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Your Complete Guide to a Scalable eCommerce Personalization Strategy

Learn how to create a foolproof personalization strategy for eCommerce with our 5-step personalization roadmap.

Published: Oct 31, 2022

Introduction

E-commerce has been growing to be a crowded space. By the time visitors land on your site, they may have seen many other similar products in many different shapes and sizes from many different brands. So, how can you differentiate your brand, engage online shoppers, and ultimately turn them into buyers?

The answer comes down to creating a personalized experience. 

OK, so does it mean I just need to email my customers saying, “Hey John, here’s our new offer” and I’ve achieved personalization?

Unfortunately, that’s not going to be enough. 

E-commerce personalization isn’t just telling people what they already know. It’s about creating a meaningful experience that is super relevant to the shoppers’ needs in a given moment, anticipates their wants in the future, and overall reflects their values and behaviors.

Alas, McKinsey research indicates that only 15% of retailers have successfully implemented personalization strategies. What happens most often is that instead of focusing all their efforts on following a clear personalization roadmap, businesses jump into quick-win customization solutions without fully knowing who their visitors and customers really are or what they truly want.

It’s time to make it right. 

In this guide, we’ll explain everything you need to know about creating an eCommerce personalization strategy for your business. Here’s what we’ll cover:

1. Why personalization strategy is important in 2021
2. Personalization strategy essentials
– Data
– Insights
– Goals, objectives, KPIs
3. Personalization roadmap

Ready to learn? Let’s jump in.

3 reasons why your brand needs a personalization strategy in 2021

Online shoppers now prioritize tailored and relevant customer communication. They’re willing to provide more and more personal information to brands in exchange for a higher quality experience. 

“Personalization is still in its infancy stages, which will accelerate as it yields strong dividends for both consumers and retailers.” 

Christina Brandeberry, Managing Director of Shopping and Performance at Google

By implementing a personalization strategy, brands can create a customer journey map, turn visitors into loyal customers, and achieve financial business goals. Below we’ll discuss three main reasons why eCommerce brands should zero in on personalization in 2021 and beyond: 

1. Personalization addresses the evolving customer expectations

The digital age has elevated consumer expectations for convenient and contextual experiences to unprecedented heights. Today shoppers are gravitating toward brands that feel most similar to them regarding values, ones that strive to understand them and cater to their specific needs.

That’s where personalization comes in. Personalization allows brands to contextualize messages, create exclusive offers, and customize the experience based on each unique buyer persona. 

According to Accenture, 91% of consumers prefer shopping with brands that treat them in a personal manner. They’re more likely to buy from stores that provide them with relevant offers and recommendations. In another survey, Epsilon found that over 80% of respondents expect and desire personalization from retailers.

“Digital transformation is no longer optional. It is required for brands to improve customer experiences and remain competitive.” 

Kevin Mabley, SVP Strategy and Analytics at Epsilon

Think of your own shopping experiences. When you’re in an online store, do you like receiving relevant product recommendations or are you OK with being offered 25% off all steaks when in fact you’re a vegetarian? What about reading a blog post that shows how to use a product you’ve recently purchased vs being served with another generic ad?

If you expect all of these things as an integral part of your online experience, so do your customers. Start treating your potential customers the way you want to be treated. 

2. Personalization increases customer satisfaction

When you give consumers what they actually want, they tend to stick with you. Think about Netflix. Every time you visit the app, it offers something new and relevant to watch based on your past behavior. Or Spotify: The complex algorithm actually curates a playlist that’s just for you facilitating easy music discovery.  No wonder both of these apps have a join user base of over 450 million.

A survey by Gladly revealed that customers now value personalization more than speed when it comes to customer service. In another survey, Reflektion also found that 98% of respondents value the importance of personalization in driving greater engagement among customers.

So what does it mean? The more accurate a personalized experience, the more likely customers will pay attention to your offers and take your desired actions. 

3. Personalization drives conversions and sales

A scalable personalization strategy helps grocery brands increase their total sales by 1 to 2%. The number is even higher for other retailers. If a brand incorporates personalization into their overall marketing strategy, it can also reduce acquisition costs by up to 50%. 

If that’s not enough to convince you, check out these statistics:

• 80% of consumers prefer to buy from brands that offer personalized experiences (Epsilon).
• 40% of shoppers who clicked a personalized recommendation during their first visit came back, compared to only 19% of shoppers who didn’t click a recommendation (Salesforce).
• 44% of consumers said that if they had a personalized experience with a brand, they would become repeat buyers (Segment).
• Personalization yields a 5-15% uplift in revenue (McKinsey). 

Need real-life proof? Check out Sephora’s success story in creating a personalized omnichannel experience for loyal customers.

Sephora’s Beauty Insider tiered loyalty program offers its highest-level members early access to new products, invitations to exclusive events, and more incentives. All members’ profile details are updated across channels, and they receive customized recommendations based on their input.

The results? About 80% of Sephora’s total transactions come from its Beauty Insider’s members. The brand also stays in the top slot in Sailthru’s Retail Personalization Index for the third year in a row. No doubt that personalization works like a charm. 

Scalable personalization strategy: The essentials

To create an exceptional personalized experience, you need to have a strong personalization strategy first. It will help you define a specific long-term vision and build the right foundations for success.

If you jump into implementing personalization tactics without first drafting the course, you might see short-term success but fail to deliver a high ROI in the long run.

The question is: What makes a personalization strategy successful? Two things.

First, a personalization strategy should be data-driven, incorporate insights from external and internal environments, and include clear goals, objectives, and key performance indicators (KPIs). 

Second, it should come with a specific roadmap (more on that below), which includes audience segmentation, campaign ideation, priority setting, orchestration, and optimization.

Failing to have all of these elements in place can result in fragmented customer journeys where some parts are personalized while others fall short and create bottlenecks for your business.

Personalization missteps can even translate to a negative impact on your bottom line: IBM’s data shows that 45% of consumers say they would be less likely to purchase or wouldn’t purchase at all if the experience a brand provides differs from their ideas of the ideal experience. 

Let’s zero in on the stepping stones of a foolproof personalization strategy for now.

Data

You can’t do effective personalization without first learning who your potential and existing customers are, where they’re from, what is their background, their values and beliefs what makes them excited and what do they consider annoying… To answer all of these questions and more you need DATA.

When you have rich customer data at hand, you can have a 360-degree view of your customers and always be one step ahead with your personalization strategy.

To gain insights into the target market, consider using these resources:

• Website analytics tools like Google Analytics to know where in the world your visitors are coming from, which devices they primarily use, which pages they visit the most, how much time they spend on your website, where and how they convert, etc.
• Behavior analytics tools like Hotjar to know which areas of the page your website visitors focus on, what makes them stay and convert vs what makes them bounce, etc.
• SEO tools like Ahrefs or SEMrush to know which keywords drive the most organic traffic to your page, to discover what products and content your potential customers are searching for, etc.
• Social listening tools like Hootsuite, Buffer, or Agorapulse to monitor what your customers are saying about you or your competitors in the social space.
• Sentiment analysis platforms like MonkeyLearn or IBM Watson to understand and monitor the social sentiment of their brand, product, or service. 
• Primary data like interviews, research data, quizzes. 
• Secondary data like industry reports, third-party surveys, white papers, research studies, etc.

As mentioned earlier, customers are more willing to share their data in exchange for benefits like hyper-relevant content, exclusive deals, special product recommendations, and better UX. Hence, it’s an excellent opportunity for brands to collect data to enhance the customer experience. 

That said, more data doesn’t mean more value. According to Gartner, most brands currently collect more data than they can reasonably expect to use, especially given that many have yet to build out the capabilities needed to leverage that data. 

Insights

From the previous section, you already see that there’s an abundance of data that can be collected, and more so, there is a willingness from the customers themselves to give that data in exchange for improved experiences.

However, data alone isn’t going to help you establish an actionable personalization strategy. It’s the insights that you draw from filtering, sorting, grouping, visualizing, analyzing, interpreting that data that drive results. 

As an eCommerce business, focus on these channels to form insights into your overall business performance:

• Website: How much traffic is your website generating? Where is it coming from? Do you get more new or returning visitors? Which pages are most popular? How much time do people spend on a single page on average? And so on.
• Email: What are your avg. email open rates and click rates? What time of day is your audience most engaged? Are specific subscriber segments engage with your email communications more than the others? What’s your average email conversion rate? 
• Social media analytics: Where the majority of your followers are located? Are they city-dwellers or suburban? What’s their age, gender, occupation? Which of your social media posts get the most likes and which have the highest CTR?
• Paid marketing activities: What is your average ad click-through rate? How much does it cost for you to acquire a customer from paid advertising? Do they boast a higher AOV than those coming from other media channels? 

For example, data might show you that customer X bought a product Y four times in the last 3 months. After analyzing that data, you might learn the product bought is in fact a gluten-free energy bar, which provides insight that the customer is likely gluten-intolerant and leads an active lifestyle.

You can then leverage that insight to personalize customer X’s shopping experience by recommending gluten-free products, recipes, sports equipment, etc.

By transforming data into actionable insights, you can identify customers’ value triggers, then score and rank customers to facilitate effective targeting and personalization. 

Goals, objectives, and KPIs

For a personalization strategy to be easily scalable, you must establish clear goals, objectives, and KPIs. Without them, you have no way of knowing whether or not your personalization strategy is working. Here’s a quick breakdown: 

• Goals are broad statements of what you want your strategy to ultimately achieve.  
• Objectives are more concrete steps that can help you achieve your goal. It’s best if they follow the S.M.A.R.T criteria (i.e. are specific, measurable, actionable, realistic, and time-bound).
• Key Performance Indicators (KPIs) are specific measurable values, or metrics, used to indicate your progress towards achieving business objectives.

Here is a formula to help you quickly determine goals, objectives, and KPIs for your strategy:

Based on [INSIGHT], I will [OBJECTIVE] as measured by [KPI] to achieve [GOAL].

For example, “Because the homepage experiences 85% drop-off, I will improve site navigation as measured by click-through rate to increase customer engagement in my online store.”

Your 5-step personalization roadmap

It’s one thing to understand the foundation of a successful personalization strategy. It’s another to actually build meaningful, personalized experiences that facilitate conversions. 

In the last section of this guide, we’ll give you a roadmap to achieve a higher personalization level. This roadmap includes 5 steps: Segmentation, Brainstorming, Prioritization, Design and Orchestration, Testing & Optimization.

Step 1: Segment

It’s hard to personalize without segmentation. In fact, it’s impossible. 

By segmenting your target market, you determine groups of individuals that have a common set of characteristics and can create highly relevant, personalized messages tailored to each of these groups. If you ignore segmentation, your message will be generic and lack personal touches.

To start segmenting your audience, you can use these parameters:

• Demographic segmentation: Classification based on personal attributes like gender, age, income, occupation.
• Geographic segmentation: Classification based on physical location. 
• Behavioral segmentation: Classification based on product usage, payment methods, purchase frequency, etc. 
• Psychographic segmentation: Classification based on attitudes, lifestyle, personalities, opinions, trait values, etc. 
• Acquisition segmentation: Classification based on acquisition channel and/or campaign. 
• Technographic segmentation: Classification based on technology customer use. 
• Firmographic segmentation: Classification based on industry, number of employees, revenue, etc. 
• Algorithmic segmentation: Classification based on predictive targeting or automated segment discovery. 

Depending on where you are on the personalization maturity curve, your market segmentation is going to vary in complexity. For example, if you’re just starting, the easiest way to segment your customers to achieve some level of personalization is based on location.

For an intermediate level of personalization, you might want to combine several segmentation criteria to achieve higher relevancy. For example, segment based on location and gender. For an advanced level of personalization, you can combine multiple segmentation criteria and bring product/category affinity into the mix, e.g. segment based on location, gender, and recently purchased products.

Step 2: Brainstorm ideas

Once you’re done with segmenting your target audience, you can start brainstorming campaign ideas and formats. Here are some ideas to get you started:

• Offer related product recommendations on checkout pages.
• Add real-time social proof to product pages. 
• Show a spin-to-win popup to new website visitors.
• Invite return buyers to fill out a survey.
• Showcase progress towards incentives.

Here you can see the latter illustrated by Tattly. The progress bar is an interactive way to nudge customers towards higher-value purchases by showing what they’ll get in return.

Step 3: Prioritize

Now that you’ve developed a healthy list of personalization campaign ideas focused on your chosen customer segment and aligned with your business goals, it’s time to cherry-pick the ones that will bring the most value in the shortest amount of time. 

Here are some methodologies for idea prioritization you can try:

• PIE framework: This is the most popular model to prioritize ideas, which includes three variables: P – Potential (how much improvement can be made on the pages?), I – Importance (how valuable is the traffic to the page?), and E – Ease (how complicated will the test be to implement on the page?). 
• ICE score: This method considers Impact (what will the impact be if this works?), Confidence (how confident am I that this will work?), and Ease (what is the ease of implementation?).
• PXL model: This method asks you a couple of questions. For example, is the change above the fold? Is the change noticeable in under 5 seconds? Does it add or remove anything? Does the test run on high traffic pages? 
• Prioritization matrix: This method helps you focus on ideas that will bring the most value to the largest amount of your target audience.

Neither of these methods alone is perfect so see which one works best for what you’re trying to achieve. All in all, you want to make sure you’re focusing your efforts on the areas of the website that shoppers visit the most.

Step 4: Design and orchestrate

This is the step where your personalization campaign ideas start to take shape. With an abundance of on-site messaging formats – pop-ups, overlays, sticky bars, embedded forms, and whatnot – you must find the one that will best fit the message you want to convey.

For example, if you’re setting up a navigational campaign on the homepage, you might do with a sticky top bar. On the other hand, if you have a time-bound promotion running, that same sticky bar can be enriched with a countdown timer to instill urgency. Here’s an example of a countdown timer we did for M.J. Bale:

If your goal is to minimize product page abandonment, you might choose to implement real-time social proof to build trust and nudge visitors towards purchase.

You might as well create an exit-intent overlay that reengages those about to leave and follow up with a cart recovery email that features an exclusive offer and encourages recipients to come back to your store and complete their purchase. Read the Busbud case study to see how they achieved particularly impressive results using this approach!

As you can probably see already, there is no single recipe for a successful personalization campaign. Your overall strategy will include a number of different campaigns all tailored to influence specific KPIs and bring you closer to achieving agreed objectives.

There are, however, best practices that you can follow that will make the design and setup of your personalization campaigns easier. We recommend to use the 6-W framework:

• Why: By this point, you should already have answered this question when setting the goals and objectives of your campaign. 
• Who: Same as above, this is your target audience, i.e. the customer segment that you’re going after with your campaign.
• What: What is your campaign about? Is it an exclusive offer, a flash sale, a customer testimonial… 
• When: When will your campaign run and when will it trigger? You might want to use different timing to achieve different results. 
• Where: Which channel will you run your campaign on? If on the website, which pages will it feature on? 
• How often: This refers to frequency. How often will your customers see the campaign during their session?

The sophistication of this step will also depend on the technology and human resources available to you. We deep-dive into personalization technology in this free guide, but here are some of the key considerations you need to make when judging personalization tech:

1. Can it capture or ingest customer data?
2. Can it leverage that data to create customer segments?
3. Can it optimize based on real-time behavior?
4. Does it support rules-based and/or predictive personalization? 
5. Does it offer testing algorithms?
6. Which channels does it facilitate?
7. Does it integrate seamlessly with your eCommerce stack?

