72% of executives say artificial intelligence and machine-learning technology are essential or important to executing their personalization strategy, according to a survey conducted by Forbes Insights and Arm Treasure Data.

Personalization is increasingly important to merchants seeking to engage shoppers, according to a new report, “The Clear Path to Personalization.” The report is based on a survey of 200 retail marketing executives conducted by Forbes Insights and Arm Treasure Data.

40% of respondents said that adding personalized elements on their websites and adopting personalized marketing tactics helped boost their sales and average order value, according to the survey, which did not give specific figures for how much the sales or average order value was boosted. Plus, 37% of respondents credit increases in sales and customer lifetime value to personalized product or content recommendations. And 35% have seen increases in transaction frequency as a result of their personalization strategy.

For the purposes of this survey, personalization was defined as “meaningful customer interaction and dialogue” across digital and non-digital channels, including email, website engagement, online advertising and in-person events, according to Erik Smith, marketing director at customer data platform company Arm Treasure Data. “This might include a retailer emailing an exclusive offer to a customer for a product or brand they commonly buy or a brand displaying specific products on its homepage based on a customer’s previous visits,” he says.

Despite those potential benefits, many organizations are still in the early stages of adding personalized features to their websites due to technical challenges, such as consumer data quality issues and a lack of resources, according to the survey. Thus, 59% of those surveyed say any personalization-related changes are at least a year away, but 41% say it is a high priority.

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Of those surveyed, 74% said that less than 10% of their marketing budget is dedicated to personalization. But 85% want to commit at least 20% of their marketing budget to it in the future, although the survey did not provide a time frame.

“As the internet makes interacting with massive numbers of customers so easy and cheap, companies should really move all the interactions with customers online and record all the data. You don’t need to make compromises anymore,” says Mark Zeng, chief of staff and strategy advisor at Chinese marketplace giant Alibaba Group Holdings.

Artificial intelligence, or machine-based technology that takes the place of human interaction, remains an area of untapped potential, at least for the survey respondents. 60% are still in the early stages of exploring or adopting AI-based personalization applications, but did not specify the types of AI or machine learning those surveyed want to adopt. However, interest in using AI is high: 72% say AI and machine learning technologies are essential or important to executing their personalization strategy.

However, many believe that AI-based platforms need human assistance. “As a marketer, you can’t just rely on AI. You’re missing the level of personal engagement that will hopefully take that sales cycle and bring it down to a manageable time frame,” says Mark Nardone, executive vice president of marketing and business development at marketing agency PAN Communications. “AI’s the engine, and the human touch is the gasoline that actually makes it go.”

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Aside from adopting AI, 56% of respondents are establishing an expert personalization team; 55% are working to find ways to better use their consumer data; and 50% are identifying channel-specific areas to focus their personalization efforts, such as social media, email or on the website.

The report also found that loyalty programs and mobile apps are extremely important channels for personalization: 13% of respondents focus personalization on loyalty programs and incentives, 12% on mobile apps, 9% on shopping cart personalization and 5% on email.

Ultimately, survey respondents have several goals for personalization:

  • 77% want ongoing customer relationships, such as loyalty, repeat purchases and customer retention.
  • 68% want increased basket size and sales leads.
  • 61% want to increase brand awareness and social media presence.
  • 59% want better conversion rates and sales.
  • 55% want better brand engagement.

Personalization is “not about pace—it’s about quality,” Nardone says. “It takes time to analyze all of the great data they have at their fingertips. Take a deep breath, make sure you’re being strategic with your data, you’re analyzing it the right way and you’re putting it into motion in a way that you know is going to reach the customer in the best way across any channel.”

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