance

In recent years, it has become more difficult to acquire new customers due to the declining birthrate and aging population, and the idea of ​​retaining existing customers is becoming more and more important.

According to demographic data from the Statistics Bureau of the Ministry of Internal Affairs and Communications , the percentage of people aged 0 to 14 in the total population decreased from 18.8% in 1989 to 12.2% in 2018. Although it is gradual, the downward trend continues.

Under these circumstances, it is important for companies not only to develop new customers, but also to retain existing customers.

The concept of personalization is indispensable for maintaining and establishing existing customers, and as the concept of maintaining existing customers becomes more important, attention is increasing. By providing information and responding appropriately to the needs of each individual customer, you can strengthen the bond between customers and companies.

Change in thinking about information gathering

User attitudes toward information gathering are changing with the times.

According to the Hakuhodo DY Media Partners Media Environment Research Institute’s “Media Fixed Point Survey 2019,” the number of people who feel that “the amount of information in the world is too much” regarding media and Internet information has increased from 42.1% in 2016 to 51.5% in 2019 . increased to The percentage of people who “cannot accept information on the Internet without question” also increased from 71.7% to 80%.

You can see the tendency of users to select only the information that is useful to them from among the vast amount of information . In other words, the importance of providing information based on user attributes and preferences is increasing.

Development of data analysis

Currently, it is possible to efficiently acquire user behavior data by making full use of big data and AI. The evolution of these technologies is one of the reasons why personalization is gaining attention.

For example, the hometown tax portal site “Satofuru” uses AI to classify individual users into detailed statuses such as “first-time visitors,” “non-member visitors,” and “visitors who have made donations.” . By personalizing the content of the top page according to each status, users can now efficiently search for gifts and local governments that suit them.

B2C and B2B use different ways of personalization

B2C and B2B use different ways of personalization

How you use personalization depends on whether your business is for individuals (B2C) or businesses (B2B). This chapter explains in detail how to use each of them.

How to use B2C personalization

In addition to suggesting recommended products based on the user’s purchase history and browsing history on EC sites, there are methods such as recommending other products related to the product added to the cart.

If the target is an individual user, it is often the person who has the decision-making authority, so it is necessary to make a proposal that matches the user’s own interests and tastes . In addition, there are many cases where decisions are made emotionally, so one method is to adopt wording and designs that appeal to emotions.

How to use B2B personalization

In addition to providing optimal content based on browsing history on owned media and blogs, there are methods of approaching issues that prospective customers have through email distribution and eBook proposals.

When implementing personalization for corporate users, the user is not necessarily the person making the decision, and in many cases multiple processes are involved in making a purchasing decision . is important to change .

Advantages & Disadvantages of Personalization

By personalizing e-commerce sites and websites, users can obtain products and services that match their preferences, or obtain appropriate information. As a result, trust in the company will increase, and results such as an increase in sales volume and customer unit price can be expected.

On the other hand, personalization can also have disadvantages. More on that below.

Benefits of personalization

The benefits of personalization are:

  • Improve conversion rate
  • Increased engagement
  • Reduced bounce rate
  • Improving customer retention rate
  • Execution of efficient marketing measures

Let’s take a closer look at each benefit.

Improve conversion rate

Personalization allows you to suggest different products that are closely related to previously purchased products. By recommending ink cartridges to printer buyers and mouse buyers to laptop buyers, you can improve conversion rates for individual products .

Increased engagement

If personalization can suggest products and services that users want, users can reach the desired page more efficiently. In addition, if the desired information can be obtained at the necessary timing, the convenience of the user will increase and contribute to the improvement of engagement .

Reduced bounce rate

Websites have high bounce rates because there is some kind of discrepancy between the information users want and the information provided by companies. By presenting information that best fits the user’s needs and issues, it leads to a decrease in bounce rate and an increase in page scrolling.

Improving customer retention rate

You can improve customer retention rate by distributing personalized coupons based on customer data or introducing exclusive products based on purchase history. Another effective way to add personalization data is customer surveys.

Execution of efficient marketing measures

If you take a one-size-fits-all approach to an unspecified number of users, only a few users will be interested in your company. On the other hand, with personalized marketing, you can decide who, when, and what content to provide to only users who are interested in your company, so you can implement measures efficiently.

Disadvantages of personalization

Disadvantages of personalization are:

  • Information provided tends to be biased
  • Analog measures are costly
  • If the number of products and content is small, it will be difficult to achieve results

We will discuss the disadvantages of each in detail.

Information provided tends to be biased

The ability to provide information according to the user’s interests and preferences is a great strength of personalization. However, as a result of relying only on the data obtained in the past, the information provided may be biased .

For example, if information about ramen is displayed repeatedly even though you were looking for a recommended ramen shop once in the past, some users may feel dissatisfied that the information is being manipulated. I guess. It is necessary to judge whether personalization is working well or not while looking at the reaction of the user as appropriate.