Besides, technology, your personalization strategy requires a team of qualified individuals. It’s essential this team combined different backgrounds, as you’ll need expertise in project management, copywriting, design, technical implementation, operations, analytics, and more.

Note: There are fully-managed personalization solutions available on the market, such as Yieldify. With Yieldify, you get access to award-winning technology, but you’re also assigned a team of account managers, data analysts, IT and design specialists to run personalization campaigns at scale on your behalf. To learn more, get in touch with our experts.

Step 5: Test, measure, and optimize

In order to prove your personalization strategy is working and generating return on investment (ROI), you’ll have to run various tests and experiments. A data-driven approach to personalization helps you identify which tactics cut through the noise, and which barely move the needle on your bottom line.

There are a plethora of testing methods available to marketers, from A/B testing and multivariate testing, and more. Use them in unison to get the most in-depth understanding of your personalization campaigns. At Yieldify, we run incrementality tests to measure the monetary value your efforts bring.

Don’t forget that whatever test you decide to run, it’s important to leverage control groups. Without a control group, you’ll never know if your campaign was effective, ineffective, or even detrimental to your success. 

Final thoughts

Personalization has become a powerhouse of successful online brands by helping them create an exceptional experience, build a solid loyal customer base, and boost revenue. Now it’s your turn to develop your own personalization strategy and take advantage of it to grow your business.

Need help getting started? Get in touch with Yieldify’s team of experts and discover the fastest and most reliable personalization solution already trusted by more than 500 leading eCommerce brands worldwide.

The post Your Complete Guide to a Scalable eCommerce Personalization Strategy appeared first on Yieldify.

FREE GUIDE

Personalization Technology: Landscape & Trends for 2023

How to choose the right personalization tool and what trends are shaping the personalization technology landscape? Find answers to this and more in our free guide.

Published: Jul 7, 2022

Introduction

89% of businesses are investing in personalization as a critical strategy for their current and future success. However, personalization goes far beyond adding a first name field into the subject line of an email…

In order to stay relevant in today’s hypercompetitive marketplace, brands need to remain customer-centric and drive their attention to personalized experiences for website visitors. After all, customers now hold the power and personalization is top-of-mind for modern consumers. Not convinced? Here’s a fraction of the stats showing the power and importance of customer personalization:

80% of consumers are more likely to purchase from a brand that provides personalized experiences.

63% of consumers will stop buying from brands that use poor personalization tactics.

Personalized shopping cart recommendations influenced 92% of shoppers online to buy products.

forbes.com

But none of what we’re saying is that new or revolutionary. Personalization has been a trend for over a decade now, and it has evolved greatly from templatized marketing communications to dynamic, predictive, and even proactive experiences.

Today, a plethora of personalization software tools, including AI and machine learning algorithms, allow us to achieve 1:1 personalization like never before. In order to take full advantage of personalization technology, we must first understand what it is and how it benefits both brands and consumers.

To answer these questions and more, we’ll take a closer look at:

1. Personalization technology definition
2. The 5 benefits of personalization technology
3. How to choose personalization technology
3.1 Personalization maturity curve
3.2 Personalization engine features
4. Personalization technology trends

What is personalization technology?

Before we take a deep dive into personalization technology, let’s start with the basics: What is personalization? In eCommerce, personalization is the process of creating individualized shopping experiences and interactions. These can range from dynamic website content to unique promotional offers to tailored product recommendations, etc.

As such, personalization technology encompasses the variety of software tools that collect, store, and manage customer data in order to orchestrate individualized experiences.

Depending on the size of your business and your place on the personalization maturity curve, your personalization technology stack can consist of a single or a set of personalization tools. If you have the budget to afford something like Adobe’s Experience Cloud, you might not have to worry about much else.

However, even established businesses often choose to go with several providers that are experts in their chosen niche: Product recommendation engine; Dynamic pricing software; Intelligent site search; Conversational commerce bots… Based on a recent ITSMA survey, this is the typical personalization marketer’s toolbox: 

It’s important to note that the orchestration part should be done by a personalization engine that is able to ingest all that third-party data and ‘spit out’ relevant communications in real-time.

For example, at Yieldify, we integrate with your CRMs, CDPs, email service providers, analytics platforms, review software, and more to make sure the campaigns we build target the right person, at the right time, with the right offer.

The benefits of personalization technology 

We’ve touched on what personalization technology is, so let’s discuss the five key benefits that personalization engines can offer to eCommerce marketers, whether through self-service, fully-managed, or in-house solutions.

Better customer experience

With the advance of technology, the customer journey has become more granular. As a 2019 survey claims, consumers are frustrated when they are offered generic, irrelevant content, and more than half expect digital personalization as a standard service. Dynamic content and personalized product recommendations help with building trust, make your brand feel more authentic, and keep your customers more engaged.

Case in point: StudentUniverse, one of the world’s leading travel booking sites for students and young adults, identified that website visitors had a frustrating experience using the site search bar. By implementing Yieldify’s personalization solution, StudentUniverse was able to counteract browse abandonment and achieved a 16.76% conversion rate uplift on mobile and +4.51% on desktop.

Higher conversion rates

While many elements impact your conversion rates, the experience you offer to your customers is a vital one. By getting the right message to the right person at the right time, your sales can skyrocket. According to a Monetate report, the more personalized pages a customer sees, the higher the conversion rates. On average, once companies implement personalization, they see a 20% increase in sales.

Case in point: TravelUp offers flights, package holidays, hotels, and more. Every step of the customer journey is crucial in the travel industry, and the company wanted to increase bookings by showcasing added value with their “Fly Now, Pay Later” payment scheme. Using Yieldify’s personalization technology, TravelUp achieved a 5.24% uplift in conversions.

Reduced cart abandonment

A staggering 80% of users abandon their carts. Reducing this by even a few percentage points will result in a significant revenue jump. By analyzing every aspect of the customer journey, companies can incorporate real-time dynamic pop-ups, browser retargeting, email remarketing, and other strategies. The result is reduced cart abandonment rates, increased customer retention, and a great customer experience.

Case in point: Domino’s, a leader in the food industry and online delivery, wanted to re-engage users who were about to abandon their cart. With Yieldify’s, they implemented dynamic messaging that encouraged users to convert with an even higher AOV. Domino’s cart abandonment campaign resulted in 14% higher conversion rates and 9% higher AOV.

Increased average order value (AOV)

A Salesforce’s report states that 69% of buyers expect Amazon-like buying experiences: Things like personalized product recommendations, cross-sells, and upsells. Personalization technology leverages what you already know about your customers in real-time and offers them relevant information that improves the customer journey and supports your business goals.

Case in point: Healthy Chef is the go-to source for healthy recipes and wholefood products for Australians. The website receives high volumes of traffic but noticed conversions were dwindling. Together with Yieldify, Healthy Chef deployed a number of campaigns, from list building to social proof, and achieved a 6.2% uplift in AOV.

Improved customer loyalty

Loyal customers are the holy grail of long-term, sustainable business success. Adobe’s report states that US eCommerce stores make 40% in sales from 8% of loyal users. Providing a tailor-made, outstanding experience to your customers makes them feel valued as individuals. Build brand loyalty and stand out in the noisy digital world by implementing data-driven personalization strategies.

Case in point: To drive customer retention and loyalty, brands are turning to loyalty programs. For instance, up-and-coming beauty brand Skyn ICELAND utilized personalization technology to improve the customer journey for their loyal customers. By tailoring their messaging and placements, Skyn ICELAND achieved a 23.1% uplift in conversion rate and boosted AOV by 14.94%.

How to choose personalization technology

Personalization maturity curve

Choosing a personalization technology ultimately depends on the sophistication level one is seeking. We’ve already referenced the personalization maturity curve, so let’s explore it in a bit more detail to understand how it informs our software buying decisions.

The personalization maturity curve signifies the different phases, tactics, and expected returns of a personalization strategy. As you can see, on the most basic level we have personalization based on field insertion. In other words, your typical “F_NAME” scenario.

As you advance up the maturity curve, you encounter more complex personalization strategies: Things like personalized product recommendations, dynamic content, social proof, and more will sit at rules-based personalization or higher. These strategies tend to have the most significant impact on revenue and customer retention and thus require more sophisticated personalization solutions.

Take a look at the image below and try to identify which stage your eCommerce personalization strategy is currently at. Most businesses sit at the first three stages, i.e. Mass-marketing; Field insertion; or Rules-based segmentation. The personalization maturity curve is also handy in predicting the effectiveness of your personalization campaigns as you move up the ladder. I mean, who doesn’t want a 20-50% lift in conversions?!

7 must-have personalization technology features

Now, when it comes to choosing a personalization solution, there are several ways you can go (read our blog post on personalization tools to learn more). In a nutshell, you can choose self-service software, such as Google Optimize. You can choose an agency. Or, you can choose a managed solution like Yieldify that gives you access to both, the technology and the human resources including account managers, designers, technical engineers, etc.

Whatever you decide to go with, you’ll need to make sure your chosen personalization provider can guarantee the following features:

• Customer data capture
• Customer segmentation
• Real-time optimization
• Rules-based and/or predictive personalization 
• Testing algorithms
• Multiple channels
• Seamless integration with eCommerce technology stack

1. Can it capture or ingest customer data?

Remember, without customer data no personalization is possible. Personalization tools rely on data to best understand your customers and prove them with the most relevant experience on your site. The first-party data you use for eCommerce personalization can be implicit or explicit:

• Implicit data is the information that was not provided by the user but gathered from available data streams. For example, their digital fingerprint (geolocation, device, browser) and digital body language (number of sessions, specific pageviews, time on site, etc.). Think how Amazon suggests related products based on your basket contents.
• Explicit data is the information that was intentionally provided by the visitor through form submission, poll, survey, filtering options, input fields, and so on. Think how travel booking engines ask you to submit a destination first to tailor the results.

Apart from collecting first-party data from your website activity, social media, advertising channels, CRM, customer surveys, and elsewhere, your personalization technology should be able to ingest second- and third-party data from CDPs and DMPs. This data will allow you to reach new audiences, predict behaviors, improve precision targeting, and build stronger relationships.

2. Can it leverage that data to create customer segments?

Understanding your visitors is the first step towards personalized customer journeys, and one way to do that is through segmentation. There are a number of ways to segment your target market (click on the links below to explore each topic in more detail).

• Demographic segmentation
• Geographic segmentation
• Behavioral segmentation
• Psychographic
• Technographic
• Firmographic 

Your best bet is to use these segmentation methods in unison to achieve hyper-relevancy. If you were to split only based on gender (demographic segmentation), you might miss personalization opportunities when shoppers deviate from their assigned segment – for example, a man shopping for a gift for his wife. However, if you combined demographic and behavioral segmentation, you could actually identify such behavior and show relevant messaging in real-time.

Audience segmentation also helps with setting priorities. You’ll be able to answer key questions like Which visitor segment drives the most traffic? How does segment X compare in conversions to segment Y? Which segment drives the most revenue? Having answers to those types of questions will prove invaluable when it comes to optimizing your digital strategy and conversions. You can learn more about this by reading our guide to STP marketing.

3. Can it optimize based on real-time behavior?

We can wax poetic about behavioral segmentation, but it all comes to your personalization technology being able to target and trigger based on real-time behavior.

As mentioned in the example above, you could have all the data pointing to your customer being an X located in Y and interested in Z. However, the moment that customer deviates from their pre-assigned segment, your personalization efforts go to waste and might even cause backlash.

Optimizing based on real-time behavior can help you avoid personalization faux pas, {insert any Marketoonist cartoon}, increase engagement, improve the on-site experience, and ultimately have a positive impact on your bottom line.

4. Does it support rules-based and/or predictive personalization? 

Rules-based personalization allows marketers to manually set rules upon which a personalization engine then executes. Think of it as an IF THIS/THEN THAT approach.

For example, IF a visitor is a member of your loyalty or rewards program, THEN provide a message welcoming them back to your website. IF a visitor is new to your website, THEN trigger an email sign up form to capture their email address. 

On the other hand, predictive personalization is a tad smarter in that it predicts actions based on the user’s previous behavior. Personalized product recommendations and cross-selling are just some examples of predictive personalization in action. More advanced capabilities include tracking customer sentiment and interfering before they had a chance to churn, like the Sprint case below:

“Predictive analytics have transformed how Sprint interacts with customers and dramatically improved the customer experience.

The company uses an AI-powered algorithm to identify the customers at risk of churn and proactively provide personalized retention offers. AI predicts what customers want and gives them the offer when they are most at risk of leaving the company.”

forbes.com

5. Does it offer testing algorithms?

A golden marketing rule states: You cannot improve what you don’t measure. That’s why testing algorithms are crucial to any personalization technology.

Most personalization engines offer some sort of A/B testing and multivariate testing functionality. At Yieldify, we like to provide our clients with more actionable insights and focus on incrementality testing. With incrementality tests, you can essentially measure the effectiveness of your personalization campaigns in money’s worth.

We set up the campaign with test and control groups, run it until it achieves statistical significance, and show you the results based on the influenced sales. Once you have established confidence in a campaign, you can then run some A/B tests to tweak simple things like copy or creative.

6. Which channels does it facilitate?

Personalization can occur in many different outlets; however, depending on the personalization software you choose, you will have access to fewer or more options. Some of the most popular personalization channels include Website, Mobile, Email, Browser, and Apps.

Before choosing a personalization engine, you will need to determine your overall marketing strategy and goals and decide which platforms or mediums you wish to pursue. Channels like website and email are kind of set in stone and shouldn’t be ignored. Based on our Personalization after COVID-19 report, here are other popular personalization channels:

7. Does it integrate seamlessly with your eCommerce stack?

As mentioned, personalization technology can encompass a number of different personalization tools, but it also has to integrate flawlessly with your general eCommerce marketing stack. Ideally, everything should come together to enhance – not impede – the digital customer experience.

Here are marketing stack examples from London-based eCommerce beauty retailer Space NK. You can see more beautifully illustrated marketing technology stacks and get inspiration for yours over at ChiefMarTec’s Stackie Awards.

Let’s take a quick look at some of the typical eCommerce marketing stack categories, and see how it can work together with your personalization technology to achieve a common goal:

Analytics and tracking. Whether you’re a marketing novice or an established veteran, you know that setting up analytics is essential to tracking eCommerce sales and marketing performance. Your personalization engine needs that data to uncover opportunities for personalization, track performance, and more.

Relationship management. The most integral piece to the foundational eCommerce marketing stack is a customer relationship management software or a CRM. This is where all your customer data is stored, and potentially segmented. Integrating your personalization tech with a CRM is what enables you to deliver highly personalized marketing campaigns at scale.

Email service provider (ESP). Email marketing is a vital part of eCommerce strategy not only in its ability to nurture warm leads, keep existing customers informed, but also reactivate lost revenue via cart abandonment emails. Because personalization happens on both of these channels, it’s imperative they talk to one another and exchange valuable information, like cart value, items in cart, product/category affinity, coupon redemption, etc.

Social media and advertising channels. Platforms like Google Ads, Facebook, Instagram, and Pinterest are often utilized by eCommerce sellers to drive qualified traffic to their online stores and increase conversions. By adding personalization technology into the equation, you’ll be able to personalize based on the referral source.

Customer review platforms. You know how they say that cash is king and reputation is queen. Well, in eCommerce, webutation is queen. While that’s just a witty acronym for website reputation, it is a powerful tool in building trust with your customers and increasing conversions. In fact, over 50% of consumers search for online reviews before making a purchase. Being able to integrate your personalization engine with webutation tools like Trustpilot and Yotpo means you can display social proof on your pages and facilitate better customer relationships.

