Why personalizing web experiences is critical to revenue generation

To personalize a web experience, site content and user experiences are tailored to each visitor in order to attract, convert, and retain prospective customers. For example, a first-time visitor might be primarily interested in general information about a business, while a returning visitor may want to request a demo. Guiding these visitors toward different pages of the website can increase the likelihood that both will eventually convert.

Because of this potential to connect more deeply with visitors, website personalization is becoming a non-negotiable for both B2C and B2B companies. But how might personalization affect your business? Below, we’ll zoom in on how this tailoring customer experiences on your website can positively impact your organization’s bottom line and your relationships with new and returning users.

Tailored customer experiences increase short-term revenue

A personalized website can increase revenue in the short term by encouraging visitors to purchase more products or services. This can play out in a few ways.

First, personalizing a site visitor’s experience based on their purchase history allows you to upsell and cross-sell. For example, consider a product that requires a subscription, like a streaming service. A visitor who has already signed up for a basic subscription may be more likely to upgrade to a premium tier, compared to someone who has yet to subscribe. Therefore, it’s more effective to upsell the existing subscriber by encouraging them to upgrade, while guiding the new visitor to sign up for the basic tier. 

Similarly, if a customer’s past purchases include specific items from your company (e.g. a razor), there may be an opportunity to cross-sell them with a complementary item (e.g. shaving cream). 

Tracking a visitor’s browsing behavior also enables you to provide personalized recommendations, helping you effectively deliver on customer needs. A customer hunting for the perfect green T-shirt, for example, might be more likely to make a purchase from ecommerce businesses that notice they’re searching for green clothing and recommends green shorts and sweaters, as well, compared to a site that doesn’t take their previous behavior into account.

Using customer data to create tailored experiences can increase short-term revenue by increasing the likelihood that a customer will make a single purchase. In the long term, it also increases the likelihood that a customer will upgrade their subscription or return for future purchases.

How much can you expect your revenue to grow using these tactics? Estimates vary, but a McKinsey research suggests personalizing a website can increase revenue by 5 -15%. This effect is particularly strong for digitally native companies, which report generating up to 25% of their revenue from website personalization.

Catering to users’ needs and preferences helps forge lasting relationships

While personalization can generate short-term gains, a successful strategy should sustain revenue generation in the long term as you continue to forge relationships with your customers. Keep an eye out for these indirect indicators of long-term success.

Engagement 

Browsing a website that has been tailored to the user creates a sense of familiarity. When your website greets a visitor by name and suggests content based on their affinities, the visitor is more likely to spend time discovering your business’s offerings and getting to know your brand, decreasing your website bounce rate.

Customer loyalty and retention 

Customers value the personal feel of customized web content enough that it translates to brand loyalty. Surveys suggest that 78% of consumers are more likely to make a repeat purchase from a brand that personalizes its communications and services, and 62% of consumers said they would be less loyal to a brand that showed them a non-personalized website. 

This becomes more evident as personalization improves over time. For example, Netflix and Spotify use search and streaming history to recommend new shows or music to their users. The more the users interact with these products, the more data machine-learning algorithms have and the better the recommendations become. Better recommendations help foster deeper relationships between the brand and the customer, decreasing the likelihood of a customer churning.

Customer lifetime value 

Customer lifetime value (CLV) represents the total revenue a company expects from a customer over their relationship. Personalization is key to increasing CLV by fostering loyalty and engagement. When brands cater to individual preferences, customers feel understood, which strengthens emotional connections and boosts satisfaction. This can lead to repeat purchases and higher spending.

Referrals

Engaged customers are more likely to recommend a brand to others. In a McKinsey survey, 78% of respondents said they were more likely to recommend a business to friends and family if it personalized its offerings and digital experiences. 

Personalization keeps websites relevant

Crafting an individualized web experience is quickly becoming table stakes: A Salesforce report found that 64% of customers expect their experience with a website to be tailored based on past interactions. Therefore, websites that don’t personalize their messaging and experiences across touchpoints based on real-time data risk being seen as anachronistic, making the business less competitive and reducing its market share. 

A well-designed personalization strategy helps stretch marketing budgets

There’s no denying that a well-run personalized marketing campaign takes both strategic planning and powerful technology. But there’s reason to believe that personalizing a website actually reduces marketing costs overall because once your program is up and running, it’s easy to scale. 

When personalization converts more site visitors to customers, the total marketing cost per customer often drops. McKinsey estimates that personalized marketing reduces customer acquisition costs by up to 50% and helps marketing budgets go further by increasing spending efficiency by 10-30%. 

Start reaping the rewards of personalization today

It’s important to remember that building a personalization program is not an overnight effort or a one-and-done project; it’s a consistent practice that takes time, requires iteration, and must be nurtured. The wrong kind of personalization can feel off-putting rather than friendly, but with the right strategy and powerful tools, you’ll not only delight and convert customers — you’ll also start witnessing the positive returns of your efforts. If you’re interested in learning more about creating a highly personalized website experience, get in touch with our team today.