What Retailers Can Learn from Spotify and Netflix

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Some critics bemoan personalization as a practice consumers don’t want or even as one that undermines trust due to creepiness. But beyond advertising, personalization delights consumers every day as they surf curated entertainment options on apps like Spotify and Netflix. 

Peter Messana, CEO of Searchspring, believes retailers have a lot to learn from their counterparts in entertainment. And, he argues, consumers already expect the same level of convenience in retail. 

What should retailers emulate in Netflix and Spotify’s personalization practices?

In the past, consumers all had the same poor user experience when it came to entertainment — they’d watch the same TV Guide rotation and have access to the same basic music stores. But now, streaming sites have given users a better experience where the content they want is only a click away (if even!). 

Both the “Because you watched…” section on Netflix and the curated “Daily Mix” playlists on Spotify guide users to discover new content they’re sure to enjoy based on previous behavioral patterns. The user experience on these platforms is now easier to use, more organized, more personal, and driven by data. With this control and customization in their streaming landscape, consumers are now demanding this level of connectivity from their favorite retailers, too. 

Brands can learn a lot from Netflix and Spotify as they strive to improve the shopper experience. An innovative approach to retail starts with a deep analysis of shopper profiles and ends with a fully-personalized commerce journey that engages the shopper at every touchpoint. 

Retailers that successfully emulate the personalization practices of these popular streaming sites achieve great results. We’ve seen personalization lift conversion rates by 18% for a fashion retailer and generate seven times higher revenue per visit for an entertainment retailer. These examples are not rare — personalization frequently leads to improvements in basket size, customer loyalty, and ultimately profits. 

What should retailers change to better personalize their own communications?

Personalization is an essential piece of the ecommerce puzzle, not just an added bonus. Custom experiences should occur at all touchpoints, including on the homepage, within search results, via email, and at checkout. 

Personalization takes many forms including recommendations inspired by the Spotify or Netflix model, as well as custom approaches to fulfillment and pricing. For example, if a customer always ships to their home address, the retailer can showcase an item’s expected delivery timeline on the ecommerce homepage. This tactic discourages cart abandonment and improves shopping efficiency. 

Are there any retailers already doing this well? What do they do that impresses you?

Peltz Shoes has done a great job personalizing its ecommerce website. They specialize in hard-to-find shoe sizes, carrying everything from a women’s size four to a men’s 17 and both super narrow and extra wide widths. 

With such a large selection, Peltz Shoes is an example of a retailer that needed to personalize the ecommerce experience to shorten a shopper’s time to purchase and improve sales. Since implementing personalized site search, Peltz Shoes improved its conversion rate by 43%.  

What are the barriers to better personalization in retail?

In my experience, the biggest barriers to personalization are a lack of data and siloed data. 

Personalization is based on a detailed understanding of each shopper. Without sufficient data, or the tools needed to analyze it, retailers struggle to create a true one-to-one personalized experience. 

Personalization errors also occur when data is siloed. For example, if the retailer is only reviewing transaction data and ignoring behavioral patterns, the personalization strategy has limited success. 

A data-driven, holistic view of the customer is required for personalization in retail. 

Joe Zappa is the Managing Editor of Street Fight. He has spearheaded the newsroom's editorial operations since 2018. Joe is an ad/martech veteran who has covered the space since 2015. You can contact him at [email protected]