Personalization technology trends for 2023

Personalization trend #1: All-in-one personalization technologies

We already mentioned the rapidly growing demand for eCommerce personalization from consumers and businesses alike. But no matter how desirable personalization, it does come with its own set of challenges. Yieldify’s “Personalization after COVID-19” report showed that businesses still struggle with both, skill and resources:

• 37% said lack of expertise is their biggest impediment of personalization;
• 36% said tools still lack functionality;
• 34% said tools are too expensive;
• 23% said drafting a personalization strategy is a too complicated project;

Aware of the existing challenges, personalization technology providers are moving to alleviate those pains by offering more and more functionality within a single, “one-stop-shop” service.

Marketing automation tools are becoming synonymous with personalization in that they often facilitate all or parts of the functionality, such as segmentation, real-time optimization, testing, and experimentation. Think of tools like Klaviyo or Emarsys that offer omnichannel experiences across web, mobile, email, SMS, ads, even direct mail!

In response, CRO and A/B testing platforms are expanding their offerings to include more complex solutions like behavioral segmentation, and utilize more channels.

Personalization trend #2: Unmasking anonymous visitors

No matter how familiar you are with personalization at this stage, it can still be quite mind-boggling having to personalize for an anonymous user. While there are certainly ways to do it in a fun and non-creepy way (see this Hubspot article), enterprise-level companies do want to take it a step further.

Mindful of this, personalization technology is increasingly developing its own or integrating with customer data platforms (CDPs) and third-party data service providers (DSPs).

“As marketers, your best investment is in technology platforms that aggregate and analyze data to break down unnecessary silos. 

[For example,] Adobe’s Audience Manager integrates with several of today’s DSPs, meaning when a user clicks on your ad, data is aggregated back to Audience Manager which generates an authenticated ID that is attributed to that specific visitor.

Using that ID, you can begin to tailor content based on which ads the visitor has engaged with in the past without them ever having to fill out a form or disclose personal information.

r2integrated.com

Personalization trend #3: Integration with IoT devices

How many people do you know who have an Amazon Echo, Google Dot, or a different voice assistant at their homes? Chances are a lot. According to Amazon’s 2019 data, more than 100 million Alexa-powered devices had been sold since launching in 2014.

But those are just one type of available IoT devices out there: There are smart appliances, home automation, health tracking devices, and much more. All of these things are embedded in our lives and gather valuable data that personalization engines can use to deliver true 1:1 personalization.

For example, back in 2018, Amazon filed a patent that would allow its Echo device to detect when someone is ill from the change in their voice, nasal tones, and stuffed nose. When synced with Amazon’s website personalization engine, this is invaluable information to make personalized recommendations for cold medicine, recipes, etc.

Personalization trend #4: More 1-1 experiences

Brands are starting to take a “one on one” approach with customers. In the past years, this was just something that marketers talked about in prophecy but it’s no longer just talk as brands have gone beyond using customer names or showcasing complementary products based on browsing history by going further than ever before when making true 1:1 experiences come alive.

This one-on-one approach allows for truly personalized content which is great for customer engagement. One of the best examples of this comes from Spotify and their Discover Weekly playlist.

The Discover Weekly is a curated playlist of tracks that it thinks a user will like using an algorithm that determines a user’s “taste profile”. This is based on user data such as listening behavior and the most popular playlists among the entire Spotify audience.

The algorithm takes into account interaction with the songs, for example, if you add a discover playlist song into one of your own personal playlists that’s a thumbs up it’s working if you skip a song within 30 seconds it knows it can do better.

Whilst you may not have all the data points that Spotify has this is a great example of using first party data points to provide a truly personalized experience at scale.

Conclusion 

We hope that you have a better understanding of personalization technology and the many benefits that come with personalizing the customer experience.

Should you have further questions or want to jumpstart your personalization journey right now, get in touch with the experts at Yieldify and we’ll be glad to help you reap the benefits of personalization.

The post Personalization Technology: Landscape & Trends for 2023 appeared first on Yieldify.

FREE GUIDE

Email List Building: 8 Best List Building Strategies for 2023

Want to take your list building strategy to the next level? Read Yieldify’s 8 tips based on creating thousands of lead capture campaigns for our clients.

Published: Oct 30, 2020

Introduction

The term list building refers to the process of collecting email addresses from visitors or users of a website. This is done via lead capture software in order to grow the subscriber database and empower future business communications with prospective or existing clients.  

For marketers, email list building is an essential strategy. Statistics show that 59% of consumers state marketing emails either positively or negatively influence their purchasing decisions. 80% of business professionals attest to email marketing increasing customer retention.

59% of consumers state marketing emails either positively or negatively influence their purchasing decisions.

hubspot.com

An engaged email list is a business’s best asset because it is part of owned media, i.e. media channels that your business has complete control over. The benefits of owned media are that it’s immune to sudden algorithm changes, it lets you shape your brand storytelling, and it has far better reach than paid media as well as being far more cost-effective.

If – in the worst case marketing scenario – a penalty is accrued and Google drops you from SERP rankings, or a social platform algorithm suddenly favors organic posts vs sponsored content, an email list remains untouched.

However, email list building is a rather complex task. You can’t create one lead capture form and expect to generate thousands of subscribers overnight. Building an effective email list requires patience, and above all else, a strategy. 

A quick recap…

Why is list building so important?

For every $1 spent on email marketing, the average expected return is $42, according to DMA Marketer Email Tracker. When compared to the return on investment of other channels, such as PPC advertising – just $2 for every $1 spent – emails’ high ROI makes it a desirable if not imperative marketing channel.

For every $1 spent on email marketing, the average expected return is $42. In comparison, PPC advertising yields $2 for every $1 spent.

dma.org

No matter the size of the business, prospects on an email list can prove vital in shaping the success of your marketing campaigns. Easy to track performance metrics, such as email open rate, click-through rate, and conversion rate, all relay useful information to marketers as to what they’re getting right, and what needs tweaking.

For example, by evaluating email click-through rate or open-to-click ratio marketers can ascertain whether their audience is interested in the content they’re producing. A/B testing email subject lines like “20% Off” vs “Free Shipping” can offer more insight into what type of value proposition resonates best with your customers, and so on.

The 8 best ways to build an email list from scratch

Whilst comprehensive email lists cannot be generated overnight, there are equally fast and effective ways to grow email lists that go beyond traditional email sign up forms. Some popular methods include:

• Enticing content upgrades
• Exit intent pop-ups
• Fully or partially gated content
• Squeeze pages
• Loyalty and referral programs
• Discounts and deals
• Exclusive notifications
• Social media

For the majority of businesses, websites are where email list building begins: From static embedded opt-in forms to dynamic pop-ups and overlays or specific lead capture pages.

Using Yieldify’s lead capture software, we’ve created thousands of campaigns for clients big and small (you see the list of our featured clients here). Some notable examples include Sol de Janeiro who generated 25,000 new subscribers in under five months using our layered lead capture approach, as well as Busbud who saw a 40% increase in revenue generated from email marketing.

Australian company Healthy Chef went a step further by adding a lead capture slide-in bar on their checkout pages. In a nutshell, visitors that did not engage with their previous opt-in forms were presented with an additional prompt at the checkout stage offering a last chance to receive a 10% discount in exchange for their email address.

These results suggest that even the smallest additions to your website can have considerable effects on your list building strategy.

How to build an email list using your website

1. Use embedded signup forms

Embedded signup forms are perhaps the most traditional of strategies for attaining email subscribers. Static embedded forms should be placed on high traffic pages in visible areas, such as headers, footers, sidebars, and splash pages.

The benefit of embedded forms is that they’re non-intrusive. They serve as a humble reminder for the visitor that they have the option to sign up and nothing more. That’s why they’re best used together with the more proactive and dynamic list building strategies that we’ll discuss below.

2. Deploy pop-ups and overlays

Studies have shown that on average, pop-ups have a conversion rate of 11.09%, with the top 10% converting at around 42%. While these stats are mouthwatering on their own, you need to be careful with your use of pop-ups and consider Google’s interstitial ad guidelines. If you don’t, you risk a penalty.

The guidelines lay out the ‘correct’ use of pop-ups from Google’s view point. The mains points being:

• Don’t show a popup that covers the main content either straight after a user hits the page from search, or whilst they are scrolling through the page.
• Don’t display a standalone interstitial that the user needs to close before accessing content.
• Don’t use a page layout where the above-the-fold section of the page appears similar to a standalone interstitial, but the original content has been inlined underneath the fold.

Google did, however, state that the penalty would not impact these types of interstitials when they are used correctly. Some examples of correct usage are below:

• Interstitials that need to appear due to a legal obligation. For example, cookie usage or for age verification.
• Log-in requirement on sites where content is not publicly indexable. For example paywalled content.
• Banners that are deemed to use a reasonable amount of screen space and can be easily dismissed.

Now that you know what NOT to do when deploying pop-ups on your website, let’s look at some of the most common types of pop-ups and overlays used by eCommerce businesses to substantially grow their email lists.

Welcome pop-ups

Welcome pop-ups are used to greet visitors to the site mostly within the first 15 seconds of them settling on the landing page. A strong call-to-action is crucial for a welcome pop-up so it doesn’t get dismissed as disruptive. Best practices include offering a discount, a sales notification, telling them more about your USPs, or some other form of value exchange for the visitor’s email address.

To lessen the intrusion, welcome pop-ups should be kept as simple as possible. Most feature a single field asking to enter an email address. Complicated forms with multiple fields and weak copy are less likely to convert.

Timing is key here and it will be important for you to find a time that’s specific to the page you are implementing this pop-up on. To find the best time to implement a welcome pop-up, you can use Google Analytics to find the average time a user spends on that page. 

If you’re doing this on the homepage – a page that visitors are meant to leave quite fast when navigating deeper into your website – you might want to serve it right away. However, if your new visitor lands straight on a product listing page where they’re meant to dwell longer, you can set the welcome pop-up to appear after 7 seconds or once they’ve scrolled 30% of the page.

Exit intent pop-ups

According to Conversion Sciences, 10-15% of potentially lost visitors can be saved with a well-crafted exit intent pop-up. These pop-ups are served using exit-intent technology that monitors user interaction with a website page and can detect when someone is about to leave. 

The premise behind exit intent pop-ups is that they reduce the possibility of an exit or bounce by capturing visitor’s attention and offering a valid reason for them to stay on the page or submit details. Offers and discounts work well, but depending on their niche, eCommerce owners can offer much more than just that.

For example, a financial services provider could list reassuring benefits that make them the go-to choice, a retailer selling hiking gear could offer a guide to the best new trails, and a travel agent might want to display social proof of how many trips they booked in the past 24 hours. Above you’ll see some exit intent pop-up examples that don’t use discounts and promotions to entice shoppers back.

Yieldify client, Sanctuary Bathrooms, went a step further and targeted abandoning visitors with an overlay that offered to ‘save their shopping cart for another time’. This is a smart cart abandonment solution because it offers convenience for the shopper, but also seamlessly grows your email list.

Promotional pop-ups

Promotional pop-ups can appear throughout the customer journey and make use of exclusive discounts and offers. Contrary to welcome pop-ups that appear when you first land on the site, or exit intent pop-ups that show up as you’re about to leave, promotional pop-ups appear as you’re actively browsing.

To create a high-converting promotional pop-up you must achieve relevancy. Start by understanding what stage of the buyer’s journey your customer is currently in and then match your promotion to nudge them further.

For example, a visitor has landed on the homepage and proceeded to navigate to a category: Women’s clothing. They’ve shown interest but are yet to enter the consideration stage. Do: Show a promotional pop-up announcing you offer 20% off women’s clothing for subscribers only. Don’t: Show a product-specific promotion, like ‘Buy X get Y.”

As the visitor proceeds to a subcategory (eg: Women’s trousers) and opens several product pages to compare, then you can show the BOGO promotion. If they proceed to add items to the cart but do not qualify for the 20% discount and have not yet signed up to your email list, maybe you want to show them a ‘Subscribe and get free shipping” message.

All in all, promotional pop-ups often play on emotions: People feel more willing to hand over their data in exchange for receiving something unique to their experience and to make the most of a discount deal.

Timed Pop up forms

Timed pop-ups are great for generating leads because you only show your lead generation offer to people who have been on the site or page for a determined amount of time. If they bounce after less than 5 seconds, then it’s likely that this visitor isn’t interested in what you offer and would never become an email list member!

It will again be important to reference Google Analytics as highlighted above so you can figure out who are more engaged users within your target audience to show this type of sign up form to. Not everybody will want to sign up so this is a nice way to segment engaged users.

This type of sign up form helped the University of Alberta massively grow its email subscribers by almost 500% in just one year.

You can start quite small with this type of sign up form, look at your most engaged pages in Google Analytics and see if you can subtly start to capture customer’s email addresses this way.

3. Introduce gamification

Gamification in list building is the process of applying interactive elements of game playing to encourage engagement with a lead capture form. Some examples of gamification include quizzes, tests, surveys, spin-to-win (aka wheel of fortune) pop-ups, and scratchcards. 

Gamification offers exclusive prizes, like 10-50% discounts or other freebies that shoppers must claim by entering their email address. The value of gamification lies in its ability to appeal to consumer psychology. Customers are motivated by prizes that appear easily attainable. This enthralls visitors who feel they are getting something for nothing, and will therefore eagerly sign up to take advantage.

Likewise, contests, giveaways, and sweepstakes can also be used as a form of gamification in your list building strategy. Brands like to participate in joint-promotions to create a higher value prize and thus enlist more subscribers to their database. In fact, 33% of contest participants are open to receiving further marketing communication about the brand and partners.

Online furniture seller Blu Dot has been, frankly, killing it with giveaways. Not only did give away $5,000 worth of furniture for their 20th anniversary, but they’ve also recently hosted a Modern Heist promotion gifting a ’72 El Camino filled with their own furniture.

4. Create squeeze pages

A squeeze page – now that’s a term you might’ve not heard before. But the meaning is encoded in the name itself – a squeeze page is a dedicated lead capture landing page designed to “squeeze” information out of a visitor by restricting access to desired content or offer by placing it behind the so-called ‘gate’, i.e. a lead capture form.

Squeeze pages will come with high exit rates, and that’s fine. Their sole purpose is to capture visitor information, so as long as their conversion is high, you don’t have to worry about much else. However, if you do want to give visitors the option to browse other pages as well, you can include a link to the homepage or product category pages.

Here’s an example from Cult Beauty. For their Black Friday marketing campaign, the brand built a dedicated squeeze page to allow shoppers to enroll in their ‘waitlist’. The page features a short description of what they’re signing up for and an opt-in form. Simple.

5. Invite to sign up for notifications

One mailing list growth strategy that works well is the use of various notifications. Depending on the type of notification, these can feature as overlays on landing pages, be statically embedded into product pages, or be placed in sliders on page headers. 

Pre-sale notifications

Pre-sale notifications are a good eCommerce list building strategy that utilizes convenience as well as marketing psychology tactics, such as urgency, scarcity, and feeling of exclusivity. 

Pre-sale notifications serve as convenient reminders to busy consumers who may want to shop your sale, but who don’t have time to refresh your page in anticipation. For the sake of convenience, shoppers will be more willing to hand over their information so they don’t miss out on bargain deals.

Also, the feeling of exclusivity, aka ‘first dibs’, is what entices many people to sign up. They might not even shop, but being let in on something before everyone else gets to join is a powerful tool in millennial psychology. The above example from Acne Studios illustrates this tactic well. The brand was running a 48-hour sale and invited shoppers to sign up to be notified of the sale start.

