AI Fuels New Demands for Personalization — Is E-Commerce Maturing Fast Enough?

The stakes for getting personalization right are at an all-time high for e-commerce brands. BCG research predicts that $2 trillion will shift to companies that know how to deliver personalized experiences over the next five years. So how can brands invest in the right areas, prove the value of personalization and foster the executive buy-in needed to seize a piece of the pie?

That’s where our sixth annual State of Personalization Maturity report comes in.

To better understand the current challenges and opportunities of personalization, Dynamic Yield by Mastercard surveyed e-commerce business leaders in the Americas (AMER), Asia-Pacific (APAC) and Europe and Middle East (EMEA) regions.

You can read the complete report by clicking on the photo below:

AI-driven experiences are becoming ubiquitous. Online shoppers are using AI to help them find what they want swiftly, seamlessly and effortlessly. To meet rising expectations for fluid, intelligent interactions, e-commerce brands will look to personalization to help them adapt to customer needs in exciting, new ways.

Most have taken the first critical steps to meet customers where they’re at. 67% of global e-commerce brands, for instance, consider personalization a top priority and plan to invest more in it. Overall, the market came back advanced in its level of maturity when scored across culture, resources, processes and effectiveness, consistent with previous years.

But is it enough to keep up?

Zooming in, brands have significantly bolstered their processes to efficiently bring contextually relevant digital interactions to life. But the right processes are not enough to scale personalization execution and impact across an organization. One key signal is still holding them back: Resources (such as dedicated staffing and teams).

Here’s more on the key areas of opportunity we believe will help make a better case for continued personalization investment this year:

Culture: Tying metrics back to personalization value remains elusive for some

To unlock scale, teams must be able to measure and communicate the value of personalization — yet four in 10 brands lack clear key performance indicators (KPIs) to assess their efforts. It’s important to link campaign metrics to larger business goals, which they can do through smaller scale tests that prove impact and open doors to greater investment.

Resources: Momentum and scale inhibited by lack of dedicated personalization staffing

Only 50% of brands have established dedicated personalization support, with others relying on ad-hoc resources or going without it completely. These constraints make it difficult to drive personalization efforts across teams and functions required to deliver personalization. Without the proper operational foundations, progress will stall, which can lead to a cycle of disinvestment.

Processes: Organizations are heavily investing in personalization processes to unlock efficiency gains

Companies have doubled down on processes this year, with 65% reporting they derive insights and learnings from test data. Brands are likely motivated by the decrease in overhead that comes with integrating personalization into their marketing and conversion rate optimization (CRO) strategies. But without adequate resourcing to reinforce these strong processes, brands risk missing out on the impact of a fully cohesive program.

Effectiveness: Siloed efforts are reducing the impact of personalization

67% of brands report they lack a singular audience strategy for approaching ideation, execution and analysis. Those brands may optimize processes only within one function or team (email marketing, for example). This leads to siloed, channel-specific efforts that have limited effectiveness when compared to cross-functional, multi-channel personalization based on an aligned, fixed audience strategy.

While these insights extend across geographies, we took a deeper look at regional e-commerce markets to understand how personalization is prioritized across each signal. We discovered some key points of difference, from team structure and processes to cross-functional collaboration and strategic alignment. Using these benchmarks, companies can compare themselves against others in their region.

EMEA

• Despite having more established campaign-specific KPIs than other regions, 44% of EMEA companies make in-the-moment decisions around winning variations — 14% higher than the global average.

• EMEA companies are twice as likely to lack champions of personalization at their organization and rely on ad-hoc support for spur-of-the-moment needs than other regions compared to the global average.

AMER

• Almost half of AMER companies state they can use insights and learnings to run tests, learn more about audiences and inform their strategy — a figure higher than the global average.

• AMER companies have fewer resources to draw from and lack the autonomy of a centralized personalization team. They may be able to accomplish personalization-related tasks — even garnering greater nuance and insight as a result — but their level of skill in the discipline is not as refined as it could be.

APAC

• APAC has led the pack as far as using a data-driven approach for personalization test ideation and advocating for existing quarterly plans based on those to take precedence over executive mandates.

• The majority of APAC respondents report there being little to no organizational alignment around an audience strategy, or that it varies in application from team to team.

Overall, e-commerce brands have made significant headway toward delivering pioneer-level personalization. For the second year in a row, we saw the most significant developments for the processes signal — a critical linchpin for brands looking to launch more effective campaigns.

But as AI-driven experiences fuel mounting customer expectations, brands can’t afford to rest on their laurels. To get a leg up with personalization, they should first establish clear, quantitative business goals that tie back to generated value. From there, they can better measure and communicate its value to the C-suite, secure greater buy-in and get the investment needed to build out more dedicated resources for scale. And remember, while AI can enhance decisioning and ensure highly tailored content delivery, it still requires proper know-how, strategy, process, and measurement to reap its benefit.

Be sure to check out the full report for more insights into the state of personalization maturity in e-commerce. And don’t forget to discover where your own company stands by answering these 16 questions.