The Rise of Return on Website Personalization & Death of The 3rd Party Cookie
We here at Automat are not, in any sense, in the business of hyperbole. In fact, we’re not fans at all. As web nerds, we prefer facts, relevant and hard data, served cold, please. Having said that, as people who care deeply about the importance of website personalization and its transformative power to offer better help to website visitors, we can’t help but watch with keen interest as digital marketers have thrown around terms like “Adpocalypse,” and “Doomsday” when referring to Apple’s recent launch of iOS 14. (We’ll get to what we mean by “better help” in a minute, so please read on.)
We all are aware that Apple’s app tracking transparency features are enabling massive numbers of smartphone users to opt-out of being tracked, and Google and Apple are beginning to limit 3rd party cookie use. Further, as of iOS 15, a whole host of other pro-privacy anti-tracking features will become available. The full impact and implications of the iOS release and coming changes are outside the scope of this article, and if you work in the business, you’re already aware of and feeling the effects of it anyway by the time you’re reading this. From our perspective, these new restrictions on tracking and data usage and their impact on things like journey mapping and marketing attribution will prove to be a positive thing in the long run.
You heard us right: “Doomsday” was a good thing.
The fact that so far, just around 4% of users have opted into the tracking functions of iOS is a telling temperature check of the consumer marketplace. Beyond that, however, it’s a call to action. It’s a call for us all to stop focusing on buying eyeballs and renew our collective focus on delivering value.
Website Personalization and The Evolution of Conversion
Consider for a moment the business rationale for a D2C brand to make the considerable investment of resources to run their own branded e-commerce platform separate from whatever they do on a platform such as Amazon.
At this point, Amazon is orders of magnitude beyond what anyone would refer to as “the 800-pound gorilla” of e-commerce. With 54% of global product searches taking place on the platform (technically making it the World’s second-biggest search engine!), a case could be made that the company is teetering into almost being their own “Internet of Commerce.” So why would brands take the time and trouble to construct, manage, and optimize their own platforms, rather than burning all their calories optimizing for sales on Amazon?
It’s because brand still matters and, moreover, customer experience is still a vastly underleveraged competitive advantage.
Most D2C brands would find it tough to compete with Amazon purely on price, and competing with them on logistics today is nearly unthinkable (although Shopify is giving it a go.) Here’s the thing, though: Amazon’s customer experience is still highly institutionalized. What we mean by that is, despite their impressive technology backbone, Amazon, and nearly every other e-commerce retailer’s personalization of experience for consumers is still based nearly 100% on lagging metrics such as our purchase history and different permutations of our purchase histories compared to the purchase history of others. They offer a fantastic and intuitive open text search that will serve the user an unparalleled selection of product options, but there is no functionality for taking inputs of what the visitor wants, cooperatively assessing with them what they may not have considered, and then helping them to get what they truly needed. Picture your own eCommerce experience: you may arrive on Amazon’s site knowing broadly what you want to buy and they make it fast and simple to buy it and have it delivered. But how are you figuring out specifically what to buy in the first place?
Anyone who has shopped for, say, a new TV knows that vast selection is not necessarily helpful and can even be gating to a sale. A consumer faced with an overwhelming number of options has a high statistical likelihood of postponing the decision out of concern that they will make the wrong choice. Before we spend money chasing them with email and advertising retargeting, let’s pick apart that fear a little bit.
The abandoned purchase path we’re talking about here, whether it’s for a TV or a skincare product, results from a consumer facing a massive array of options and suddenly realizing that they now have the opportunity to make a wrong choice. In this case, a lousy choice means either keeping the product and being a bit grumbly about the mistake for as long as they own it or engaging with the process and effort of re-packing and arranging a return because of the realization that it doesn’t optimally suit their needs. Either of these options is a sub-optimal experience. Additionally, both options reduce the likelihood of building the level of brand affinity it takes for them to organically create user-generated content (UGC) on social media or even re-purchase from the brand in the future.
How can this problem be resolved?
By offering better help.
Does this sound like an oversimplification? Fear not; we’re not going to blithely state that you need to “offer better help” to your visitors and then leave you hanging. This is real work, but it’s also some of the most fun and rewarding (in every sense!) work your team may ever take on. It still takes considerable brainpower and creativity to roll up your sleeves and think deeply about your prospective customer, her needs, her wants, the questions she may have and, most importantly, the questions she may have never thought to ask herself.