New collection notifications

Another way to give shoppers exclusive access is by inviting them to sign up for new collection updates. If you’re selling particularly in-demand items that tend to go fast, your visitors and customers might be inclined to hear about new arrivals first.

Yieldify client Petal & Pup utilized this form of list building and achieved a 116% uplift in new leads by simply inviting users to sign-up for their latest additions to the collection.

‘Back in stock’ notifications

Back in stock notifications can be used to capture the information of consumers who are ready to purchase but can’t convert due to product unavailability. Not only is it a powerful list building strategy, but this also offers a slew of useful information for marketers and product managers because demand levels across products can be easily identified and monitored.

If for example, a larger audience has submitted their email address to be notified of one type of product over another, retailers will be able to plan to develop and sell items that are similar to the most sought-after type. Utilizing this information is likely to lead to higher revenue as well as customer retention.

6. Offer content upgrades

A content upgrade, also referred to as a lead magnet, is a gated piece of content a business can offer to their website visitors in exchange for their email address. In eCommerce, this can be everything from exclusive access to members-only sale to actual gated pieces of written content, such as guides, catalogs, and more. 

In the example above, electric bike manufacturer Evelo used this list building strategy by creating a buyer’s guide for electric bikes. It has been implemented on their product detail pages so it’s safe to assume that visitors will find this content useful as they are likely in the consideration/research phase of the purchase cycle.

Visitors who might not be ready to buy a bike right now will be provided with all the information they need to make an informed purchase, putting Evelo in their good graces. From Evelo’s point of view, they get the email of someone who is interested in buying electric bikes and can now nurture them via email and EDM marketing campaigns to try and secure the sale at a later date.

7. Include opt-in fields at checkout

Most online shoppers have come to expect checkouts to take personal information. When making a purchase, all of us feel more secure if we receive a confirmation of our order by text or email, and we feel more assured knowing the business has some way of updating us on the order progress. 

As shoppers are already familiar with entering their information in a secure checkout environment, including an option to join an email list is a non-invasive way to encourage mailing list subscriptions. (As per GDPR rules, the check box option cannot be pre-checked however.)

8. Utilize loyalty and referral programs

Strategized customer loyalty and referral programs can also help when growing your email list from scratch. Programs that offer rewards can encourage brand new subscribers as well as nudge existing subscribers to upgrade, generating more lifetime value.

Loyalty programs

Loyalty programs are a great way to build your email list and drive repeat purchases. According to Technology Advice, people are more inclined to shop with stores that offer a loyalty or rewards program.

However, new data from CFI Group and Radial suggests that 38% of consumers choose not to join loyalty programs due to their lack of perceived value. KPMG went further to look into millennial thoughts on brand loyalty and rewards programs, and here’s what they found:

To make the most of your loyalty program and utilize it as an effective list building tactic, make sure you make it easy to enlist, offer some really noteworthy benefits like access to members-only sales, free gifts, events, content, and more. Also, make sure to personalize the experience once the person has signed up.

Referral programs

When you have established a loyal customer base, the next step is to utilize the power of word of mouth marketing. Give your loyalists and advocates to receive even more benefits by referring their friends to your product or service. After all, data shows that people are more inclined to trust recommendations from friends and family than brand communications.

Referral programs work by rewarding customers who successfully refer new people to your business. Usually, you’ll have to offer an incentive for both, the referral and the referee. This can go something like: Give $20, get $20; or Get $25 when your friend spends $75 or more, etc. eThe reward will only be issued once the referee submits their details or makes a purchase. 

Another way to structure your referral campaign is to allow users to invite friends with similar interests to pre-sale events. This way you don’t have to discount initially but will be able to contact those who have been referred.

Referral programs have a lot of overheads, including the need to invest in a referral management software, and an affiliate manager. Consequently, it is only worth the effort when you have dozens (or even hundreds) of affiliates promoting your products.

Build an effective distribution plan that includes promoting your referral program on your website, sending email newsletters to your customers on the latest referral rewards, as well as leveraging email signature software to promote your referral program in your employees’ email signatures.

BONUS: How to build an email list using social media

Social media marketing is one of the best ways to drive traffic to your website and get more subscribers. Social media strategies for generating email signups include:

Embedded signup buttons on social accounts. The easiest, no-cost way to advertise your company newsletter to social media users is to add a call-to-action on your social profiles. Facebook and Instagram allow you to do it by featuring a “Sign Up” button on your profile but can also always share posts that invite people to join your email list.

Giveaways and contests. Social media platforms are making brands more reachable, personable, and above all, interactive. Instagram stories especially include polls, quizzes, and Q&A features that can generate user engagement. By promoting a contest, giveaway, or even limited-time special event, traffic can be driven to a landing page where followers can sign up to take part.

Lead forms via Facebook Ads. Facebook Ads allows businesses to run lead form ads, which basically mean that a person can convert, i.e. subscribe, without leaving the platform. Due to convenience, lead form ads are known to boast quite high conversion rates.

Twitter Lead Generation cards: Twitter’s Lead Generation Cards are the perfect way to engage your followers and turn them into subscribers. All you need is a tweet that contains an expandable card, which will automatically enter their name, email address (as entered in settings), as well as @handle so they can subscribe right from Twitter.

BONUS: How to build an email list offline

Your website will be your best option when it comes to building your email list but that doesn’t mean you have to rely solely on it. You can also grow your email list by making the most of offline channels. Some easy ways to do this are: 

In-store. Foot traffic can be converted to mailing list subscribers by using signup sheets at your store or checkout desk. Get creative – if someone at the changing booth requested an item that’s currently unavailable, nudge them to signup for stock updates or new arrivals. Just make sure you get their full consent when collecting this information offline.

Trade shows. Trade shows offer great opportunities for businesses to network with other wholesalers as well as selling directly to consumers. Email information can be captured using the same signup sheets, upon purchase, hosting giveaways, etc. If you’re handing out business cards here you could also encourage sign-ups on these.

Direct mail. If your business uses direct mail to send marketing collateral, you might want to include a call-to-action or QR code that links people to sign up for “paperless” news. Most people will opt to receive information about sales digitally rather than traditionally, and promotions are easier to manage when they are digitally recorded.

Best practices to follow when building your mailing list

Just like any marketing, there are best practices to follow that can help your email list building efforts if followed, or hinder them if not. The recommended best practices include strategies like:

Don’t purchase an email list. A purchased email list is not only a guaranteed way to have your emails end up in a spam folder, but it is also illegal.

There are serious ramifications involving both the European Data Privacy Act, the General Data Protection Regulation (GDPR), and the United States 2003 CAN-SPAM act. All of these laws place restrictions on the collection of users’ personal information as well as monitoring email opt-in sequences. If businesses are found to be in breach of these restrictions, there are substantial financial penalties.

Send a welcome email or series. Nobody likes to feel as though they’re just a number. Once you have subscribers’ email addresses, you must work to retain them. Plus, if you don’t nurture your lead, your previous acquisition efforts become useless. Make sure you have a welcome series set up to introduce new users to your brand. 

Use social proof. Showing many people have already subscribed to your email list builds trust, instils FOMO, and tempts new people to sign up. Use copy like “Join over 100,000 subscribers” and “Join a community of 100K fans.”

Taking email data one step further

So now we have covered how to build an email list from scratch how can we take this one step further?

The goal of email marketing is to deliver the right content, when it’s most needed. Companies should know their customers well enough so that they can personalize emails with targeted offers and information just for them.

Now, most of the ways to quickly build an email list will involve minimal data entry on sign up forms, you’ll likely just have an email address and possibly a first name. To really make the most of new subscribers in future email campaigns you’re going to need a bit more data.

If they become a consistent customer you may be able to figure out what products or services they are interested in over time.

However, a quicker way would be to introduce them with a welcome series email that aims to get more useful data.

A nice example of this is below from Ann Handley, you’ll notice she asks new subscribers want they hope to learn, if they reply she will have a very good idea of what content and emails to send them going forward.

In summary

To summarize, even into 2023, email list building continues to come out top of the most popular and effective marketing strategies. Engaging on a personal level with customers is where email marketing is unrivalled. Curated and highly personalized email lists are guaranteed to drive repeat business for your eCommerce website.

Remember to carefully select and review what landing page you use to capture email addresses, and what method you use to build your email list. A test and learn approach works well so don’t be afraid to switch things up. And if you’re going to use a list building tool to drive more subscribers, make sure you consider your options carefully before committing to a provider.

These 8 strategies should hopefully provide you with a great place to start building your email list effectively and provide you with another way to reach your target audience. Lead generation is just the start.

Once you have their email address and your subscribers are growing you need to have an effective email marketing strategy that keeps them engaged and as paying customers. Sending segmented and targeted emails that are super relevant is your next challenge, and don’t forget your email call to action.

If you need any help growing your list, we’re only a demo away!

How to build an email list FAQs

The post The Ultimate Guide to Email List Building appeared first on Yieldify.

FREE GUIDE

8 Black Friday Marketing Ideas for eCommerce + A 2020 Special

Learn how to get a slice of that $135.35 billion dollar revenue with your Black Friday marketing campaigns.

Published: Oct 8, 2020

Introduction

Each year, Black Friday marks the beginning of the holiday shopping season. A favorite pastime that’s originated in the US, Black Friday is now a global phenomenon overtaking physical and online shops everywhere.

But what’s it going to look like this year with the global pandemic front and center in consumers’ and retailers’ minds?

In this guide, we’ll take a look at Black Friday statistics to see where the trend is going, as well as outline some evergreen Black Friday marketing campaign ideas that will set any eCommerce retailer on the path to BFCM success.

Table of Contents

1. Black Friday: How it all started
2. Black Friday importance for retail
3. How to prepare your website for BFCM
4. 8 Black Friday marketing ideas for eCommerce
5. BFCM marketing: A 2020 Special

What is Black Friday and how did it start?

Black Friday is the name given to the Friday after American Thanksgiving and signals the start of the Christmas holiday shopping season.

The name was first coined in the 1950s when huge crowds of shoppers descended on Philadelphia’s high streets commencing the weekend before the eagerly anticipated Army-Navy football game. Philadelphia Police were overrun with the sheer numbers, and worked unexpectedly long hours to cope with both the foot and vehicle traffic in an event they referred to as ‘Black Friday’. 

By 1961, Black Friday was fully established in Philadelphia, and by the late 1980s retailers used consumer psychology to reinvent the meaning of Black Friday. Retailers implied the meaning reflected on their profits, claiming that stores would be “in the red” (operating at a loss) for the entire year up until Thanksgiving when they would suddenly earn a profit and be “in the black” thanks to holiday shoppers wanting to spend on discounted merchandise.

The notion of discounted products, sales and deals caught on and now Black Friday is as much of an American holiday tradition as the Thanksgiving turkey.

How important is Black Friday for retailers?

For any retailer, eCommerce store owner, or business owner, Black Friday is an exceptionally important day. In 2019, Black Friday sales totaled $7.4 billion in the United States alone, marking a 19.6% increase from the year before, and making it the second most profitable day of 2019 right after Cyber Monday.

Year on year, Black Friday sales and popularity continues to increase. Earlier this year in February 2020, eMarketer predicted that the total retail spend will increase by 3.4% to $1.042 trillion, whilst the eCommerce net spend was likely to increase by 13.9% to $156.69 billion. 

This seems to be supported by findings from Yieldify’s own Peak Season 2020 report. We surveyed 400 eCommerce leaders and 2,000 consumers and discovered that 34% of consumers plan to increase their peak season spending year-on-year and only 18% plan to decrease it.

This consumer research suggests that Black Friday 2020 is perhaps even more important for retailers than the last, especially when taking into account the economic ramifications of the Coronavirus pandemic. 

How should eCommerce prepare for Black Friday?

So how should businesses and eCommerce stores prepare for Black Friday 2020? One of the first parts of Black Friday marketing should be to properly prepare and optimize the website for both desktop and mobile users.

In Deloitte’s 2019 Holiday Retail Sales consumer survey, when asked how they’d split their holiday shopping going forward into 2020, 59% of consumers stated they’d use online shopping over 36% who said they would remain shopping in-store.

Likewise, findings from Yieldify’s Peak Season 2020 report revealed that consumers who are increasing their spending across all three peak events will be most likely to do so online. An average 8pp. growth is predicted for consumers shopping either mostly online or only online.

In addition, sales attributed to mobile devices have been growing year on year, with mobile traffic increasing by 14% each year and contributing $64.29 billion out of the total $142.5 billion in United States eCommerce sales.

Here are four crucial things to consider checking on a website before the Black Friday bonanza:

1. Website traffic

On Black Friday 2019, traffic to the top 100 shopping sites increased by 137%, proving how on the day, eCommerce stores will be handling more visitors and more requests than ever before.

That same year, despite spending thousands of dollars on better servers, retailer SweetLegs missed out on an estimated six-figures worth of sales because their website crashed through being overwhelmed with requests. 

To make sure that a site won’t be returning error messages, developers and website owners should run tests on their site with tools such as Load Impact or Pingdom. These tools simulate peak traffic numbers so that developers or owners can gain an understanding of how a website is performing under increased visitor numbers.

Then optimizations such as compressing images, refining HTML and CSS elements, and utilizing plug-ins that balance server-based requests without affecting site speed can be implemented before the traffic arrives.

2. Website speed

Throughout Black Friday, a website should be giving high conversion rates, not high bounce rates, which is what will happen in the event of site slowness. A Google study once reported that for every second of load time, conversions drop by 12%.

To prevent losing potential consumers to competitors, use tools like Google Labs’ own PageSpeed Insights. It assesses core elements of CSS and Javascript that could be slowing down the site and supplies personalized suggestions as to how to improve site performance and speed. 

Similarly, Google’s Test My Site tool will calculate how to increase your mobile conversion rates using your site speed and loading times.

3. Website navigation

Up to 80% of visitors will abandon a site because of poor user experience, and a large part of that user experience begins with navigation. If your site is confusing or unintuitive to navigate, visitors will become frustrated and go in search of another, more responsive site.

One way to check a site’s ease of navigation is to ask willing friends, colleagues, or family members to test the site. Give each person a product, and ask them how easy they found the search experience. If the responses aren’t positive, implement faceted search that will help users find their way to your most popular items. 

In addition, if your site will be categorizing products by discount prices or as exclusive Black Friday products, make sure that category is on prominent display: Either as a segment on the homepage or as one of the very first options on a navigational menu. This makes it easy for Black Friday bargain hunters to find the section you want them to purchase from.

4. Checkout process

Despite Thanksgiving traditionally being a time of relaxation, Black Friday jolts that perception with an omnipresent feeling of hurriedness. Consumers feel pressured to get onto a site quickly, find their item, and checkout before moving onto the next site and repeating the process, ahead of product sell-outs. 

To optimize your site for this psychology, remove any barriers to buy that could seem as too time-consuming. Implement one-click buying that utilizes a secure mobile wallet with the customer’s information readily available, such as Apple Pay, Android Pay, Google Pay, or Paypal.

If your eCommerce site is hosted on a platform like Shopify or WooCommerce, dynamic checkout buttons are available to create a seamless one-click shopping experience. These buttons allow users to skip the checkout process and purchase instantly using their preferred payment method. For example, on an Apple product, the checkout button would change to display the Apple Pay sign.

8 Black Friday marketing ideas for eCommerce

Now that you’ve ensured your website can handle the onslaught of Black Friday-Cyber Monday traffic, it’s time to consider holiday eCommerce CRO tactics that you can deploy. Below are our eight best recommendations to help you achieve Black Friday marketing success no matter the industry.

