The State of Testing & Personalization for Retail

NEW YORK, July 16, 2014 /PRNewswire/ -- Online marketers for retail brands often perceive and organize their personalization and testing strategies separately. They go so far as to create positions responsible for each within a team, wasting resources and creating unnecessary divisions. Even retailers who don't separate personalization and testing as job functions still fail to understand these two crucial optimization pieces holistically. 

As further indication that retail marketers perceive testing and personalization as distinct, consultants are faced with the following responses when proposing a unified optimization solution:

"We're interested in testing, but we don't believe in personalization."
"We're interested in personalization but we are happy with our current testing strategy."
"We're interested in both."

The answer is rarely (if ever), "Don't they go hand-in-hand?"

Herein lies the problem. Brands decide that they know what works best (or have a strong enough idea) and proceed to target customers with the personalized content they believe will be most effective. Whereas the testing culture suggests that brands must try and compare different content to see what works best.

The truth is, these are contradictory perspectives.

When Personalization & Testing Are Harmonious

Effective personalization builds on insightful testing. Goal-driven omni-channel strategy determines your customers' preferences to improve their experiences. The right testing increases the chances your customers will convert. When it comes to e-commerce for retail organizations, conversions drive revenue. It is imperative to test different content and generate a comparative analysis to determine which content yields the best results.

Unfortunately, many brands or retailers understand personalization as an opportunity to target visitors while omitting the need for test-generated empirical data to inform their efforts. They might instinctively decide that visitors will prefer a specific piece of content, for example a certain pop-up, while another subset, e.g., the user that navigates to your e-commerce site via Pinterest, will respond well to a personal offer. But there must be statistical significance for your personalization efforts. In essence, personalization will be ineffective without first testing to determine your visitors' preferences.

The Opportunity Beyond "Winner-For-All"

To effectively unify your testing and personalization efforts, you must first design a test that includes variants determined by offline analytics. Your foundational tests should identify a winner-for-all, in other words, the experience which is preferred by the largest number of visitors. By testing two or three experiences against one another, you can find out which one drives the highest overall conversion. The mistake many retailers make is stopping here. It is important to see which content drives the highest overall conversion, but the other visitor segments must not be neglected. To achieve an optimized and enjoyable experience for the largest number of visitors and increase the likelihood of their return, brands must target visitor segments which fall outside the winner-for-all category and serve their optimal experiences. If the majority of users who prefer the winner-for-all experience amounts to just a bit more than half of your visitors, you're ignoring the potential to optimize the experience of up to 49% of your visitors.

So how do you optimize for the "anomalies?"

After identifying that there are visitors who do not prefer the winner-for-all, as well as the characteristics of these visitor segments, then you have begun to identify the optimal experience for each of the aforementioned groups. Ideally, these visitors and their responses to variants will be different enough to meaningfully personalize their experiences.

Understanding a Unified Approach

Altering your understanding of testing and personalization is a matter of shifting the way an organization thinks about customer experience optimization. It starts with designing tests made up of variants you think will impact conversion rates. The challenge, then, is focusing your personalization efforts on different subsets of visitors. Optimization is not about the best overall experience. The majority of your organization's testing and personalization efforts must be focused on which experience is best for a given group (or several different groups). For personalization efforts to be effective, organizations need statistical significance that is determined through focused, empirically driven testing. It's about which variant is best for each visitor's preferences.

Retailers cannot afford a myopic approach to personalization. Consultants see first hand the damaging separation in both understanding and practice of testing and personalization. Brands must recognize the opportunity available to them. Testing is that opportunity. Determining how and why one experience may be better or worse based on a visitor's preference is the best way to define your hypothesis and continue to test to ensure you're optimizing customer experience, not for most--but for many. When it comes to digital transformation for retailers, customer experience optimization that is genuinely customer-centric is fundamental.

It's time to ask yourself…

1. Are your personalization and testing efforts (or even positions) mutually exclusive?
2. Is the personalization of your e-commerce experience based on intuition or tests?
3. Do you test for more than a winner-for-all?
4. Do you know your various customer segments?
5. Does your content drive the best possible conversion results?
6. Are you leaving dollars on the table?
7. Is it time to shift the way your organization thinks about customer experience optimization?

About Maxymiser

Maxymiser empowers brands to transform every digital interaction into seamless, relevant and engaging customer experiences with its cloud-based testing, personalization and cross-channel optimization solutions. Known for serving nearly 10 billion experiences each month worldwide, Maxymiser leverages customer data to dramatically boost engagement and revenue, while also driving long-term business value. Combined with a team of vertically focused digital experts, Maxymiser's Customer Experience Optimization suite quickly delivers measurable results to every client through A/B and multivariate testing, segmentation, behavioral targeting and product recommendations for the web, mobile, social and email.

Maxymiser works with some of the world's most iconic brands, including HSBC, EPSON, Avis Budget EMEA, Virgin Media, Alaska Airlines, Harry & David, Progressive and Office Depot. Founded in 2006, Maxymiser is headquartered in New York with offices in Chicago, Edinburgh, Dusseldorf, London, Munich and San Francisco. To learn more about Maxymiser, please visit www.maxymiser.com and connect with us on Facebook, Twitter and LinkedIn.

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