Website Personalization is a Confidence Lever
We are building a significant dataset (findings to be published very soon and then ongoing) that readily demonstrates the critical point here: conversion from visitor to purchaser is not simply about speed and ease. The most successful website visits in our analysis (data is an aggregate derived from client GA accounts, “successful” being a function of time on site, reduced time to conversion, and a non-trivial lift in average transaction value) were those where the user took time to engage with the virtual advisor. These visitors spent nearly 3 times as much time on site, and reached the checkout page at a rate of 3 times the number of users who made it to checkout but did not engage with the virtual advisor. The not-one-bit-secret sauce here is website personalization. Website personalization is the lever through which these brands are helping visitors to build up the confidence to purchase sooner and very often spend more. The confidence that we’re referring to is the belief that they have untangled the immense array of options available to them (an entire Internet’s worth!) and landed on the product or solution that best suits their needs.
What is Return on Website Personalization Spend?
Simply put, return on website personalization spend (ROPS) refers to the return on investment a brand realizes for each dollar it spends on website personalization initiatives and optimization.
For context, the average Automat.AI customer currently enjoys a 10% lift on gross revenue that translates to a ROPS of $4.30 (430%) or more. Meaning, these brands currently see an average return of four dollars and thirty cents for every dollar invested in their website personalization efforts.
Let’s compare that with some (pre-“Adpocalypse”!) average returns on ad spend (ROAS) figures published by Google. These vary pretty broadly between verticals, but most brands can count on a baseline ROAS of around $1.25 when they first launch in the market, pre-optimization.
While ROAS can be improved over time, advertising still has a fundamental problem it’s unlikely to ever solve, besides the apparent movement toward the destruction of the current model. Advertising still only serves to deliver a visitor to the website and does nothing to solve the above problem of building the product confidence required to convert to a sale. At its worst, ad and email retargeting have the effect of badgering the prospect over time until perhaps they relent and make a purchase, a totally different customer experience than the person making their selection with confidence. The motivational psychology of these two disparate triggers as it relates to brand affinity is not to be underexamined but is outside of the scope of this article.
“Why am I spending so much time and money getting people to my website, and so little time actually making sure my website is helping my potential customers find the right products for them?”– actual eCommerce leader at recent Ortus Club roundtable event
Outside of the simple mathematical comparison, an analogous way of comparing the two is to look at it this way:
If you were to follow a stranger around a shopping mall (e.g. tracking their web activity), there are some hypothetical inferences you could draw about them. For example, you could make your best guess at their intent for the trip to the mall in the first place. You might make some observations about how they respond to different pattern disruptors such as signage, lighting, colours, or smells (Mmmmm…Cinnabon!). However, all of your conclusions would be limited to your best guesses following analysis from observing their behaviour and comparing it to whatever information you may have about similar types of consumers. The most useless part of this whole exercise is that you are unlikely to land on any conclusions before the person has either already left the mall or already transacted the purchase that was their key objective in attending the mall in the first place.
Or, here’s a thought:
You could offer them a friendly greeting as they arrive at the mall’s main entrance and engage them in a natural conversation on a human level. Through some simple rapport building and asking a series of the right questions, you have a very high likelihood of increasing the overall quality of their experience in visiting the mall, most likely by simplifying their shopping process somehow. “Simplifying” in this metaphor might mean providing directions or, even more helpfully, recommendations of how to find the best solution for the need they identified and clarified during your friendly conversation. This is how website personalization works. Instead of having a 1:1 army of uniformed mall attendants, your website has scalable technology taking care of the friendly curation journey that builds the type of confidence that leads to a purchase.
In light of all of the above, there is a crystal-clear business argument that an intelligent brand should re-purpose some of its ads spend and invest that budget in website personalization.
Answering the Call: The Return on Personalization Spend Calculator
Ideally, by now, you’re thinking to yourself, “Cool, but how do I even begin to take this on?” Especially because, as we’ve identified, there are so many variables to consider when building a business case about what this could look like for your brand.
Have no fear; we’ve got you covered.
Today, we’re absolutely thrilled to announce that our team has finalized a tool that is free to use and will help you project what it would look like to invest in website personalization for your D2C website. Our free return on personalization spend calculator is available for use immediately; all you need to do is click here to access it.
We’re fired up about helping as many brands as possible to raise the bar of user and customer experience in eCommerce. If you need help working through the ROPS calculator or want to talk further about any of the ideas in this article, we should talk ASAP!