1. Optimize website landing pages

Unbounce did a quick analysis of Black Friday landing pages to answer the question of how many retailers create custom pages for their holiday promotions. Out of 34 websites analyzed, only 8 BFCM campaigns sent their traffic to a specialized landing page.

The rest were either using a custom headline or a banner and a whopping 10 websites simply sent their BFCM campaign traffic to their homepage with no mention of Black Friday or Cyber Monday whatsoever.

This is a huge missed opportunity. Holiday landing pages will not only help you get organic traffic from people searching for specific offers, but also better match the intent of shoppers coming from your ads, social media, and email communications.

See how Dyson uses squeeze pages to capture leads interested in their Black Friday offers:

To illustrate with a theoretical example, see how searches for “laptop sale” spike around BFCM each year – you can make use of that by creating an SEO-optimized landing page for this search query, set up PPC, and social ads promoting your laptop discounts, and send traffic to that page.

The reason a landing page like this will beat a generic product listing page or homepage is that these pages are designed for conversion:

• They focus on one specific offer;
• They’re information-rich;
• They speak to a high-intent audience;
• Usually, these pages use FOMO and urgency tactics.

If you don’t have the means to create holiday-specific landing pages, at least update your hero images and use other elements, such as banners and overlays, to help website visitors locate your offers. You can utilize additional features like countdown timers to nudge visitors to convert.

Don’t neglect your category pages, product listing, and product pages as well. Product detail pages, in particular, should cater to the time-sensitive Black Friday shopper: Make sure your product descriptions are clear, product images are high-quality, use anchor pricing ($150 $99), real-time social proof (“27 people are looking at this”), and other psychological tactics to boost conversions.

In addition, make sure your delivery, return, and exchange policies are displayed prominently. Free and expedited shipping, as well as free returns, are considered big motivators for Black Friday shopping – in 2019, about 40% of shoppers decided to buy online due to flexible options such as free delivery and buy online pick up in-store (BOPIS).

Get our free product page design template here!

2. Deploy holiday lead capture and nurture sequences

With 59% of subscribers stating that marketing emails influence their purchase decisions, email marketing is an already crucial part of day-to-day marketing strategies. In peak season times, it receives an additional boost.

In Yieldify’s Peak Season 2020 Report, when marketers were asked which tactics they were most likely to deploy this holiday season, unsurprisingly, email marketing came out on top.

Ahead of the peak season and days such as Black Friday, eCommerce stores should have a lead capture software ready in order to build a comprehensive email list. List building tactics are most effective when they offer a value-exchange, i.e “10% off when you sign up to our newsletter” or exclusive access to pre-sale.

Once a lead has been captured, the next step is to nurture them with relevant email marketing campaigns that will eventually nudge them towards purchase. The most powerful lead nurturing campaigns use segmentation to group users based on a number of variables, such as browsing or purchase history, category/product affinity, gender, location, etc.

Segmentation ensures that consumers receive emails relevant to their buyer’s journey, and can encourage engagement and conversions. In fact, segmenting an email list can produce ROI of up to 122%, according to an eMarketer study.

Segmentation for Black Friday marketing campaigns can be as simple as grouping new vs returning customers. For new customers – a drip campaign introducing the brand and its offers for BFCM weekend will do just fine. For existing customers – leverage loyalty programs and inform them how to earn the most points with holiday shopping. 

3. Encourage wishlisting

Wish lists work similarly to abandoned shopping carts – they signify interest and mean the consumer is already in or very close to the decision stage of their purchasing journey.

Wish lists are also mutually beneficial for both shoppers and store owners: Customers have a convenient place to store products they wish to acquire, while retailers can gather a slew of data and make informed decisions behind discounting, use that information to send relevant email communications, analyze reasons behind purchasing barrier, and more.

During Black Friday and Cyber Weekend, wish lists can be effectively utilized in many different ways:

• To encourage app downloads or account signups;
• To grow your email subscriber list;
• To optimize your drip email campaigns;
• To cross-sell and upsell relevant products;
• To boost website traffic if you choose to create your own curated wish lists based on the most ‘wished for’ items.

4. Offer flash sales

In the build-up to Black Friday, many retailers prepare blanket offers – for example, 20% off for the entire promotional period. Whilst this will surely drive conversions, businesses should also take advantage of flexible sales methods, such as flash sales.

Flash sales are recurring discounts or promotions offered for very limited periods of time. These sales are short-term and data shows that flash sales have the potential to boost conversion rates by 35% because they use consumer psychology – most notably, urgency and scarcity – to increase the rate of impulse purchases.

Flash sales can be implemented for Black Friday as well, with offers set to a specific time of day, like a “Midnight Special” where everyone who shops from 11:00 PM to 01:00 AM will get an additional 5% off their order. Or, a flash sale for just the last day of the Black Friday-Cyber Monday weekend that will push surplus stock.

With statistics suggesting the average website visitor makes at least seven visits before converting, flash sales broadly entice new visitors whilst working to re-engage familiar customers, whether they are newly acquired or existing loyal advocates.

See how soak.com used time of day targeting to boost conversions:

5. Cross-sell and upsell

Cross-selling and upselling are vital sales tactics for retailers all year round, with upselling techniques increasing revenue by 10-30% on average. During the peak season, however, disguising cross-sell and upsell as time-sensitive opportunities can tempt customers through increased value perception and convenience. 

Cross-selling offers to purchase complementary products, for example:

• A rental car when you buy airplane tickets;
• A charger when you purchase a new smartphone;
• A soda drink with your lunch order.

Upselling, on the other hand, offers an upgraded product version or a product bundle, for example:

• A holiday package that includes airplane tickets, a rental car, and a hotel;
• An iPhone X vs iPhone 7 Plus;
• A combo meal instead of ordering a burger and a fries separately.

In the above example, cross-sell plays on the ease of creating a finished activewear set by offering shoes and leggings that match the sports bra that’s already in the customer’s shopping bag.

To execute cross-sell or upsell campaigns, you will need a product recommendation engine of some sort. You can use apps like Product Upsell for Shopify, One Click Upsells for WooCommerce, and Beeketing for Magento that will automatically display these offers when a relevant product is selected.

6. Abandoned cart recovery

While shoppers abandon their carts all year round, Black Friday sees an average 5% increase in cart abandonment. In 2019, Black Friday’s global cart abandonment rate was recorded as 73%, with an average of 3 out of 4 shoppers not concluding their sale. 

Two years ago in 2018, Shopify released data that suggested had all Black Friday cart abandonments been rescued, retailers could have made an extra $1 billion in revenue.

While the numbers might be higher for Black Friday, the reasons for cart abandonment remain pretty much the same. Usually, shoppers decide to abandon their carts due to high shipping costs, unexpected taxes, discount codes not working, or simply because they are looking for the best possible deal and compare prices.

Either way, you want to make sure you’ve done everything to stop them from leaving or to make them come back. Here are some popular cart abandonment solutions that you can utilize in your Black Friday marketing efforts:

• Implement exit-intent overlays to stop shoppers from leaving;
• Offer an exclusive discount or other value exchange if they choose to convert now;
• Offer the ability to save their shopping cart for later;
• Retarget abandoners with social and display ads;
• Send timely cart abandonment emails (more on that below).

Cart abandonment email campaigns are particularly effective when trying to recover an abandoned cart. With a click-through rate of around 40%, they also boast an avg. 18% conversion rate.

Cart abandonment emails should include an instant reminder of what the consumer has left in their cart and direct, personalized copy that engages the reader, tempting them back onto your site. During a peak sales weekend, additional discounts can be offered if the item is of high value as this may help to encourage the removal of a purchasing barrier. 

7. Increase advertising spend

It may sound counterintuitive to do the same as a whole raft of other marketers, but during Black Friday and throughout Cyber Monday advertisers justify increased ad spend by good returns on investment. 

Year-on-year, advertisers spend 134% – around 2x – more on Black Friday than they spend prior to the holiday ramp-up period, beginning on November 1st, according to Kenshoo.

And each year, their investment yields returns: Black Friday sales increase 348% when compared to an average day in October, and 229% when compared against the initial increases in holiday preparation across November. ROI jumps by as much as 55% while cost-per-acquisition (CPA) sees reductions of up to 16% compared to October, and 14% compared to the period beginning November 1st-21st.

When choosing your advertising channels for Black Friday marketing campaigns, think carefully. Search engines, such as Google or Bing, provide opportunities to advertise to consumers who are already actively searching for products and deals, and therefore closer to converting. 

Whereas on social media, your audience will have a lower intent to purchase but you might be able to reach a much wider demographic.

Aside from prospecting campaigns, Black Friday is the perfect time to invest more in retargeting ads. Almost all advertising platforms now offer dynamic ad formats that allow you to insert products from your store and remarket to customers who’ve already expressed interest. Here’s how they work in a nutshell:

• Prospecting campaigns use pre-determined target audiences to reach people based on a number of variables: Location, Interests, Job titles, etc. These campaigns are designed to attract new customers who are unaware of your business yet but give you reasons to believe they might be interested. (See below on the left)
• Retargeting campaigns use tracking codes, such as Facebook Pixel and LinkedIn Insight, to recognize people who have previously visited a website and match them with profiles on their respective platforms. As such, retargeting audiences are groups of people who have already interacted with your business. Based on their level of interaction and your tracking parameters, you can serve retargeting ads that show the products they have browsed or added to cart. (See below on the right)

8. Give the gift of giving back

For the past couple of years, brands and retailers have been under intense scrutiny for participating in events like Black Friday and Cyber Week, which do inevitably encourage mass consumption and go against environmental concerns and fair trade regulations.

Encouraging by the increasingly negative sentiment around these shopping events, some businesses choose to opt-out from Black Friday marketing campaigns completely. In 2019, for example, skincare brand Deciem made headlines after choosing to close its brick-and-mortar stores as well as shut down its website on Black Friday.

Also supporting the movement is outdoor clothing brand Rei, who run their #OptOutside campaigns each Black Friday to drive focus to the links between fresh air and better mental health. On Black Friday, the retailer also closes its doors and proudly announces on its website that it has paid its 13,000 staff to “go outside and make a difference.”

Others, however, use this opportunity to collect donations off the back of their profits. Everlane is a good example to illustrate this. The brand partners with ocean protection charity Oceana to help eradicate the production of single-use plastics by donating $10 of every Black Friday sale to the charity.

These campaigns are generally successful and generate great returns because they offer consumers the ability to better justify their purchases. With this in mind, they might feel inclined to spend more and are more likely to become brand ambassadors. 

Related events, such as Giving Tuesday have been on the rise too. Giving Tuesday refers to the Tuesday after American Thanksgiving and aims to create an international day of charitable giving at the beginning of the Christmas and holiday season.

Leesa mattresses used #GivingTuesday not only to encourage sales but also to remind everyone of their ongoing mission to donate one mattress for every ten they sell.

Black Friday marketing: A 2020 Special

Despite economic restrictions, consumer spending habits indicate a willingness to indulge in this peak season. Based on the findings of Yieldify’s 2020 Peak Season report, 34% said they will be increasing their spending year-on-year. What’s more, most of that spending is going to be happening online.

The latter findings aren’t particularly staggering – a recent report by Adobe sees Black Friday transactions growing 23% year on year with a 1.7% decrease in retail store footfall across the US, and a whopping 5% in the UK.

What is surprising, however, is the number of eCommerce businesses that are opting out of 2020 Black Friday marketing activities completely. Even household names like Walmart and Macy’s are prioritizing the protection of their customers and staff by closing their doors across the Thanksgiving weekend.

Choosing to pull back from the biggest shopping event in the online sales calendar, especially with the rise in consumer demand, seems confusing at first. But on closer inspection, the reasons for doing so become clear and justifiable.

One of the key concerns facing retailers this peak season was the ability to meet consumer demand, recalling challenges with fulfillment services, and supply chain management. Some brands have taken it upon themselves to find creative solutions to this.

Sustainable fashion retailer Alohas started running its “It’s Over, Black Friday” campaign that encourages consumers to buy on-demand instead of holding off all their purchases till the last day: “We would like to cordially invite you to say NO MORE to Black Friday and buy on-demand instead. This year, shop whenever works for you, at transparent prices, from the comfort of your home, via sustainable on-demand shopping. Start any day and quit waiting for Friday.”

The events of the COVID-19 pandemic, coupled with online shopping continuing to take precedence over brick and mortar stores may be responsible for altering the face of Black Friday to a purely digital event. With online sales rising, footfall dropping, and consumers increasingly aware of their safety, eCommerce stores are best placed to optimize stores and potentially see revenue increases like never before.

Opportunities like the starting sales promotions ahead of time, optimizing sales channels with targeted advertising campaigns, and promoting discounts that last longer than a singular weekend could potentially expose brands to larger audiences and offer chances for new and repeated custom. 

Want to win this Black Friday?

Get ahead of the competition by optimizing your website to convert all of that Black Friday traffic! Our team has investigated the most popular BFCM campaigns of last year and put together an exclusive Black Friday marketing strategy – get in touch to learn more about it!

The post 8 Black Friday Marketing Ideas for eCommerce + A 2020 Special appeared first on Yieldify.

FREE GUIDE

Fashion eCommerce: 9 Trends to Capitalize On In 2023

What can marketers learn from the fashion eCommerce trends driving a $2.5 trillion industry?

Updated: Feb 8, 2023

Introduction

The fashion eCommerce industry is an industry that has always proudly worn change like a model would wear Prada. Change is a key part of the fashion industry’s identity, occurring at almost every seasonal fashion show year on year. However, the year ahead may bring about the industry’s most drastic transformation yet. 

As consumers and fashion retailers navigate the aftermath of the COVID-19 pandemic, there are new looks for the industry to try on. Sustainable, yet affordable clothing is on the rise, and the reCommerce industry is booming with grounds to flourish further in the wake of global economic changes. The glossy fashion events that the industry has become synonymous with are going too, replaced instead by a growing market for seasonless items as consumers look to make the most out of each purchase.

With more change occurring than that of a fashion retailer’s fitting rooms, we decided to get ahead and compile the 9 fashion eCommerce trends that are worth styling your eCommerce store around in 2023. 

Table of Contents

1. ReCommerce and rental
2. Sustainable and ethical fashion
3. Athleisure
4. AI and virtual assistants
5. Seasonless fashion
6. AR & VR
7. Omnichannel strategies and DTC
8. Genderless fashion
9. Delayed payment methods
What’s next for fashion eCommerce

Fashion eCommerce trends for 2023:

1. ReCommerce goes mainstream

What is reCommerce? ReCommerce, or reverse commerce, is the process of renting, reselling, or thrifting previously owned apparel through online or offline stores. Consumers are increasingly searching for economical, sustainable methods of buying or owning new clothes instead of buying brand new.

As the fashion world moves toward a more sustainable model and post-pandemic spending preferences force brands to be more accountable, resale is a fashion eCommerce trend experiencing a rebirth. Up from $7 billion in 2019 to an estimated $36 billion by 2024 with a forecasted 39% annual growth rate, the online and offline resale industry has a new lease of life in its quest to remain an affordable, sustainable way to keep up with fashion.

“Before the pandemic hit, the resale market was on track to double. Now, this growth may very well accelerate. Resale sites are coming out big winners as the pandemic plunges the economy.”

Business of Fashion 

From 2008 to 2016, post-Great Recession, resale revenue in the United States increased by more than 50%. In conjunction with that increase, department store sales declined by 25% and history looks to be on track to repeat itself. 

