Is personalization the future of retail?

Imagine a retail world where every customer interaction is uniquely tailored, and shopping experiences are as individual as the customers themselves.

With 84% of customers saying that being treated like a person — not a number — is key to winning their business, personalization isn’t just a marketing afterthought. Instead, all signs point to it as the future of retail.1

In this guide, explore how personalization may influence retail success and discover tactics to engage customers, drive conversions, and foster loyalty.

What is personalization?

Personalization refers to the strategy of tailoring products, services, and the overall shopping experience to meet individual customer preferences and behaviors.

Leveraging data analytics and shopper insights, businesses can begin to personalize every step of the customer journey, from targeted ads that grab a casual browser’s attention to product recommendations for upselling.

Personalization not only enhances the shopping experience but may also increase engagement and loyalty, which can lead to improved business outcomes.

Emerging customer expectations in retail

Thanks to shifting trends and advancements in data collection and technology, customer expectations are constantly evolving. Here are a few examples:

  • More personalization. Approximately 71% of consumers expect companies to deliver a personalized experience.2
  • Convenient and fast delivery options. When it comes to shipping and delivery, free shipping and delivery speed are the top two factors that influence a shopper’s decision to shop online from a particular retailer.3
  • Sustainability and ethical practices. Compared to older generations, Gen Z and Millennial consumers are 27% more likely to purchase from a brand if they believe it cares about its social and environmental impact.4
  • Seamless omnichannel retail experiences. From virtual shopping to in-store pickup options, omnichannel retail solutions can help companies increase revenue by an average of 179% more than companies that do not adopt such strategies.5

The power of data in personalization

The foundation of effective personalization in retail lies in data collection. This may present in many forms, such as:

  • Online channels. Customer accounts and online purchasing histories offer rich information on shopping patterns and preferences.
  • Browsing behaviors. Analyze customers' website interactions (like page visits and item views) to learn more about their interests.
  • Customer feedback. Surveys and feedback forms can provide direct insights into customer preferences and improvement opportunities.
  • Social media interactions. Engagement on social media platforms, including likes and comments, offers valuable detail into the types of content people find most engaging and relevant.

Crucially, any collected data must be gathered and handled securely, respecting customer privacy and adhering to data protection regulations. While 90% of consumers are open to sharing their behavioral data for a better shopping experience, 62% also say they’re more worried about their data being compromised than two years ago.1

Personalization’s use for keeping customers engaged

Personalization plays a critical role in maintaining and enhancing customer engagement. By making the shopping experience more intuitive and enjoyable, customers may be encouraged to explore more products, spend more time on a site, and, ultimately, make more purchases.

For example, personalization helps businesses:

  • Provide customized recommendations. By analyzing past purchases, browsing history, and preferences, retailers can offer curated product recommendations to match each customer's unique needs and desires, saving them time and effort.
  • Deliver tailored marketing campaigns. If data shows a customer frequently purchases eco-friendly products, for example, a business can highlight its sustainability initiatives in communications with that customer.
  • Enhance customer support. Support agents can be prepared with relevant information and suggestions to provide quick and more relevant help.
  • Create personalized discounts and offers. Retailers can send targeted discount offers or exclusive promotions based on purchase or browse history to increase the likelihood they return.

Personalization trends to consider

New martech innovations and e-commerce trends are constantly expanding the possibilities of personalization. Here are some e-commerce personalization trends to look for:

  • AI-driven personalization. AI and machine learning can analyze customer data and support unique product recommendations and dynamic pricing strategies.
  • Personalized rewards. Approximately 55% of global consumers join loyalty programs for personalized incentives.6
  • Privacy-conscious personalization. In response to increasing privacy concerns and the phasing out of third-party cookies, brands are shifting focus to first- and zero-party data for personalization strategies. Today, 37% of businesses exclusively rely on first-party data for personalization compared to 31% in 2021.6

Create seamless shopping experiences through personalization

Effective personalization isn’t just confined to isolated touchpoints. Instead, it can span the entire customer journey — from initial discovery to long-term retention.

By catering to individual preferences and behaviors at each stage, personalization can create a more intuitive and seamless customer experience.

Get started with these strategies:

  • Web experience. Personalizing the web experience involves dynamically updating the layout, content, and navigation of a website based on user behavior and preferences. For example, if a customer regularly views a specific category, those products could be highlighted more prominently on the homepage’s content blocks.
  • Pricing. Dynamic pricing strategies, where prices are adjusted based on customer data like past purchase history or browsing behavior, can make offers more attractive to individual customers.
  • Images. Feature lifestyle images that align with customers' interests or demographics.
  • Product recommendations. Spotlighting products based on a customer’s previous purchases or viewed items creates a more unified shopping experience.
  • Checkout experience. Two-thirds of consumers surveyed said that a positive checkout experience was very or extremely influential on whether they would return to an eTailer for repeat purchases.7 Consider using personalization to streamline the checkout process, such as by simplifying payment options according to their preferences.

Enable a personalized experience with PayPal

Businesses can build a highly personalized customer journey with PayPal, complete with a smooth and hassle-free conclusion to every purchase.

Businesses that offer Pay with PayPal not only benefit from the trust and reliability of a global payment platform, but they can also provide fast and secure payments that are customized to customers’ needs.

Learn how PayPal can help boost your growth and reduce costs with game-changing product innovations that build intelligence, personalization, and speed into every consumer touchpoint—from discovery to doorstep.

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