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ECOMMERCE INDUSTRY

PERSONALIZED WEB EXPERIENCES

77% of consumers have paid more for a brand that provides a personalized experience online.

Ever-increasing competition demands eCommerce businesses to become more focused on customer experience. New tactics must be built around delivering personalized web experiences.

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DRIVE LOYALTY & RELEVANCE WITH PERSONALIZED EXPERIENCES

Instead of interruptive blast oriented marketing, personalized CX is about delivering value at just the right moment that a user needs it.

Direct traffic

1993 - 1997

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Organic search and paid ads

1998 - 2004

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Sales funnel

2005 - 2018

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Growth flywheel

2019 -

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The dotcom era

In the early days of eCommerce, most business owners exclusively stuck to shopping carts. When shopping, customers would find their product, click on it to view the product detail page, and click on the checkout button. The store might suggest other items and other minor additions, but this was the basic template of every single eCommerce store.

Back then, there were two types of eCommerce businesses: online stores that sold physical products, and direct-response information marketers who sold information via courses, eBooks, and training products. The latter type of eCommerce evolved from the offline direct response world, where marketers mailed sales letters advertising courses. When these marketers got online, they brought what was working offline with them–and just like that, the online sales funnel was born.

ECOMMERCE 2.0

It marked the start of the eCommerce 2.0 period, the golden age of sales funnel strategies.

Awareness, interest, consideration, intent, purchase. Acquisition, activation, desire, purchase. Product views, product customization, cart additions, checkouts, purchases.

These are just a few examples of many sales funnels used by online stores to generate revenue. However, technology and customer behavior evolved, and the sales funnel started to lose its relevance.

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Why Funnel Based Strategies are Failing

1. Shopping cart conversion rates are decreasing
With intense competition and aggressive pricing campaigns, eCommerce companies are struggling to retain their customers. In 2019 the average eCommerce conversion rate was just 1,53% falling back from 1,68% in 2015.

2. CAC exceeds LTV
Customer acquisition cost (CAC) has reached a point where it's outpacing customer lifetime value (LTV). The total amount a customer spends with a brand decreases by 3% every year, and CAC increases by double amount – 6%. Depending on the industry, acquiring a new customer can cost anywhere from 5 to 25 times more than retaining current ones – and the cost will continue to rise as marketers attempt to stay afloat in a noisy digital marketplace. Funnel-based tactics are no longer effective.

Why Funnel Based Strategies are Failing

3. Ignoring multi-channel interactions
With the rise of mobile technology and social networks, the purchasing journey is no longer linear. Users might start researching the product in the mobile app, jump to the web page, compare the prices in the marketplace, visit the social media site, and read and watch reviews of the product or service. Customer interactions are scattered across different data sources, and sales funnels can no longer accurately model user behavior.

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PERSONALIZED EXPERIENCES MATTER

Price and convenience ceased to be the only prerequisites that define a successful transaction. Buyers want to feel that there's somebody behind the computer screen who cares about them. They are fatigued from knowing that algorithms are messaging them rather than real people.

The majority of modern consumers are craving personalization in their shopping experiences. Research backs this sentiment, with 48% of buyers claiming to have already switched to companies that provided personalized shopping experiences.

ECOMMERCE 3.0

In eCommerce 3.0. Online stores must shift their funnel-based customer acquisition strategy to a CX focused mindset. Companies need to treat each customer as an individual - understand their preferences and behaviors. It means delivering unprecedented levels of customer intimacy, targeted engagement, contextualized and dynamic end-to-end experiences for individual customers.

Such personalization can help customers create deep emotional connections to products and brands, driving loyalty and business growth. If done right, web personalization can reduce acquisition costs of up to 50%, uptick revenue to 5-15% and increase marketing spend efficiency by 10-30%.

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THE GROWTH FLYWHEEL

The full eCommerce 3.0 transformation can be explained with growth flywheel that shows how positive or negative feedback loops can build momentum. The customer is at the center of the flywheel – CX is the main engine that spins the wheel.

For example, irrelevant or misleading content drives customer dissatisfaction and poor reviews, which causes products to lose their ranking on search algorithms. Conversely, effective content generates higher conversion rates, more satisfied customers, better reviews, and improved search rankings.

Providing personalized customer experiences is not simple, but as you keep iterating and improving, one-time guests turn into loyal customers. The flywheel keeps spinning, and business sets into growth momentum.

Failure Cases: the Outcome of Mass Discounts

Ensogo was a social commerce website that offered members discounted deals on restaurants, hotel accommodations, SPA services, activities, and retail products. However, its strategy was to rely on mass discounts extensively. As a result, Ensogo was mainly used by "Price hunters" that rarely became regular and loyal customers. This slowly dried customer base and progressively diminished profits. Eventually, delayed payments and terminated hotlines led to Ensogo being permanently suspended in 2016.

Ecomom was a startup internet retail company selling earth-friendly mom and maternity products, including food, toys, apparel, and other baby-related items. Ecomom's growth has flatted by heavy 50% discounting tactics. For every average $69 order shipped, the company lost $29. By mid-Autumn, 2012 the company lost $1.1 million after variable cost, spent $1.7 million more on overhead, and was closed in early 2013.

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Success Cases: the Outcome of Personalization

Amazon.Contextually relevant, personalized advertising is the e-commerce giant's stock-in-trade. From customized onsite content to personalized emails and offers, the company delivers dynamic, data-powered messaging in real-time. Amazon uses powerful algorithms to personalize your homepage, tailoring product recommendations based on your search and purchase record.

Stitch Fixis a personal-shopping website that delivers hand-picked garments directly to consumers. Customer-specific personalization is how Stitch Fix differentiates themselves from many of their competitors. Instead of showing everyone the same set of clothing, Stitch Fix personalizes web content and garment selection based on the information they gather from customers. Everyone's product list is different and personal to their specific style and taste.

What is the common thread?

PERSONALIZED user experience

Discount based tactics image CX based connection
Generic engagement messages image Customer-adapted messages
Linear purchasing process image Multi-channel purchasing journey
One-size-fits-all marketing image Personalized offerings
Marketers' push image Consumers' pull

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