In 2019, resale was already growing 25% faster than the broad retail sector, and according to a report issued by First Research, around 20,000 used merchandise stores were generating $17.5 billion in annual sales across America. 

Secondhand fashion eCommerce stores had also been estimated to grow 69% between 2019 and 2021 – long before online shoppers started actively seeking more affordable options from home whilst quarantining. 

In fact, the rise of the now-major players in the fashion reCommerce industry began all the way back in 2009, when retailers like ThredUp, Vestiaire Collective, and Tradesy launched their brands. Luxury reCommerce retailer The RealReal spied a growing market and launched two years later in 2011, as did the more accessible and social media-based DePop.  

Now, ThredUp is the world’s largest fashion eCommerce thrift store, welcoming an average of 7 million monthly visitors to its site. At the higher end of the scale, luxury resale eCommerce stores like The RealReal also experience around 6 million monthly visitors.

Today with 88% of people surveyed during the Coronavirus pandemic admitting they had adopted a new thrifting hobby, and 79% confirming plans to cut their apparel budget in the next 12 months, 69% is beginning to look like only the tip of the iceberg in hindsight when taken into consideration that the sole purpose of reselling for 2 in 3 people is to make money.

Big fashion houses have remained abreast of these developments too. In 2019 both Burberry and H&M launched reCommerce and rental models, whilst Patagonia had also recently announced plans to open a brick-and-mortar shop specializing in their reCommerce collections. 

In the influencer sphere, the Kardashian-Jenner family launched a resale apparel site, Kardashian Kloset, whilst Chrissy Teigen publicly voiced her support for The RealReal, a popular resale site for designer labels, admitting that she both buys and sells her clothing from the site. 

Looking to the increasingly popular and profitable future, across the next 12 months ThredUp highlights the three main subtrends of reCommerce fashion being: 

1. Sustainability: As brands transparent with their carbon footprint and ethics continue to see rising sales numbers. 
2. Quality: As luxury brands like Louis Vuitton and Gucci become offerings for investable and high-quality pieces. 
3. Nostalgia: As Generation X brands such as Doc Martens and Nike begin to appeal to thrift-store hunters by integrating throwback style fashion into their new releases. 

If you’re a fashion ecommerce store owner with the capability to sell goods that can be returned or resold whilst retaining their quality, now’s the time to start exploring whether you could adapt to this growing trend. 

If you believe you could have this capability, consider whether your customers would purchase used items – and if so, which ones? Develop ideas around reimbursement policies, whether in cash or store credit for those who would donate their clothes to your store and finally, examine any cost of refurbishing and preparing items for resale, versus the profit your store would make reselling it. 

As more conversations continue to be had around protecting the environment, and the global economy attempts to rebuild post-pandemic, the reCommerce and rental market is only going to flourish further.

2. Sustainable and ethical are the new black

The fashion and aparel industry has long been criticized for its detrimental effects on the environment and hailed as one of the most pollutive industries in the world. On average, it costs the environment 75lbs of CO2 to make a pair of jeans, whilst 700 gallons of water is estimated to go into the production of a new t-shirt. Perhaps worse, 208m lbs of waste was generated in 2019 just by the buying and then subsequent destroying or disposing of single-use outfits.

However, there are signs emerging that suggest the interest in sustainable and ethical fashion is now a steadily rising upward trend. Global Fashion Search Engine, Lyst, has seen searches including sustainability-related keywords increase 75% year on year, recording an average of 27,000 searches for sustainable fashion every month. 

Most recently, Lyst attributed the increase in sustainable searches to brands either launching sustainability initiatives, paying closer attention to, and being more transparent of, the materials used in their collections, or investing in the aforementioned reCommerce.

This is reflected in search data on individualistic levels. Girlfriend Collective’s leggings, made from recycled plastic bottles, were a popular search with shoppers whilst brands Nudie Jeans and Bassike clothing, both advocates of organic cotton – a search term up 52% – saw increases. 

‘Vegan leather’ has been a yearly steady riser, with searches increasing 69% year-on-year and searches for ‘upcycled fashion’ have grown 42% across the last six months.

The increasing rise in sustainability and transparency comes as a result of consumers choosing to shop with brands whose values and ethics mirror their own, and those ethics don’t just stretch to the natural environment – they include issues around human rights and the natural world.

“Consumer demand can revolutionize the way fashion works as an industry. If everyone started to question the way we consume, we would see a radically different fashion paradigm.”

Carry Somers, Co-Founder of Fashion Revolution

As an example, British fashion eCommerce behemoth Boohoo has seen more than $1.3bn wiped from its retail share price after being embroiled in a human rights scandal whereby it was found to be paying workers in a Leicester factory well under the mandatory national wage, with no COVID-19 social distancing measures in place. Next, ASOS, Zalando, and Very all suspended their sales of Boohoo items, whilst consumer boycotts raged on social media channels.

On the other hand, online American apparel company Patagonia has been achieving steady year on year growth of 13% due to its transparency in things like its products made from renewable or recyclable fabrics (45%), or its number of workers earning a Fair Trade premium (26,000) which it openly publishes in its yearly reports.

Elsewhere, Prada signed a $57m deal in order to meet three eco-friendly objectives, including using sustainable material Re-Nylon, a material Lyst recorded a 102% rise in searches for last year, whilst fashion houses Armani, Gucci and Versace have completely eradicated fur from their products in order to source more ethical solutions.   

As fashion continues to incorporate ethics throughout its lines, so emerges another, new type of consumer: The conscious consumer. 

The conscious consumer is aware of three things: The environmental cost of producing a product, the potential human cost of manufacturing a product, and the potential resale value of the item further down the line.

One brand that is not shy about having made the Conscious Consumer their primary target is fashion eCommerce retailer, Organic Basics. The brand has currently launched a ‘low impact’ version of their eCommerce site.

‘Low impact’ means that visitors are greeted by an almost bare site, free of graphics, videos, heavy scripts, and similar elements. The website only loads images whey they are actively requested by the user, informs the user of the impact of their browsing behavior, stores data locally on the user’s device to minimize data transfer, and more.

“The internet is dirty. Data transfer requires electricity, which creates carbon emissions – and this leads to climate change. The Low Impact website reduces data transfer by up to 70% in comparison to our regular website.” 

Organic Basics

When taking the Conscious Consumer’s values into account, eCommerce fashion retailers offering cheaply made, non-ethically produced products could suffer the most when compared to higher quality, longer-lasting garments. For example, if the piece is one-time wear, it will only eventually add to landfill if it has no recyclable value, and if it can be worn more than once, its resale value will diminish anyway through natural wear and tear, making it a non-profitable, non-sustainable piece to invest in. 

With these factors in play, the next step for any fashion eCommerce retailer is therefore to appeal to the conscious consumer through the production of products incorporating values of sustainability, resale, and environmental, as well as human, ethics. 

3. Athleisure transitions into mainstream luxury

According to a study by market research firm NPD Group, athleisure is set to lead the American shoe sale market through 2021, as it continues its steady 7% year-on-year rise. These findings support Lyst’s most recent report, which revealed that luxury streetwear and sportswear continue to evolve their definitions. 

Searches for both ‘streetwear’ and ‘athleisure’ powered the year’s biggest trends with customers spending on average $192 on a new pair of sneakers – a 39% year on year increase. 

“Consumers are looking for shoes that are less technical and instead more versatile and every day.”

Matt Powell, Senior Sports Industry Advisor at NPD

But those themes of versatility and everyday comfort are ensuring it’s not just the shoe market that athleisure is beginning to dominate. In their August report, data and analytics firm GlobalData predicted the global athleisure market will rise 9% in 2020, and outpace the total clothing and footwear market beyond 2023.

Comfort seems to be the key driving factor in consumer purchases of athleisure style goods, and more so in the post-pandemic climate with more people working from home than ever before. Data originally gathered from a 2019 RBC Capital Markets’ United States survey had previously revealed three-fifths of respondents said that they used sporting goods for athleisure reasons while just 30% said they only used them for sports activities.

This divide gives explanation to not only the rise in the continued growth of companies who have doubled down on consumers’ increased health and wellness pursuits like Nike and Lululemon – who in 2019 registered a 130% increase in online searches – but also as to why major online retailers Amazon and Target have both made recent entrances to the athleisure market by rolling out their own lines.

Athleisure has also been given a brand new twist: Luxury. 

Influencer-led campaigns by celebrities like Beyoncé, Rihanna, and Rita Ora have all helped glamorize the use of activewear by displaying it as a key element of their ‘behind the scenes’ lifestyles, regularly being snapped looking comfortable in fitted tracksuits aboard private jets or expensive chauffeured vehicles. 

As more and more companies adopt working from home policies, whether in rotation format or permanently, expect to not only see lines such as Lululemon’s “Office, Travel, Commute” athleisure collections, or Athleta’s “City Pants” range, but further expansions into the high-end side of athleisure in brands such as Under Armour, Fendi, and GymShark: An athleisure brand that grew solely through clever influencer usage and who just celebrated becoming a $1billion dollar company.

4. Artificial intelligence turns virtual assistant

With more shoppers choosing to purchase from retailers that align with their values, personalization and the act of relevancy are continuing growing trends throughout any eCommerce industry. To assist this new problem of how to put the customer at the heart of their marketing strategies, fashion eCommerce retailers are increasingly turning to one solution: AI, and most importantly, AI chatbots.

According to a survey conducted by Hubspot, 48% of consumers would rather connect with a company via live chat than any other means of contact, and 35% of consumers would be happy to see more companies using chatbots according to Ubisend.

Brands such as ASOS, Burberry, Levi’s, and Tommy Hilfiger have all adopted retail chatbots in order to bridge the gap between the customer and the retailer in a more convenient and personalized way. 

Tommy Hilfiger’s chatbot engages you in a conversation, first introducing itself as a bot and then offering a variety of options: Shoppers can browse through the collections, proceed directly to the catalog of available items, or even get the bot to help in selecting an outfit. By asking questions, the bot filters the collections to suggest the items fitting your style – and all within Facebook Messenger.

Meanwhile, Epytom is another popular chatbot that is not tied to any one brand. It serves as a personal styling service, encouraging users to shop their own closets rather than driving them to an external point of sale. The bot works first thing in the morning and styles a user using clothes they already own based on their preferences, as well as external elements like the weather outside and their itinerary for the day ahead. 

Epytom surveyed its users and found a plethora of positive feedback. From those surveyed, 64% wore what was recommended to them more than twice a week, 20% wore what was recommended three to five times a week, and almost all reported that their mornings were easier and less stressful. 

Encouragingly for the future of AI bots, 80% of users loved the bot format and were glad to regularly receive notifications from the app because of practical, applicable advice given.

With 80% of businesses expecting to be using chatbots by the end of this year, plus Facebook’s AI Research unit, FAIR, developing Fashion++ – a system that “reads” images of outfits submitted by users and then makes recommended fashion adjustments like untucking a shirt, taking off an accessory or changing a tops color to make it more stylish, it looks encouraging for the belief that automation technologies will most improve customer experience. 

Whether it’s just greeting visitors on a page, or creating recommendations through a conversational service, artificial intelligence has made itself indispensable through its effortless work nurturing and engaging potential consumers. Advancements in technology will continue to reverberate throughout the fashion eCommerce industry, but the ever-versatile artificial intelligence looks set to remain a must-have for fashion and apparel retailers of all sizes.

5. Seasonless fashion introduces slow fashion

In diary entries shared by Gucci’s creative director Alessandro Michele, he stated that pre-fall, spring-summer, fall-winter “were all ‘stale and underfed words” and that the fashion house would no longer be participating in the traditional fashion calendar, but would instead move to a seasonless schedule meeting twice a year.

Gucci were not the only ones. Saint Laurent also chose to opt-out of a calendar schedule, whilst Vogue agreed they would also take control of their own schedule. 

Vogue editor-in-chief Anna Wintour spoke on the subject to say that the impact of the Coronavirus pandemic was giving everyone the chance to “rethink what fashion stands for, what it means, what it should be.” She said: “I think it is an opportunity for everyone to slow down, produce less. […] Maybe have less of an emphasis on things moving so quickly and emphasis always on what’s new.” 

However, it is this emphasis that seems to have been trending upward long before the implications of the pandemic. 

“We have definitely noticed a shift in the way in which designers are approaching the traditional seasons. Collections are more seasonless than ever, as brands take more of a considered approach to the longevity of a collection. This is strongly resonating with our customers who seek pieces that they can keep in their wardrobe longer than a season.”

Rebecca Tinker, Womenswear Buyer at Selfridges

In 2019’s core fashion events, items such as boots were promoted in Spring, while during the Winter shows, sleeveless and trench style coats took precedence over heavy wool outerwear. In Giambattista Valli’s Fall collection, pastel pinks and floral colors adorned dresses, whereas traditionally those types of details would be reserved for Spring.

Reasons given for this upward turn in seasonless pieces included the business model many eCommerce afashion brands began transitioning to – the ‘See Now, Buy Now’ model. These pieces readdress delivery schedules by allowing consumers the chance to buy straight from the runway, instead of waiting until the appropriate season and then purchasing.

Another reason was that of the effects of climate change, with 86% of fashion retailers reporting that changing, and often unpredictable seasonal weather patterns were having impacts on their lines, and their sales.

But there’s now another new, emerging reason: Slow fashion. Fashionable wear that lasts longer than one season and can be recycled or reused through as many different seasons or styles as possible. 

This shopping habit is supported by statistics such as how extending the life of clothing by an extra nine months could reduce carbon waste and water footprints by around 20–30% each, as well as 12.5% of global fashion companies making pledges to change their processes in favor of adopting more sustainable practices by 2020. 

It’s good news if you’re an eCommerce business that has traditionally held seasonal wear. If your products have the versatility to cross-function through unpredictable and ever-changing seasons, it’s time to identify and market those USPs. 

6. Fitting rooms try on AR & VR experiences

As the digital world continues to grow and change, more and more fashion eCommerce retailers are attempting to retain existing customers, and attract new ones through the use of Augmented Reality (AR) and Virtual Reality (VR) experiences.

In a 2018 Gartner survey, 46% of retailers surveyed stated they were planning to deploy either AR or VR solutions to meet customer experience requirements.

One avenue that fashion retailers are focusing on especially is the use of AR and VR dressing room experiences. These experiences allow visitors to see themselves in a brand’s clothing, without necessarily needing to visit the store, in a persuasive attempt to buy. 

A notable success story of VR experiences was Rhone Apparel, who partnered with Rakuten to implement a virtual try-on service, Rakuten Fits Me. 

The service was just that: Made for consumers who were unsure of how a product would fit them. By tapping a button, they would undertake a series of quick questions, provide simple data points, and then be shown the most common body shapes for those unique inputs. Afterward, Fit Origin would generate a final recommendation for them. 

Within its first month of implementation, the conversion rate of Rakuten Fits Me users on Rhone’s website was 9.8% versus non-users who converted at just 3.7%. Twelve months on, Rakuten Fits Me user conversion rates still triple and some months even quadruple non-user conversions.

On the other hand, AR – Augmented Reality – can work just as effectively. eCommerce Fashion giant ASOS recently marked their first step into Augmented Reality experiences by launching their app, Virtual Catwalk. The feature was developed in partnership with London-based augmented reality firm, HoloMe, and allows customers to point their smartphone camera at any suitable flat surface, click the ‘AR’ button, and they will be able to view models as if they are walking in front of them.

