Hyper-personalization – The next level in e-commerce

Hyper-personalization – a definition

Hyper-personalization is a marketing strategy that interprets customers' intentions in detail and tailors content to them. It reaches shop visitors on a much deeper level than the first stages of personalization, as the respective content is not only adapted to the individual preferences of a specific user, but also to their intentions and buyer type, and this in real time: the right product at the right time and at the right touchpoint. This is why it is also referred to as 1:1 personalization. It is also often referred to as one-to-one marketing, as this refers to 1:1 personalization or hyper-personalization. An example of this is a newsletter with 1:1 personalized cross-selling recommendations, in which the header image shows a product from the customer's favorite brand, for example, and reaches the customer at the right time.

Stay up to date on personalization: Sign up for the Epoq newsletter. Register now!

The aim is to use 1:1 personalization to attract customers' attention and thus generate competitive advantages. This plays a particularly important role in e-commerce, because there are a large number of competitors offering similar products and services.

With each level of personalization, the depth of personalization and the scope of personalized customer touchpoints increase.
(Source: Own representation)

Personalization vs. hyper-personalization

Personalization in e-commerce has been a familiar concept for many years: emails that address customers personally and newsletters with personalized content are among the most important strategies for email marketers to increase engagement rates. Personalized product recommendations and search results are also important pillars for higher sales in online retail. To offer this type of content, you need pseudonymized data on your customers' click and purchase behavior. Artificial intelligence helps you evaluate this data. This allows you to get to know the wishes, likes, and preferences of your shop visitors and respond accordingly.

Personalized search results are one example of how to engage customers individually with relevant content.
(Source: Own representation with screenshots from peek-und-cloppenburg.de)

Hyper-personalization is a further development of personalization. Instead of using historical data for product recommendations, for example to display recommendations such as "recently viewed" or products of the learned size, you collect data about your customers' purchasing behavior, location, and preferences in real time. In addition to the personal preferences of shop customers, hyper-personalization also takes into account the user's intention (e.g., a customer wants to browse) and the type of buyer (e.g., bargain hunter, bulk buyer, etc.). With the help of artificial intelligence and machine learning, as well as data from IoT (Internet of Things) devices where applicable, you can analyze this information to identify patterns and correlations.

The results then serve as the basis for highly personalized recommendations and offers, which are automatically displayed to the respective customers. The PAYBACK points system, for example, accesses the location of app users to show them coupons for nearby stores.

How hyper-personalization works

Hyper-personalization thrives on data about purchasing behavior, individual preferences, and interests, as well as the calculation of intent, user type, and preferences based on real-time interaction between the website and the user. For its successful recommendation engine, Amazon analyzes order history, all products that customers have added to their shopping cart or rated positively or liked, as well as products that other customers have liked and purchased. From this, artificial intelligence ultimately determines suitable recommendations for the respective shop visitors.

State-of-the-art technologies are needed to analyze the huge amounts of data. With the help of machine learning, artificial intelligence can make increasingly accurate predictions. IoT-enabled devices also provide support: the Malibu Rum brand, for example, has developed a smart bottle that works with NFC technology. Customers simply hold their smartphone up to the bottle to interact with the company in the store or at home.²

Due to current data protection regulations, not all types of individual customer data may be collected. However, even pseudonymized facts and figures can help to develop hyper-personalized offers.

Core elements of hyper-personalization

Three factors are extremely important for hyper-personalization to work successfully in your online store: engagement, relevance, and trust. We will take a closer look at these three aspects below:

• Engagement: Huge amounts of data are the necessary basis for hyper-personalization. In order to collect this data, you need the engagement of your customers. Only when they willingly disclose their data can hyper-personalized offers be made. If they receive individually tailored content in return, this increases customer loyalty.
• Relevance: Customers of your online store will only buy from you again if the personalized recommendations, search results, etc. are actually relevant to them. For example, a 2019 Accenture study found that 87% of consumers surveyed like to buy from brands or retailers that truly understand them and their interests.³
• Trust: Ultimately, trust is important when it comes to sensitive data. Customers should know exactly what types of data you collect, what you use it for, and who else besides your company has access to it. If you manage to create positive shopping experiences for your store visitors, this will increase their satisfaction and thus their trust in your brand.

Advantages of hyper-personalization in e-commerce

One-to-one marketing offers you numerous advantages, which we explain here.

Well-known companies are focusing on hyper-personalization

Some well-known brands have been using the concept of hyper-personalization very successfully for several years. These include Amazon, Starbucks, Spotify, and Netflix, for example. Here, we explain how they specifically engage their customers with individualized content:

Conclusion: Hyper-personalization is a decisive competitive factor

With the help of hyper-personalization, you can recommend the right products and services to your customers at the optimal time. Your shop visitors will appreciate this individualized service and enjoy shopping in your online store. This will help you retain your customers in the long term, reduce your costs, and, last but not least, increase your sales. It will also set you apart from your competitors. The big brands have shown that hyper-personalization is a key factor in success.

Sources: ¹ HubSpot, ² Marketing Insider Group, ³ Accenture, ⁴ Epsilon, ⁵ intomarkets

Frequently asked questions about hyper-personalization in e-commerce