While website optimization, achieved through A/B testing and various research methods, is increasingly a common approach, personalization is still on the rise. We're certainly seeing more companies embrace conversion rate optimization (CRO), testing, and research. But when it comes to personalization, it's safe to say that most organizations haven't fully exploited its potential yet. This article discusses why a strong CRO program is essential for personalization and how these two practices can benefit from each other.
The most important distinction between optimization and personalization lies in their respective goals. Optimization focuses on improving the user experience for all website visitors, while personalization focuses on tailoring the experience to specific segments. The crucial difference lies in how hypotheses are formulated. Personalization requires a clear understanding of the target group, which goes deeper than general A/B tests that target the entire population. While the latter also takes into account visitors' needs and preferences, it's less specific.
Another difference lies in the implementation process. After an A/B optimization test has proven successful, the changes can be implemented directly on the website. Personalization, on the other hand, depends on segmentation via a Customer Data Platform (CDP). That is why a hard-coded implementation is often impractical and personalization continues via the CDP, because it depends on creating visitor profiles and segments to effectively target them.
Despite the different goals, the working methods are similar, or at least they should be. Learning through testing is fundamental to both approaches. Hypotheses are based on theory or research, qualitative or quantitative. A test plan is formulated with clear KPIs, demographic target groups and the expected duration of the test. A test is then developed, launched and followed by a thorough analysis. However, the extent to which this process is followed in personalization is a matter of debate, as we often see that this is insufficient.
Optimization and personalization must work together. As illustrated in the pyramid below, we consider personalization to be the ultimate phase in e-commerce. Prior to personalization, it is necessary to lay a solid foundation of usability, which is achieved through optimization. Even the most sophisticated personalization efforts can't save a low-performing website. Defining the baseline for usability can be somewhat elusive, but it's essentially about making sure a website is error-free, best practices are implemented, and major obstacles in the checkout process are addressed. In addition, this baseline includes developing a comprehensive understanding of customer wants and needs and the factors that prevent conversion.
When an organization is willing to focus on both overall optimization and creating personalized experiences, it becomes essential to ensure that these activities are in sync. For example, let's imagine that we perform an A/B test on the product page for all website visitors and that it does not produce the expected improvement. However, the analysis shows that there are variations in test performance between different segments (such as devices, number of pages viewed, new/returning users, and traffic sources). This situation opens the door to personalization, where the same adjustment on the product page can be tested again on a specific segment. The opposite scenario is also plausible; if a personalization A/B test proves successful within a specific segment, it can be considered for deployment across the entire website, although with the need to perform initial tests.
In addition, alignment is crucial to prevent conflicts between traditional A/B tests and personalization A/B tests that may unintentionally run at the same time. While this seems simple, things get messed up easily when different teams or individuals work together.
Earlier, we emphasized that the practices between optimization and personalization are, or should, be very similar. The motivation behind this article, however, is the observation that these agreements are often not true in many companies. CRO methods, such as formulating well-founded hypotheses, conducting user research, doing SRM checks or conducting in-depth test analyses, are not standard procedures within personalization projects.
A bigger problem is the fact that systematic A/B testing is not yet standard practice in many organizations. Personalizations are often launched without validating their impact or testing the optimal way to visualize personalization. In addition, we've noticed that some organizations are running random personalization experiments without a clear strategic framework behind it.
When starting with personalization, it's crucial that the organization has a strong CRO program. This means not only that there must be a well-defined process that includes research, ideation, test development and analysis, but also that there must be a clear strategy. This strategy should indicate how optimization and personalization can contribute to achieving business goals. If such a strategy is not developed, there is a risk that considerable time and effort will be invested in things that may not ultimately contribute to overall success. While individual personalization efforts can be effective, when all personalizations work together towards a common goal, the chances of better results are greater.
Many organizations are increasingly using CRO, which includes both optimization and personalization. However, there is room for improvement in how organizations approach this. The critical factor is understanding the distinctions and subtleties of personalization while maintaining a process similar to traditional CRO. The most important thing is that personalization does not stand alone, but integrates with optimization and picks up where the other person stops. All of these efforts must be aligned with a long-term strategy that uses experimentation to contribute to business goals.