Likewise, Zara found a way to bridge the gap between online and offline by introducing their AR app. The brand attempted to lure customers into stores by having AR experiences activated on certain store windows, or on sensor points dotted around their stores. 

All customers had to do was hold up their phone to one of these points, and then watch as models came to life on their screens wearing selected items from the Zara range, with an option to click through and buy. Research has found that 44% of shoppers used their smartphones to shop or research while in stores, and this number is likely to rise. So this is a trend to keep an eye on.

There are notable other household names signing up for the technology of AR and VR too. Brands such as Burberry, whose app allows for digital redecoration of your surroundings with Burberry-inspired drawings by the artist Danny Sangra. 

Balmain, whose app allows you to go behind the scenes and enjoy specialist augmented reality content including live streams of its runway show, and Puma who created AR sneakers covered in QR codes that allowed for a variety of AR experiences once scanned with a mobile phone camera. 

California-based designer hat brand Tenth Street also offers an augmented reality option on their product pages. 

Visitors can choose items marked with “Virtual Try-On,” click the “Try it on in AR” button, and see how their chosen hat looks. It was a big hit with costumes too with engagement levels increasing by 33% thanks to the augmented reality feature.

As brands look to reinvent their methods of acquisition and conversion, AR and VR will continue to develop into must-have abilities for all major fashion eCommerce powerhouses. 

7. Omnichannel will keep stores omnipresent 

In a survey conducted by eConsultancy, data revealed a 21% YoY increase in online orders in comparing March 2020 to March 2019. In a separate survey, 41% of respondents said that they were currently shopping online for things they would normally shop for in-store.

Whilst the coronavirus pandemic is responsible for these significant changes, it adds more fuel to a growing dilemma puzzling and pressurising most fashion ecommerce retailers. What to do about their brick and mortar stores?

With the accessibility and convenience of online shopping having left notable impacts on retail spaces in high streets around the world, now more than ever retailers are under pressure to unify retail experiences both inside and outside of their stores. Especially if they wish to maintain a profitable high street presence. 

To help solve this problem, fashion retailers are instead turning to omnichannel strategies, such as direct-to-consumer. These marketing strategies allow fashion ecommerce retailers to offer seamless shopping experiences both online and offline, as they navigate the world of balancing brick and mortar stores with surging eCommerce sales. 

Back in January 2018, Zara gave a glimpse of what an omnichannel future could look like by opening a click and collect concept store in London. The space had a dedicated area for collecting online purchases but also had staff on hand with mobile devices that offered sizes, stock, and, collection information for a limited selection of items available inside the store. Alongside this, there were options to avoid payment lines altogether by paying through either the Zara or Inditex group app, as well as self-service checkouts. 

Most interestingly, a virtual styling tool was trialed in-store using information screens embedded into mirrors. Customers were able to scan barcodes of items using sci-fi-sounding radio frequency identification technology. Once the item was recognized, the internal system would load “multiple choices for coordinating and combining the piece with other garments and accessories.” 

Meanwhile, Nordstrom’s DTC omnichannel strategy of “reserve online, try on in-store” was such a success that it is now available at 43 stores across the US, with 80% of shoppers who tried the service coming back to use it multiple times. 

The service allows shoppers to select items through the Nordstrom app, notifies them when the products are available to be tried on in-store, and then sends a followup message upon their arrival which tells the customer where they can find a specialist reserved dressing room with their selected clothes.

Recently, Nike is the latest big fashion brand to see success with their implementation of direct to consumer. Seeking to climb aboard the tech-driven drop strategy of selling exclusive, limited-edition items – popular among apparel makers like Supreme to generate excitement and demand – it purchased predictive analytics company Celect. 

Celect’s cloud-based platform issues data to help retailers optimize their inventories with local demand predictions. These predictions then aim to forecast how and when consumers will buy certain styles, bolstering Nike’s DTC strategy of being able to personally supply consumers at a global scale.

According to the company’s annual report, the digital portion of Nike’s direct sales grew 35% during the period and outpaced all other marketing channels. Nike attributed its growth rate to its digital DTC sales and hailed them as a key driver of its sales for the foreseeable future.

While online eCommerce has had undeniable effects on physical high streets, omnichannel marketing supports the theory that retailers aren’t necessarily closing their doors, they’re evolving the methods in which they can reach and supply their customers. 

For physical retailers, strengthening their digital presence ensures they can drive traffic both to their physical stores, like Zara, as well as make their catalog easily accessible to larger, online audiences, like Nordstrom. 

For eCommerce retailers having a two-pronged approach to driving consumers between both an offline and online presence could not only be a way of unifying brand experiences whilst helping to keep a brick and mortar store profitable, but also fulfilling different consumer needs through segmenting the approach to supply, such as making certain products online only in a direct to consumer strategy. 

8. Genderless fashion means there’s a fit for everyone

In 2018, the Council of Fashion Designers of America, the organization that organizes the week’s calendar, added a new category: Unisex/nonbinary. At the time the addition was regarded as a major feat for the LGBTQ community and was widely praised by society as a whole. 

Since then, more progress has been made in the understanding of gender norms and within the inclusivity of non-binary gender identities, and this is now being reflected throughout the fashion industry. Lyst recently reported a 52% increase in searches for the terms ‘genderless’ and ‘gender-neutral’ fashion.

Across the past year, eCommerce fashion brand Inhabit launched its first genderless collection, Norma Kamali changed her brand to a unisex label, Umit Benan launched a unisex line, B+, whilst Equipment followed on by launching their gender-fluid collection in the Spring of this year. 

With the latest data suggesting 56% of Generation Z consumers shop outside of their assigned gender categories, fashion houses H&M and Zara also introduced genderless collections, while Tommy Hilfiger’s loungewear section features pieces that appear across both men’s and women’s individual sections.

“We’re already beginning to see a shift in the industry through multiple waves; through casting of androgynous, trans and gender non-conforming models, as well as combined women’s wear and men’s wear runways. We’re seeing the shift take place through how products are being bought, whether it’s unisex, gender-fluid items, or women’s wear items on the men’s wear side.”

Brigitte Chartrand, Senior Director of Womenswear Buying at Ssense

According to the Pew Research Center, 35% of Gen Z are familiar with gender-neutral pronouns, followed by Millennials at 25%. Gen X makes up an additional 16%, bringing the total number of people familiar with gender-neutral pronouns to 76%. 

That large consumer market is a predominant reason behind the likes of Louis Vuitton and Gucci using male celebrities to promote traditionally female clothing, such as in 2016 with Jaden Smith and Harry Styles in 2019 and forms the basis for brands adopting the language, describing their gender-neutral collections as genderless. Genderless pieces also contain greater potential through their ability to connect and appeal to two market segments.

Doug Stephens, an author and futurist of the retail industry predicts going forward, genderless clothing will influence a significant part of fashion’s future. “The way we dress from a gender standpoint is, to a larger extent, a reflection of how we regard gender roles,” he says. “As gender roles are blurring, the traditional fashion identities of both men and women are blurring along with them.”

Already reflected in brands such as Selfridges, Totokaelo, and Vans, genderless and unisex fashion are trends that will continue to evolve all the time conversations around them continue to develop. Additionally, as companies aim to diversify their workforce, including those from BAME and LBGTQ backgrounds, influences on the design and development of styles could see brand new, exciting changes that allow fashion to return to its roots as a statement of identity.

For eCommerce retailers, now is a great time as any to truly tap into your audience’s wants, needs, and values. If you’ve been wanting to expand your ranges outside of traditional gender norms, there’s no better time to support an inclusive movement just finding its voice.

9. Buy now, pay (for luxury) later

In February of this year, Style360, a New York fashion week event organized by publicity firm A-List communications forewent celebrity guests in favor of a technological one: Swedish banking firm, Klarna. 

Klarna took to the spotlight to advertise its recent partnerships with eCommerce brands that allow consumers to pay for products through installment plans, instead of potentially off-putting upfront costs. One example in action was a $140 Jeffrey Campbell shoe, available for purchase for four monthly installments of $35.

As economic ramifications are still to be navigated for fashion eCommerce retailers and consumers alike, a new purchasing landscape seems to be offering a potential solution to the question of just how luxury fashion retailers, in particular, are going to make their pieces affordable to a new range of savvy buyers going forward.

Enter: Buy Now, Pay Later, a new form of purchasing that is being embedded into a range of different fashion eCommerce retailers, both big and small. 

Services such as Klarna, Afterpay, Affirm, and Openpay allow a shopper to purchase and receive the product upfront while financing a payment across a number of months. All of which are showing tremendous growth.

Whilst the aforementioned services have mostly been introduced into sites such as ASOS, Pagani, and Puma, luxury retailers have now also begun their foray into BNPL services. 

Brands like Henri London, Burberry and Givenchy have all recently partnered with Klarna, and Henri London in particular have updated their site to state: “Quality comes at a price, no matter what you’re buying. We want to make shopping an affordable option for everyone.”

Gartner senior director analyst Derek Stubbs spoke on the subject to say that “Younger customers see new payment options as ‘ubiquitous and necessary’. Consumers are going to places to make a purchase and not necessarily thinking about payments. But if a purchase can’t be made by the platform they expect to use, they just won’t go there.”

During 2019, Klarna added 75,000 new merchants – one every 7 minutes and now boasts over 200,000 active merchants across 17 markets globally.

With recent reports suggesting that up to 65% of shoppers avoid credit cards for retail purchases, brands who choose to opt-in to installment payments lower the obstacles in making a purchase, such as those who are price-conscious and may be deterred by large, upfront purchase costs. This expands their audience and appeals to even the consumers who may be unable to initially afford the fashion brands they covet.

One such success story is the Canadian apparel brand Kotn, who opted to implement New York-based Quadpay. Kotn’s chief digital officer Ben Sehl says the buy now, pay later scheme has led to better conversion rates as well as a slightly higher average order value.

“Yes, we are converting customers that we may naturally not have, because now we provide a new piece of the customer experience to them. But we are also seeing [that] even our customers who have been loyal to us for a very long time are also taking advantage of this alternative payment type.”

Chad Miller, Senior Director of Digital Experience at DSW

Fintech startups are increasingly hopeful that eCommerce fashion retailers will continue to view buy now, pay later services as a gateway to making high-value purchases more affordable, and accessible to wider markets.

Going forward, eCommerce giant Shopify also has high hopes that its merchants will implement payment methods with installments including micro-payment and split payment options – the capability for which it is installing across its platform. 

With fintech companies and selling platforms like Shopify making the means to implement these payment options easily accessible, retailers should prepare for the future of high-value purchases no longer needing to be specifically targeted toward a variety of affluent audiences. 

This potentially exciting development opens a wealth of opportunity for high-end eCommerce fashion retailers, who could experience the chance to reach new audiences and scale new heights in their business by attracting a new market of consumers.

Fashion eCommerce: What’s next?

Fashion will meet and conquer new frontiers. With every change, fashion returns to its roots of accessibility and identity, engaging new audiences with technology like Klarna and adapting its values and ethics to cater for genderless and sustainable fashion.

For eCommerce fashion retailers, it’s time to try on these easily transitional changes. Merchant platforms like Shopify have made it easy to implement accessible payment options, and direct-to-consumer popularity means your eCommerce store can already get ahead of the rush if optimized correctly. 

We hope these eCommerce fashion trends give you a taste of where the industry is headed – for ideas on how you can leverage them, check out our fashion showreel to see how Yieldify has helped leading fashion eCommerce brands, such as M.J. Bale, Marks & Spencer, and others improve their digital customer journeys.

The post <strong>Fashion eCommerce: Top Stats, Trends and Strategies for 2023</strong> appeared first on Yieldify.

FREE GUIDE

9 Beauty Ecommerce Trends That Will Define the Industry In 2023

What can marketers learn from the beauty ecommerce trends driving a $700 billion industry?

Published: Aug 19, 2020

Introduction

The beauty industry has always been at the forefront of ecommerce innovation and reinvention, and this year has been no exception. From clean beauty to hyper-personalized skincare and AI cosmetics solutions, beauty retailers are always looking to enhance their customer experience.

With all that’s going on, we decided to deep dive into this ever-changing world and provide you with our top beauty ecommerce trends that will continue to push the beauty industry forward in 2023.

Table of Contents

1. Inclusivity
2. AI technology
3. Personalized Experiences
4. Subscription services
5. Clean beauty
6. Big data
7. Influencers
8. Brand partnerships
9. Hyper-personalization
What’s next for beauty ecommerce?

1. Inclusivity is invaluable

In a survey conducted by market research company Nielsen, findings show that in America beauty aisles are finally beginning to reflect diversity. The number of unique color ranges has grown seven times as fast as product lines as a whole, whilst the number of unique colors of foundation sold has grown three times as fast as the rate of new general product development across foundations. 

“Inclusive ranges allowing for everyone to ‘find’ themselves are becoming more of the norm.”

Jordan Rost, Nielsen’s VP of consumer insights

Consumers now seek value-driven products that reflect their personalities and lifestyles. Global Cosmetic Industry data shows sales of multicultural beauty products surging at a pace double the conventional market and companies that are embracing inclusive styles and lines are seeing their efforts rewarded in their annual revenue.

For example, Too Faced, a brand that prides itself on innovative makeup products and has a wide range of lines, saw a huge annual turnover of $350m, whilst Illamasqua, a beauty brand whose tagline encourages the consumer to “Express your individuality” saw their profits rise to their largest yet at $50m. 

Meanwhile, Black Opal Beauty, generated $15 million worth of sales by identifying a huge gap in the inclusive market – the underrepresentation of undertones. Derek Wanner VP of Sales & Marketing for Black Opal explained: “Ethnic consumers not only had beauty aspirations but buying power left untapped by a beauty industry that did not cater to the diversity of skin tones and undertones.”

Black and Ethnic Minority women agree that while the introduction of a range of different colors is a positive start, lines with an extended shade range present new problems: quantity over quality. More specifically, this means companies are failing to address undertones as well as they could be. 

“As a person of color, you can still see a brand have about 50 shades and not take into account the different undertones and all the different things,” Kimberly Smith, co-founder of the Brown Beauty Co-Op, told Retail Dive. “It’s not just about the shade itself or the complexion color, it’s really a little bit more than that. I think brands do a disservice when they don’t take the time to understand what it is that we need in our color cosmetics.”

2. VR, AR and tech partnerships

A few years ago, Perfect Corp, the world’s leading AR company partnered with the Chinese ecommerce giant, Jack Ma’s Alibaba group, and integrated its YouCam Makeup AR virtual try-on technology into Taobao and Tmall Alibaba online shopping experiences. This brought new virtual try-outs to consumers in China. Just six months into using Perfect Corp’s AR technology, Alibaba revealed they had increased their conversion rate by 4x. 

Since then, new technology in the beauty industry is coming on leaps and bounds, immersing AI, AR, and VR into household brands like MAC, NARS, and L’Oreal. 

Such is the effect on L’Oreal that the L’Oreal India managing director, Amit Jain, stated the firm’s CEO had set a global mission for the brand to “evolve from a beauty to a beauty technology company” as a result of the market impact and ever-changing consumer habits exacerbated by the recent global pandemic.

And he’s not alone. In Malaysia, skincare brand Nutox partnered with Ministry XR to create a ‘skin analysis tool’ powered by deep learning and computer vision, in order to give customers a hyper-personalized experience when shopping for skincare goods – something difficult to buy without trying on samples in-store. 

The tool is made available to “anyone with a smartphone to analyze their skin and identify major skin concerns such as wrinkles, hyperpigmentation, texture, and dullness.”

