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ROI on advanced personalization: $20 return on $1 investment, new report finds

A new report released Monday from The Relevancy Group and Liveclicker has taken a look at revenue from advanced personalization tactics.

Other key findings from the report, “The Value of Personalization Optimization for Retailers,” include:

  • Nearly 90% of retail marketers are using personalization, but few are using advanced tactics.
  • Those using advanced personalization see up to a $20 return on every $1 invested.
  • Highest returns came from real-time personalization.
  • Marketers cited top challenges as “getting appropriate IT help” and concerns around privacy.

Types of personalization tactics used among US retailers

The image below shows marketers’ use of various personalization tactics. In general, the tactics become increasingly sophisticated from left to right. For each tactic, marketers were asked to select whether they “currently use,” “plan to use within the next 12 months,” or have “no plans to use.”

So for something as basic as “first name,” 86% of marketers currently do this. For more complex tactics such as “offers by weather” and “countdown timers,” however, only 43% and 41% (respectively) of marketers do these.

The report also includes a handy pyramid showing tiers of what classifies as basic or advanced personalization. The “advanced” category includes things like real-time data, live inventory data, and rules-based personalization.

Commenting on the findings, David Daniels of The Relevancy Group said:

“Customers have come to expect basic personalization. To be truly compelling, retailers have started to step up their game with real-time advanced personalization, and math-based personalization using click behavior and inventory data. Our research finds that these advanced tactics absolutely pay off in the form of real revenue for the company.”

Indeed, the report found that those “advanced” tactics yielded as much as a twenty dollar return on investment for every dollar spent.

Challenges for personalization

According to these findings, the biggest challenges to personalization are:

  • “Having adequate IT support for data extraction”
  • “Concerned with the security of third-party provider”

Other concerns cited include “lack of budget” and “difficulty accessing customer data.”

On the bright side, the least commonly cited challenges were “have not been able to find a suitable technology” (16%) and “don’t see the value” (14%).

So if marketers struggle to keep up pace with advanced tactics, at least they might see value in doing so. And, at least the technology might exist to empower it.

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