SOURCE: Segment

Segment

October 25, 2017 12:30 ET

Segment Survey Finds Consumers Will Spend More When Their Shopping Experience is Personalized, but Most Retailers are Missing the Mark

SAN FRANCISCO, CA--(Marketwired - October 25, 2017) -

71 percent of shoppers on average express some level of frustration when their experience is impersonal

49 percent of shoppers made impulse buys after receiving a personalized recommendation; 44 percent will become repeat buyers after personalized experiences

54 percent of consumers expect to receive a personalized discount within 24 hours

With total retail sales in the United States set to hit $5.68 trillion by 20211, the competition for customers has never been more intense. Consumers expect highly personalized shopping experiences from retailers and are willing to spend more money when brands deliver targeted recommendations.

However, a majority of consumers are disappointed with the ongoing lack of personalization in their shopping experiences, and on average 71 percent express some level of frustration when their experience is impersonal, according to The 2017 State of Personalization Report published today by customer data platform Segment. Segment surveyed 1,006 U.S. adults to analyze attitudes, expectations and experiences when it comes to personalized shopping, both online and in-store.

The proliferation of new devices and the rapidly evolving technology landscape has led to a "personalization gap" in the shopping experience, and as consumers' expectations rise, brands are struggling to meet them. For example, 54 percent of people expect to receive a personalized discount within 24 hours of identifying themselves, and 32 percent expect a discount after just one hour. However, only 22 percent of consumers actually find their retail shopping experience to be highly personalized.

The brands who get personalization right have a lot to gain. Nearly half of shoppers surveyed (49 percent) have purchased a product they did not intend to buy after receiving a personalized recommendation from a brand. Twenty-three percent of them have spent more than $50 on a single purchase, with 7 percent spending more than $100. Notably, 85 percent of impulse buyers were happy with their purchase, and just 5 percent returned their products.

"Shoppers expect brands to remember who they are, whether they're on a digital channel or in-store. However, very few companies can actually deliver on these tailored experiences," says Peter Reinhardt, CEO and co-founder at Segment. "This is a profound data and technology problem that needs to be solved. The brands who get this right will reap the rewards, as personalization and the customer experience will be the key differentiators for brands in the near future. Segment will help companies get there."

Additionally, Segment today released Personas, a new product that allows businesses to synthesize massive amounts of customer information into a single profile that brands can leverage to create personalized experiences everywhere they interact with consumers -- whether in e-mail, advertisements, push notifications, in-app, or even in-store.

Key findings from Segment's "2017 State of Personalization Report" include:

The Personalization Gap: Expectations vs. Reality

The rise of multi-channel shopping has led to a "personalization gap" in the consumer experience. While small, niche retailers and grocers are in line with consumer expectations when it comes to personalization, larger, varied retailers are struggling to keep up. On average, only 22 percent of consumers find their shopping experiences to be highly personalized.

 
Percent of consumers who expect highly personalized experience vs. those who experienced it
Retail Sector Consumer Expectations Actual Experience
Large online retailer 77% 23%
Department store 51% 17%
Independent or local business 34% 24%
Big box retailer 47% 12%
Online grocery store / service 29% 31%
Niche online-first retailer 24% 25%
   

Personalization Drives Impulse Purchases

The brands that get personalization right have a lot to gain. Whether digital or in-store, highly personalized recommendations often lead to impulse buys, and the most expensive impulse buying still happens in a brick and mortar store. Shoppers are generally happy with their impulse purchases, and only five percent will return their products.

  • 49 percent of shoppers have purchased a product they did not intend to buy after receiving a personalized recommendation from a brand. 63 percent of millennials made an impulsive purchase based on a personalized recommendation.
  • 40 percent of U.S. consumers say they have purchased something more expensive than planned because their experience was personalized. 23 percent have spent more than $50 on a single impulse purchase, and 22 percent of these purchases came from brick and mortar stores.
  • 85 percent of consumers are satisfied with their last-minute purchases. Only 5 percent will return their products.

Personalization Leads to Repeat Shopping

Providing tailored, personalized shopping experiences will lead to happy, loyal customers. After a personalized experience:

  • 44 percent of consumers will likely become repeat buyers.
  • 39 percent will be likely to tell friends or family.
  • 32 percent will be like to leave a positive review.
  • 22 percent will be likely to post a positive comment on social media.

Retailers Must Act Fast

Consumer expectations are at an all-time high, and to gain loyalty and capture revenue, brands must act quickly. Olive branches of all types, but especially discounts, are most important. After identifying themselves to a brand:

  • 54 percent of consumers expect to receive a relevant discount within 24 hours.
  • 32 percent of consumers expect to receive a relevant discount within one hour.
  • 63 percent of consumers say receiving a discount within an hour of interacting with a brand will drive loyalty.
  • 45 percent say a discount is the most compelling incentive to add another item to their cart.

Retailers Should Improve Brick-and-Mortar Personalization

Despite the fact that consumers in brick-and-mortar stores are willing to spend more money on unplanned purchases than through any other channel, consumers also say brick-and-mortar stores need the most improvement. Brands that work on personalizing the in-person experience have the most to gain in the coming years. The opportunity to increase loyalty -- and revenue -- is huge. Brick-and-mortar is the channel most likely to drive last-minute purchases worth more than $50.

  • 17 percent of consumers think that retailers are customizing the in-store experience.
  • 41 percent of consumers say they expect representatives in a brand's physical store to know what they have purchased online, yet only 19 percent have experienced this.
  • 24 percent of consumers think the in-store experience needs the most improvement when it comes to personalization.

The complete report detailing the findings is available here.

About Segment

Segment is the infrastructure for your customer data. Use one API to unlock 200+ tools for every team in your company. With Segment, developers can stop building tedious and expensive one-off data integrations while business users can identify important signals about each customer and push this data to their favorite apps for analytics and personalization. Segment is trusted by thousands of companies including Gap Inc., New Relic, Instacart, Intuit, and Time. For more information visit https://segment.com.

(1) eMarketer, "Total Retail Sales in North America, by Country, 2017-2021"

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