By deploying an AR tool, Nutox found they were able to engage with their consumers, added value to their brand, and drove ongoing conversion and sales. Consumers were changed by the experience, voting the company more than just a skincare brand.

“From virtually trying on make-up looks to evidence-based skin analysis, AR and other disruptive technologies are changing the way consumers discover, experience and connect with health and beauty brands.”

Kimberley Yap, Ministry XR’s VP of Experience Design

Facebook’s Spark AR studio also adopted the rise of the interactive experience. Popular social media platforms Facebook, Instagram, and YouTube incorporate its technology into banner advertisements that allow consumers to click and virtually try on makeup products without ever leaving their app. Brands like Chanel, YSL, Charlotte Tilbury, and Maybelline now too offer VR try on services across their website and mobile apps. 

3. Personalized experiences take priority

Personalization is becoming increasingly important to consumers and helping brands optimize their ecommerce CRO strategy. In a world where we are bombarded with marketing messages, personalization allows consumers to feel like they are receiving messages that are tailored specifically for them.

In addition, personalization can create a sense of loyalty and connection between a consumer and a brand. As of 2020, 56% of online shoppers attested to returning to an online store that offers personalized recommendations, and in a separate SmarterHQ survey, 80% of shoppers admitted to only shopping with brands offering personalized experiences.

When a consumer feels like a brand knows them and their preferences, they are more likely to continue doing business with that company.

As personalization technology continues to evolve, cosmetics brands offering personalized experiences will be more likely to create meaningful relationships with their customers throughout 2023.

Two significant ones to watch include the period-tracking app Clue which recently partnered with skincare giant L’Oreal to offer personalised hormone-related skincare advice for women and newfound dental tech app Toothfairy which aims to now provide its users with a bespoke remote treatment method.

4. Beauty subscription services

Royal Mail’s UK Subscription Box Market report forecasts the subscription box market is set to be worth £1.8 billion by 2025 in the UK alone.

First Insight’s survey on subscription boxes reported that 25% of American consumers (both men and women) are currently receiving a subscription box, and another 32% of respondents plan to subscribe in the next six months. 

Meanwhile, in China, Shingetsu Research revealed that women were more likely to dominate the market by 2027 due to the surge in the working population, the changing female shopping preference toward convenience, and the popularity of subscription boxes available for apparel, beauty, and hosiery. 

In the beauty ecommerce industry, examples such as Birchbox and Glossybox have displayed just how successful the subscription box business model can be. In a research study of 5,000 US consumers conducted by McKinsey, the study found that curation services – subscriptions which aim to seek and surprise by providing new items or highly personalized experiences – received 55% of total subscriptions, and were by far the most popular, suggesting a strong desire for personalized services. 

Beauty subscription boxes and men’s grooming services have been identified as offering the largest growth opportunities in the market, so it’s no surprise it’s attracted the attention of brands and retailers such as P&G (Gillette on Demand), Sephora (Play!), and Walmart (Beauty Box). 

Beauty boxes cater to the replenishment needs of their subscribers, but additionally offer the excitement of getting to try out new products. As the McKinsey study concluded, subscribers surveyed wanted something new and innovative in order to continue subscribing, and consumers (particularly curation subscribers) expected personalized subscriptions to become more tailored over time.

FabFitFun is one example of a subscription service ticking the right boxes. The subscription box is curated around product recommendations in the field of beauty, health, and interior design. The brand has grown 300% YoY, including recording $200 million in annual revenue. 

To minimize its “churn” (the percentage of customers that opt not to renew), FabFitFun has integrated value – more specifically, content value, as a driving force in its business model. A magazine accompanies the products in the box and explains how to use them. 

To keep subscribers engaged between deliveries, there’s an active FabFitFun message board on the brand’s website where members can discuss recipes, weight loss, and decorating tips. The company hosts a members-only TV station and has just launched a daily Facebook Live show where viewers can learn about products and get other lifestyle content.

For FabFitFun, they’re conquering the art of personalization and new experiences by heavily investing in the brand outside of the box. 

“If members see us as more than just a box, but access to a community and valuable knowledge, then it’s hard to put a price on how much that experience is worth.” 

Katie Rosen Kitchens, FabFitFun co-founder

As the subscription box service continues to grow, expect to see more brands keep the excitement alive by utilizing social media and content marketing to drum up a sense of brand community. 

5. Natural, clean, and transparent beauty

Consumers are now seeking brands that are as transparent in their ingredient list as they are natural in their products. Whilst clean beauty has been a rising buzz across the industry since 2018, it is still a controversial, confusing, and ever so enigmatic subject that can present more questions than answers. 

For example, both the FDA and EU vary on their banned ingredients – the FDA ban 11, the EU ban 1,328, but more brands are beginning to emerge from the confusion with minimalistic and transparent approaches as consumers continue to pay eagle-eyed attention to the ingredients list on the back of the packet.

In a Neilsen research study, the company found that beauty industry consumers are flocking to more natural and objectively simpler products. But rather than simply accept brands’ definitions of what’s natural, consumers are deciding for themselves. 

Sales of cosmetics products that are both free from parabens and claim to be natural are growing five times as fast as those just meeting the paraben-free specification. One example of this is American cosmetics brand Kiehl’s, who reformulated their Ultra Facial Cream to remove parabens and experienced a sales bump of $5 million. The increase helped it climb into the top five U.S. prestige skincare brands. 

A Harper’s BAZAAR poll of more than 1,000 women across all ages, races, and ethnicities, discovered more than 60% of women would be willing to spend on new brands if they were offering natural products. New sustainable brands also attracted the interest of 55% of those surveyed.

The eagerness to try something new if it is clean is enabling the rise of new niches, such as blue beauty, a concept referring to products that aim to protect the oceans and water supplies (such as One Ocean Beauty, which partners with charity Oceana). 

Meanwhile, there are new audiences being reached too: Florence by Mills, the makeup brand founded by actress Millie Bobbi Brown, prides itself on promoting and producing its clean beauty products and is helping to spread the message across social media platforms by specifically targeting Generation Z – the generation who do want to take a stand against socio-economic, political and global issues such as climate change. 

Other brands like From Molly With Love, Biossance, and Beautycounter specifically list the ingredients that do not appear in their products, before listing the ones that do. 

6. Leveraging big data for new product development

“The next big idea in beauty is community,” stated Jennifer Goldfarb, Ipsy co-founder at WWD’s Digital Beauty forum. “The brands that will win in the future are the ones that can activate their customers, their followers, their fans, and really bring them into their brand, help them build the brand, product development, marketing, all aspects of the business.”

How is that achieved? Enter: The rise of big data in the beauty industry, collected through questionnaires, search term data, and spending habits.

Household name Olay transformed their downward trajectory, sinking through years of familiarity and staleness, by implementing digital strategies into their workflow and developing a deeper understanding of what their consumers were really looking for. 

In association with Procter and Gamble, the brand launched Olay Skin Advisor, a web-based, data-collective tool meant to help people understand the right products for their skin. 

To date, the Olay Skin Advisor has collected more than ten million data points, which have significantly impacted product development. 

For example, Olay learned that a big percentage of consumers actually desire fragrance-free skin-care products. So the brand subsequently launched scent-free versions of its Olay Whip facial moisturizers, which have become “just as big” as the original. Olay has continued the strategy for future products, including Olay Retinol 24 after the brand saw retinol was the number-one searched ingredient and decided to create a new product based around the query. 

“This is the first time we took those data points, those consumer engagements, and actually transitioned our mind space from a digital-to-sell mindset to a digital-to-design mindset.”

Eric Gruen, Olay North America’s brand director

Across the beauty industry, more brands are embracing the use of data collection and analysis and watching it exceed their development processes. 

Proven, a beauty startup, simply analyses data gathered freely from the internet and uses an Artificial Intelligence engine to digest thousands of reviews, evaluate over 20,000 ingredients, and peer review thousands of specific scientific articles. Thanks to its massive database and machine learning, Proven has programmed an entire bespoke beauty regime for its individual consumers. 

Meanwhile, Prose, a custom haircare business, has a team of in-house data engineers based in Paris that aim to understand similarities between customers, and what ingredients can be tweaked in order to maximize satisfaction. The business said it has been able to increase satisfaction by 30 points, to about 90%, in the prior year. 

7. Influencers are an investment

Influencer marketing has been part of beauty ecommerce strategies for the past few years, and it’s not going anywhere soon. The British Beauty Council’s 2020 Value of Beauty report found influencer marketing had once more given the industry a notable boost in economic capacity, which found for every $1 spent on influencer marketing, brands secured a return of investment of around $11.45.

Within the rise of influencers, and now micro-influencers (influencers with smaller fan bases, traditionally 100,000 or under) the beauty industry and its advertising outlets have finally found a return of investment in renewable resources. 

Harvard Business School reported that global spending on influencer marketing rose from an estimated $2 billion in 2017 to about $8 billion in 2019, and that spending is expected to jump to $15 billion by 2022. 

These findings are reiterated in the likes of beauty giant Estée Lauder now spending 75% of its marketing budget on influencers, whilst L’Oréal allocates 30% of its media spend to digital channels. 

A significant initiative from L’Oréal has been its ‘Beauty Squad’ campaign, where a number of influencers created YouTube videos and articles for both L’Oréal’s website, social channels, and their own channels, tapping into a combined influencer reach of 5.5m. 

Ipsy, the beauty subscription service, enlists beauty influencers and brand ambassadors to create videos that demonstrate how to use the products in the bag after its co-founder, Michelle Phan, was a beauty influencer who saw first-hand how beauty-obsessed consumers loved watching videos of people unboxing new beauty products and demonstrating how to execute new styles. 

Ipsy’s influencers generate millions of dollars in YouTube ad revenue for themselves, which they then share with Ipsy and which Ipsy return by making those beauty influencers a cornerstone of its business, offering services to help emerging influencers connect with Ipsy’s large audience, and by creating a plush studio where influencers can create videos with high production values. 

However, data suggests that there could be a new trend in the influencer industry: Authenticity.

Looking to the future, Mintel suggested that “beauty brands and influencers that showcase authenticity will stand out in this crowded landscape.” In addition, taking a more honest approach will help bolster trust among skeptical followers. 

Their claims are supported by the Harvard Business School study conducted by MBA Graduate Alessia Vettese. In her study, Vettese surveyed 250 self-confessed “beauty enthusiast” women, of which 43% said they’d only purchase from influencers who openly disclosed their endorsement deals. 

Vettese places the importance surrounding this on “consumers actively seeking out influencers who share the same skin tones and even skin sensitivities, and then those consumers want to trust that influencers actually believe in and use the products they talk about.”

These new values of transparency and relatability pave the perfect path for the up-trend of the just as influential micro-influencer, who consumers often feel they can build a personal connection with through regular, more personalized interaction.

8. Brand partnerships

Market analysis by AdNews revealed that collaborations in any industry were up to “30 times cheaper than digital advertising” due to the ability to tap into already existing audiences. 

In the beauty industry, this rings especially true: whenever a unique makeup collaboration is released, a slew of social media posts and reviews convert excitement to product sales. Often, these products are seen as collectibles to their audience (Andy Warhol x NARS is a standout example) and generate a large demand for similar releases within the beauty industry. 

So, when interests such as a favorite childhood snack or television show are combined with makeup and beauty, joining the existing audiences of both brands together in a marketing move called co-branding, more customers are attained with a potential reach – even appealing to those who wouldn’t typically be interested in makeup. 

This business model was fully utilized by both Cheetos and Hershey. Cheetos captured enthusiasm amongst consumers were the newly released Cheetos-themed eyeshadow and bronzer palettes as well as an XXTRA Flamin’ Hot lip gloss kit.

Likewise, this past January, the Hershey Corporation coordinated with the Korean beauty brand Etude House to create chocolate bar-themed products. The line featured two eyeshadow palettes, one with Hershey’s Creamy Milk Chocolate bar packaging and the other mimicking the packaging of a Cookies ‘N’ Creme bar. As a result of the line’s unique product and packaging design, it was met with stellar reviews for its “collector’s item” quality and quickly became a best seller.

This beauty ecommerce trend is set to continue. Brands such as Coca Cola have partnered with eyeshadow giant, Morphe. MAC branched out into new territory by announcing a collaboration with popular Chinese online multiplayer game, Honour of Kings. And Mentos lent their name to a new range by K-Beauty label Innisfree. 

It’s not just large brands taking advantage either: With digital advertising becoming an ever more convoluted space, co-branding with influencers is a new, effective way of combining two sets of audiences and generating excitement as well as sales and brand following. 

Colourpop released numerous collaborations with YouTuber Kathleenlights, who boasts over four million subscribers, along with multiple collaborations from smaller influencers. The makeup brand launched solely on social media and developed such a cult following that their popularity as a small brand skyrocketed them into selling at both Sephora and Ulta.

As influencers continue to take hold of the digital and collaborative space, more startup brands are beginning to make use of audiences readily available to them. 

9. Hyper-personalized skincare

An Epsilon online survey of 1,000 consumers between the ages of 18-64 found the appeal for personalization within retail is high, with 80% of respondents indicating they are more likely to do business with a company if it offers personalized experiences and 90% indicating that they find personalization appealing. 

This continuing desire for personalization and connection with brands has allowed a new form of hyper-personalization to blossom in the beauty ecommerce industry thanks to AI technology and a two way, data-driven conversation.

There are already numerous examples that began to emerge back in quarter four of 2019: Neutrogena introduced MaskiD – a 3D-printed face mask tailored to your skin’s needs, based on data collected from a selfie; La Roche-Posay announced its stick-on My Skin Track pH patch, which tracks pH levels and prescribes targeted products via an app on your phone; SkinCeuticals displayed made-to-measure Custom Dose correction serums. 

At the same time, Mintel Research found that Google searches for ‘microbiome’ (the microorganisms on and inside your body) increased by +110% year-on-year in 2019. The rise in these searches suggests the facial skincare market is moving towards hyper-personalized skincare. Beauty giants such as Johnson & Johnson have already installed a dedicated microbiome platform. 

In the highly competitive beauty ecommerce industry, hyper-personalization is a way of ensuring brands can stand out by allowing consumers to make informed decisions based on their preferences, not flooding them with endless options. Using technology to help customers fulfill their needs allows for brand loyalty and repeated sales. 

One company utilizing data to make a personal connection is Prose, whose customers take a 25-question online quiz in order to determine their best custom formulations and product regimens. Questions range from hair type and scalp conditions to environment and lifestyle habits and lead to 135 data points that the company can use.

“We take this information, we put it in our algorithm that we created in-house, and that will create a bespoke formula just for you. It’ll also tell you which products should be part of your routine.”

– Paul Michaux, Prose co-founder

The desire for personalization is so high that after a study revealed that 40% of British male beauty and personal care shoppers found it difficult to know which products are right for them, Geologie was born: A male skincare subscription service that offers men a personalized regimen determined using a quiz that asks a range of questions, including ethnicity and location. 

Now more than ever in a more data prevalent world, consumers are willing to have a conversation with their chosen brand if they feel as though their wants will genuinely be listened to and adapted. 

Beauty ecommerce: What’s next?

Beauty brands are in a unique position to build strong personal bonds with their customers, and there’s a lot that can be learned from how they’ve done this to date.

These beauty ecommerce trends give us a taste of where the industry is headed – for ideas on how you can leverage them, check out our beauty showreel to see how Yieldify has helped leading beauty ecommerce brands, such as Sol de Janeiro, Ouidad, and others improve their digital customer journeys.

The post 9 Beauty Ecommerce Trends That Will Define the Industry In 2023 appeared first on Yieldify.