Analog measures tend to be expensive

When sending direct mail or paper catalogs based on user attributes and behavior history, costs such as printing and shipping costs are incurred. Since analog measures tend to be more costly than digital measures , it is important to verify cost-effectiveness in advance.

If the number of products and content is small, it will be difficult to achieve results

One of the roles of personalization is to help users efficiently find what suits them from among a large number of options. However, if there are only a few types of products and content to offer, there are cases where personalization does not have the desired effect because the choices are narrow in the first place. It is important to consider whether your company’s products need personalization by identifying their characteristics and characteristics.

Examples of representative measures for personalization

So where is personalization used? Here are six representative measures.

personalized advertising

Personalized advertising is a measure to display advertisements that suit individual users based on their search history and browsing history. It can be used mainly in web advertising services of Google and Yahoo!. For users, there is an advantage that they can acquire new products and information in their fields of interest.

Personalized ads are perfect for those who want to use personalization to attract customers.

personalized video delivery

Personalization can also be leveraged for video delivery. For example, typical methods include introducing suitable floor plans based on the attributes and preferences of users looking for rental apartments, and calling out the user’s name in a video. It has the advantage of being able to convey more information in a shorter time than text or images .

email personalization

Adjust the content and timing of emails sent based on user demographics, purchase history, interests, and other data. For example, it is possible to recommend product A to customers with one purchase history, and product B to customers with three purchase histories. As a benefit, you can expect to improve the email open rate and conversion rate.

EC site recommendation function

Recommending appropriate products based on the user’s purchase history and browsing history on EC sites is called “recommendation”. Specifically, it refers to personalization such as “I recommend this product” and “If you see this product, check out this product as well.” Since it can support product searches, it can be expected to prevent users from leaving and improve usability.

Earn the trust of your users by using a recommendation engine that can make suggestions tailored to their needs.

Personalized display of SNS

SNS displays posts that may be of interest to a specific feed based on the user’s behavior history such as “likes” and comments in the past. For example, Facebook’s news feed shows the best news based on past actions, location, and more.

In addition, Twitter and Facebook have adopted a similar system for advertisements, which can be delivered only to users who are related to their products and services.

personalized search

For Google Search, we employ personalized search, which presents different search results based on your search history and your location. If you search for “recommended lunch”, the contents displayed at the top will differ for each user, such as cafes in Tokyo and set restaurants in Osaka.

By deepening your understanding of the search system, you will be effective in SEO measures.

Things to know when implementing personalization

Utilizing personalization has advantages such as improving user convenience and gaining trust, but there are also points to note when implementing personalization. Know the two points I will tell you below and implement the appropriate personalization.

Consider personalization based on 1.5W1H

First, let’s build a foundation for measures based on 5W1H. 5W1H includes important elements such as “why”, “target (who)”, and “method (how)”. By preparing the 6 elements in advance, effective personalization is possible without blurring the points and motives .

Personalization 5W1H consists of the following elements:

  • Who is the target? (Who)
  • Why Personalize? (Why)
  • What is personalized, attributes, preferences? (What)
  • Which pages of your site will you personalize? (Where)
  • How long to observe the effect? (When)
  • How to personalize, email newsletter or video? (How)

2. User needs change over time

Since the information and tastes sought by users are not always constant, it is necessary to keep track of needs that change over time. It is necessary to take countermeasures such as frequently obtaining questionnaires and rewriting data, instead of relying too much on specific information that has been personalized at a certain point in time .

Personalization business case

Personalization business case

Finally, learn how companies are leveraging personalization to put personalized marketing into action right away. Here are three examples: Amazon, SABON, and Spotify.

[Amazon] Thoroughly propose products that users want

Amazon utilizes the “recommendation function”, which is a personalization measure for EC sites. “Products related to shopping trends” that introduces recommended products based on purchase history, and “People who bought this product also bought” based on the purchase history of users with similar tastes and tastes. Guidance is typical.

[SABON] Unique recommendation function based on scent

SABON sells bath and body cosmetics. There are 8 types of scents such as “Green Rose”, “Musk”, and “Lavender Apple”.

Since the call center has been receiving inquiries from the past, “What other products with this scent are available?” I had a hypothesis.

Therefore, we implemented a measure to recommend products that have the same scent as the product being viewed on the product detail page. As a result, the conversion rate has improved by 30% compared to other recommendation measures.

[Spotify] Efficiently get information about your favorite artists

[Spotify] Efficiently get information about your favorite artists

Spotify, a music distribution service, uses personalization to provide a service that suits each user with different musical tastes. For example, in addition to generating a dedicated playlist from the user’s viewing history, measures such as introducing concerts scheduled to be held nearby based on location information.

Personalize and build trust with your users

The real purpose of personalization is to build a deep relationship with your users.

By incorporating the concept of personalization into EC sites and websites, users can recognize products and services that match their interests and hobbies. As a result, usability will increase, and companies will also benefit from increased trust and increased sales .

In order to make personalization successful, it is important to clarify the 5W1H at the introduction stage and implement it after understanding the characteristics of the market and products.

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