Segment Survey Finds Consumers Willing to Spend More on Personalized Shopping Experience

According to The 2017 State of Personalization Report, a new report published today by customer data platform Segment, consumers expect highly personalized shopping experiences from retailers and are willing to spend more money when brands deliver targeted recommendations.

Peter Reinhardt, CEO and co-founder at Segment, said, “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. 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 for the foreseeable future. Segment will help companies get there.”

In addition to the report, the company also launched Personas, a new product that allows businesses to synthesize massive amounts of customer information into helpful traits that signal user intent.

 Key Takeaways from the Segment Survey Report

• 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 of consumers will become repeat buyers after personalized experiences
• 54 percent of consumers expect to receive a personalized discount within 24 hours

The report finds that a majority of consumers are also disappointed with the ongoing lack of personalization in their shopping experiences. The verdict is clear—Millennial shoppers expect better personalization and hence, are impulsive towards making a purchase more often.

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 seven percent spending more than $100. Notably, 85 percent of impulse buyers were happy with their purchase, and just 5 percent returned it.

The Personalization Gap: Expectations vs. Reality

The rise of multi-channel shopping has lead 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 with consumer demands. 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 Impulsive Purchases

The brands who 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 happy with their impulse purchases – and even if those who aren’t, won’t return it.

• 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 five 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 after personalized experiences
• 39 percent will be likely to tell friends or family
• 39 percent will likely to become a repeat buyer

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

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 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

Introducing Personas by Segment

There are three key pillars of Personas:

1. Identity Resolution: The Segment Identity Graph resolves a user’s identity across different channels into one profile. It uses a deterministic matching algorithm to add any ID fragment with a common link to the right user profile.
2. Trait and Audience Building: On top of these profiles, marketers can build Audiences, like high-value users, or Computed Traits, like favorite product category, to calculate important signals from their historical customer data.
3. Activation: Segment syncs Computed Traits and Audiences to each company’s marketing integrations, so they can tailor their campaigns. Developers can build custom in-app experiences with the Personas Read API.

The Right Message, for the Right Person

Segment Personas helps companies drive customer loyalty by sharing the right message at the right time, and keeping messages consistent across channels.

HotelTonight, a popular hotel booking app, plans to use Personas to further enhance customization in the hotels it displays to individual customers.

Sam MacDonnell, CTO at HotelTonight, said, “We’ve been using Segment for centralizing data tracking to one platform and syncing our data to all of the tools we use,” said. “With Personas, we’re excited to surface user insights within Segment, remove engineering work required to manually derive user traits, and more easily give each user a custom experience no matter where they are. Segment data has always been a core piece of our internal machine learning and personalization efforts, and Personas will bring our capabilities to the next level.”

Availability

Personas represents the next generation of Segment’s platform and will be rolling out over the next few months. Today, companies can join the waitlist for the Personas beta, which includes core features for identity resolution, trait and audience building, and activation. Segment will make Personas generally available in 2018 and add more functionality throughout the year.