Ahead of the 2023 holiday shopping season, online retailers are leaning into personalization efforts to deliver relevant, engaging experiences tailored to individuals’ unique needs and preferences.
We see this evidenced in newly-released survey results (part of a larger report titled Countdown to Code Freeze from online checkout company Bolt) indicating that of the more than one hundred US-based e-commerce companies who responded to the survey, 66% of those decision-makers were prioritizing collecting first-party customer data in preparation for pre-holiday marketing efforts.
Why? Because modern consumers prioritize brands delivering these tailor-made online experiences. Data shows 75% of shoppers are willing to pay more for personalized online shopping experiences.
“Personalization is the potent new standard of online shopping,” Chris Rothstein, Director of Strategic Partnerships and Digital Experiences at Wunderman Thompson Commerce and Technology said. “Site visitors expect this type of experience, and to be successful as the organization, there is a requirement to shift the decision makers’ mindset to this understanding.”
Penny Porterfield, VP of Operations and Business Development at The ZaneRay Group, echoed this thought, explaining that knowing the customer and their preferences for shipping and payment options helps brands ensure they’re making it as easy as possible to buy.
Putting zero and first-party data to good use, however, is its own challenge. 51% of merchants Bolt surveyed indicated launching personalization efforts based on the customer data collected was their top challenge ahead of the 2023 holiday shopping season.
These personalization efforts emerge in various forms, including things like targeted advertisements as well as personalized site and email recommendations.
“The reality for retailers is that it’s a challenging landscape to be selling in,” Bolt’s SVP of Marketing and Communications, Hilary Neve said. “In order to contend with rising customer acquisition costs and persistent inflationary pressures, forward-thinking merchants need to launch or improve their customer data collection, personalize to shoppers at the individual level, and offer a simple checkout that converts.”
There’s a lot at stake for these retailers: According to Adobe Analytics, consumers spent $211.7 billion online during last year’s holiday shopping season (spanning November 1 to December 31, 2022), which produced a 3.5% growth in year-over-year spending. eMarketer predicts a similar growth rate of 4.5% in online spending during the 2023 holiday shopping season.
And personalization isn’t the only challenge these retailers face, either. In order to get a piece of this year-end consumer spending, brands selling online have a plethora of challenges and obstacles to tackle as they prepare for the holiday shopping season, including things like:
- Rising customer acquisition costs: As advertising online becomes more expensive, retailers have to get more strategic with their budgets. Data from FirstPageSage indicated that in 2023, customer acquisition costs for e-commerce businesses averaged around $86 across industries, while another data set indicates there was a 222% increase in customer acquisition costs in 2022.
- Inflation and reduced marketing dollars: Rising inflation compounds budgetary issues and has made prioritizing marketing investments with the highest possible ROI top-of-mind within marketing departments. Even so, Gartner
data shows 71% of CMOs feel they lack the budget to fully execute their strategy in 2023.
- Lack of data from third-party cookies: With this data source off the table in 2023, today’s brands are scrambling to gather customer insights for accurate targeting and personalization efforts, leading to the uptick in interest around zero and first-party data collection.
So where should brands focus their time, energy, and budgets as they prepare for the upcoming holiday shopping season?
Brendan Witcher, VP & Principal Analyst of Digital Business Strategy at Forrester, encourages a sense of urgency around efforts aimed at relationship-building with customers.
“It’s common for retailers to think about converting customers as November and Black Friday approaches,” he said. “But this year, and more than ever, ‘winning the customer’ will need to happen much earlier. Amazon
Bolt’s report encourages a focus on mobile experience improvements, the implementation of loyalty programs that help gather first-party data, frictionless checkout flows, and elements of social commerce and artificial intelligence that improve the overall customer journey from start to finish.
“One of the best ways to provide exceptional customer experience is through seamless checkout, eliminating as many obstacles as possible for your customers,” Christian Dreisbach, Head of Sales at Vaimo U.S. said. “Converting a shopper to a buyer to a return customer (and ultimately someone who refers others) relies on the simplicity and ease of the checkout process.”
Regardless of where brands decide to focus their investments, it appears those efforts need to begin now.