How to Use AI for a Personalized eCommerce Experience

Personalization is a powerful way to speak directly to current or future customers, which can work wonders for increasing conversions and revenue. Now, AI and personalization can work together to maximize the benefit of speaking to your customers while also reducing the manual labour involved.

Keep reading to learn more about how you can leverage AI to personalize several aspects of your eCommerce business.

What Exactly is Personalization in eCommerce?

Let’s step back from AI and focus on what exactly we mean by personalized ecommerce. Personalization is an overarching term describing any activity that gives visitors and customers unique content or recommendations based on what you know about them.

Something as simple as using a customer's name in an email marketing campaign is personalization. More complex examples use purchase history, stated preferences, or site behaviours to create a custom experience.

Now, new advances in artificial intelligence and applications to web applications have allowed eCommerce businesses to take the next step in providing personalized experiences to every new or prospective customer.

Personalization helps enhance customer engagement, lifetime value, and average order value and ultimately provides a better customer experience. Below, you can see how Varos compares your results directly to your peers so you can gauge the success of your personalization efforts.

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Top Personalization AI Use Cases in eCommerce

Personalization isn’t a brand new concept, but the rapid advancement in AI has enabled several new use cases to provide a personalized experience to your visitors.

AI eCommerce personalization is made possible by a range of specific apps. Even though ChatGPT may be the most popular AI app, there are several other apps specific to your needs to consider. We’ll be taking a general look at use cases that can be made available by a variety of apps.

Using the right tools can do wonders for creating a better customer experience, increasing conversions, and boosting average order value. Let’s explore the top use cases for using AI to enhance personalization.

Product Recommendations

Recommendations are a proven way to generate more sales from current and potential customers. AI-enabled apps can analyze user behaviour and other specific data to make targeted suggestions about products they might be interested in.

Depending on your store, you can use this capability to provide personalized product bundles based on both browsing history and purchase history. 

Additionally, you’re more likely to keep new visitors around and reduce abandonment rates by guiding customers directly toward products they may be interested in. You’ll be able to use everything you know about visitors to recommend the perfect products that they’re most likely to buy.

Dynamic Pricing

Major online stores have used dynamic pricing for years, but now advanced dynamic pricing allows eCommerce sites of all sizes to use this pricing strategy.

Dynamic pricing is a powerful strategy that uses a range of available data to determine how to best price your products. Data includes existing inventory, competitor pricing, and other data made available by your chosen app. 

The AI algorithm evaluates all available data to determine the ideal price that will be appealing to consumers while generating the most revenue for your business. Additionally, pricing can be determined specifically for each customer, which can help improve overall revenue and profitability. 

Advanced Cross-Selling and Upselling

Cross-selling and upselling are both powerful ways to increase your average order value (AOV) and conversion rates. Both of these practices have been around for a few years and have some key differences to touch on before we explore AI advancements.

Upselling is when a customer is offered a more expensive product than the one they’re considering or about to purchase. 

Cross-selling is offering a complementary product to what the customer is about to purchase, such as offering athletic socks to someone about to buy new running shoes.

How has AI changed how these practices are handled? eCommerce sites can leverage available data to decide when to cross-sell or upsell and determine exactly what products should be offered.

Older methods were based on the specific product the customer was considering. Now, you can take that a step further by involving the customer in the algorithm. For example, an existing customer that typically buys low-value products and has ignored upsell offers in the past can instead cross-sell and increase their AOV.

AI Voice Assistants

Allowing visitors to use voice assistance can create a hands-free shopping experience while also allowing for enhanced accessibility options.

Voice assistants have been around for a while but have usually been disappointing. Now, as advancements in natural language processing (NLP) technology, next-gen tools can provide a tremendously better customer experience. These new voice assistants can allow users to:

• Help navigate your site and find specific products
• Provide support with a chatbot that talks back
• Give customers an efficient way to browse your site
• Gain a competitive edge against your competitors who do not offer AI voice assistants

For some customers, offering an effective AI voice assistant can go far in building loyalty and keep them coming back. As a result, you might see a boost in your 12-month lifetime value.

Below, you can see how Varos will help you understand if implementing specific changes is improving your LTV in comparison to your peers.

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Personalization Marketing and Promotions

Marketing and promotions were one of the first ways we saw personalization in the eCommerce space. Asking a customer for their name when they sign up and then using that name in marketing communications is a basic but still effective way to speak more directly to customers.

When it comes to AI content personalization, the AI-enabled email marketing platform can use available customer data, like past behaviour and demographic details, to create hyper-targeted campaigns that speak to those individual customers.

Your campaigns can promote specific products, unique discounts, or provide necessary information to help nurture leads and encourage customers to return. Some platforms are also emerging that can even write individual emails, but you should still proofread them before they go out.

Optimizing Your Homepages

Homepages have been generally the same for every visitor since the beginning of eCommerce. We saw a few dynamic elements start to emerge pretty quickly, such as showing best-selling products on the homepage, but those elements weren’t based on the user viewing the page.

Fortunately, new tools can change that. Leading-edge AI solutions can customize your homepage based on the specific user. 

You might still want to show best-selling products for brand-new visitors, but returning visitors can be shown the products and categories they were last browsing. You can go even further with the returning customers and leverage past order history to determine what customers see on your homepage.

Which AI Tools Should You Use?

You can find tools available for most of the above use cases, but should you buy them all and put them to work? How do you know which of this new wave of AI-enabled tools is worth your time and changing your eCommerce strategy?

A few ways you can navigate available tools are by asking yourself the following questions:

• Is the tool solving a specific problem you have? Will it clearly and demonstrably improve key aspects of your business?
• How long has the tool been available? Has it been used by other stores that had positive experiences with it? 
• How much does it cost? How much profit or revenue will it likely generate to produce a positive ROI?
• What does installation look like? Is there a ready-made plugin for your eCommerce platform, or will the setup process be time intensive and require a developer?

All of these questions are branched off of one underlying point — don’t only focus on AI hype and take a business-minded approach. Otherwise, you run the risk of paying for too many tools that likely have monthly fees and increasing operating costs that may not increase revenue. 

By that same token, if you adopt five different AI tools at the same time, how do you know which one is increasing your LTV? Additionally, you might not be taking the time to fully integrate them and leverage them effectively when you make so many changes at once.

It’s well worth adopting one tool at a time, getting it set up, exploring all available options, and measuring the KPIs that are most relevant to the specific tool. As an example, is a cross-selling AI tool increasing AOV?

Compare Your Progress with Real-Time Competitor Benchmarks with Varos

Gauging the results of your personalization efforts can be a challenge and relies on accurate data tracking. Your chosen eCommerce platform will likely have analytics available, as will your site analytics platform.

However, you’re making decisions in a vacuum when only relying on past results. You may see an increase in lifetime value, which is great, but your LTV may be lacking compared to your peers.

That’s why Varos developed a unique platform to help you understand the full context behind your results. We provide real-time competitor benchmarks so you always know how you compare. From there, you can keep exploring ways to enhance your AI personalization usage.

Below, you can see how Varos compares your Shopify results alongside a tiered breakdown of your competitors. You’ll always know the big picture so you can make tactful changes to pull ahead.

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Are you ready to stay ahead of the competition with real-time eCommerce benchmarks? Sign up with Varos today or schedule a demo to learn more.

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About the Author

Yarden Shaked

Co-founder & CEO at Varos

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