The 2017 State of

Personalization Report
Overview
With total retail sales in the United States set to hit $5.68 trillion
by 2021, the competition for customers has never been higher.1
In The 2017 State of Personalization Report, we explore how
personalization impacts consumer shopping choices, where
consumers demand tailored experiences, what happens when
retailers live up to expectations, and the effects of falling behind.

Consumers expect highly personalized shopping experiences from retailers

and are willing to spend more money when brands deliver targeted
recommendations. Despite those expectations, however, a majority of
consumers are disappointed with the ongoing lack of personalization in their
shopping experiences. On average 71% express some level of frustration when
their experience is impersonal.2

The proliferation of new devices and the rapidly evolving technology

landscape has led to a “personalization gap” in the shopping experience,
and as consumers’ expectations rise, retailers are struggling to meet them.
This report unpacks consumers’ rising expectations about their shopping
experience, examines how expectations vary by age and by marketing
channel, and demonstrates how personalization can drive purchases.

Methodology:
An online survey was conducted with a panel of potential respondents.
The recruitment period was September 8, 2017 to September 14, 2017.

A total of 1,006 respondents 18 years and older and living in the United States
who have shopped online in the last six months completed the survey.

Sample was provided by Market Cube, a research panel company. All were
invited to take the survey via an email invitation. Panel respondents were
incented to participate via the panel’s established points program.

1. eMarketer, Total Retail Sales in North America, by Country, 2017-2021.

2. Segment, The 2017 State of Personalization Report, page 3.

The 2017 State of Personalization Report 2

Key findings:
KEY FINDING 1 KEY FINDING 3
Lack of personalization is frustrating, Personalization drives impulse purchases that
while practice of it spurs loyalty shoppers welcome and revenue that retailers enjoy

On average 71% of consumers express some Nearly half of shoppers surveyed (49%) have
level of frustration when their shopping experience purchased a product that they did not initially
is impersonal. intend to buy after receiving a personalized

44% of consumers say that they will likely become recommendation from a brand.

repeat buyers after a personalized shopping 40% of U.S. consumers say they have
experience with a particular company. purchased something more expensive than they
originally planned because their experience
KEY FINDING 2 was personalized.
Retailers must act fast 85% of impulse buyers were happy with their
54% of consumers expect to receive a purchase, and only 5% of impulse purchasers
personalized discount within 24 hours of actually returned the items they reported being
identifying themselves to a brand (such as unhappy with.
by submitting their email or signing up for an
account), and 32% expect a discount to be issued KEY FINDING 4
after just one hour. There is a wide disconnect between consumer
expectations and their actual in-store experience
of personalization

Brick and mortar stores are the channel most likely

to drive last minute purchases worth more than
$50; however nearly 25% of consumers said that
this channel needs the most improvement with
respect to personalization efforts.

41% of consumers say that they expect

representatives in a brand’s physical store to
know what they have purchased online, yet only
19% have experienced this.

The 2017 State of Personalization Report 3

Table of Contents
Key Finding 1
Lack of personalization is frustrating, while
practice of it spurs loyalty .....................................5

Key Finding 2
Retailers must act fast ...........................................7

Key Finding 3
Personalization drives impulse purchases
that shoppers welcome and revenue that
retailers enjoy.........................................................8

Key Finding 4
There is a wide disconnect between consumer
expectations and their actual in-store experience
of personalization ................................................. 11
Key Finding 1
Lack of personalization is frustrating,
while practice of it spurs loyalty

As expectations rise, brands are struggling to meet them. Stores with

more specific offerings — grocery and niche retailers like lingerie,
eyewear, and makeup brands — are offering more personal shopping
experiences than larger retailers selling broad product arrays.

Personalization across channels:

Consumer expectation vs. actual experience

Large online retailer Big box retailer

EXPECTATIONS 77% EXPECTATIONS 47%
EXPERIENCE 23% EXPERIENCE 12%

Department store Online grocery store / service

EXPECTATIONS 51% EXPECTATIONS 29%
EXPERIENCE 17% EXPERIENCE 31%

Independent or local business Niche online-first retailer

EXPECTATIONS 34% EXPECTATIONS 24%
EXPERIENCE 24% EXPERIENCE 25%

The 2017 State of Personalization Report 5

 The emotional impact
of personalization

A personalized experience leads to happy, loyal customers.

An impersonal experience loses customers.
Percent of people who feel some level of frustration in the following scenarios:

81% Shopping experience

remains unchanged after you
provided negative feedback
76% Gets your name wrong
in brand communication

66% Online shopping cart not

connected to mobile app 65% Mistakes you for
the wrong gender

60% Displays an ad for a product

that you are not interested in

Consumer frustration can quickly turn into disloyal or lost customers.

If the brand gets information wrong when directly marketing to a customer:

37% Will be less likely to make

a purchase from the brand 23% Will unsubscribe from
the brand’s email

20% Will rehash the negative

experience to friends or family 11% Will unfollow the brand
on social media

Personalization has significant positive effects.

After a consumer has a personalized shopping experience, however:

44% Will be likely to

become a repeat buyer 39% Will be likely to tell
friends or family

32% Will be likely to leave

a positive review 22% Will be likely to post
a positive comment
on social media

The 2017 State of Personalization Report 6

Key Finding 2
Retailers must act fast

To generate loyalty and capture higher revenue, retailers have

to act quickly. Consumers demand fast action and personalized
communication in nearly every channel almost as soon as they
choose to identify themselves to a brand (such as by providing an
email address or creating a login). These expectations remain about
the same whether someone eventually purchases a product from
the brand or not.

Percent of consumers that expect the following to happen

within one hour of identifying themselves to a brand:

32+68+B 31+69+B 27+73+B 25+75+B

32%

Get a relevant discount

31%

Get served personalized

online ads
27%

Get personalized product

recommendations on
website or app
25%

Get a personalized
newsletter

Reasons to offer a personalized discount right away:

54+46+B 63+37+B 45+55+B

54%

54% expect to get a

discount within 24 hours
of identifying themselves
63%

63% say receiving a discount

within an hour of interacting
with a brand will drive loyalty
45%

45% say a discount is the

most compelling incentive to
add another item to their cart

The 2017 State of Personalization Report 7

Key Finding 3
Personalization drives impulse purchases
that shoppers welcome and revenue
that retailers enjoy

Personalized recommendations, in particular, drive

impulse purchases.
When retailers do get personalization right, it drives purchases in a big way.
49% of U.S. shoppers said that in the past three months they bought a product they
did not initially intend to buy after a brand made a personalized recommendation.

Percentage of shoppers who have made an impulse buy in the last 90 days:

63%
46%
26%

MILLENNIALS GEN X BOOMERS

Which channels work best at driving impulse

purchase behavior?
Recommendations during the online checkout process are most likely
to drive last minute purchases, but consumers respond to personalized
recommendations in every channel.

Percentage of shoppers that made impulse purchases based

on a recommendation in the last 90 days:

22% 16% 13%

ONLINE CHECKOUT EMAIL BRICK & MORTAR

12% 6%
ONLINE AD PUSH NOTIFICATION

The 2017 State of Personalization Report 8

Consumers spend big money on impulse
purchases driven by personalization
40% of U.S. consumers say they have purchased something more
expensive than they originally planned to because their experience
was personalized.

Just how much are people spending?

Of U.S. consumers that make impulse buys, 23% have spent more than $50 on
a single purchase, including 7% of respondents who spent more than $100.

What channel drives the highest value impulse purchases?

Brick and mortar is the channel most likely to drive last minute purchases
worth more than $50. However, nearly a quarter of consumers said that brick
and mortar is the channel that also needs the most improvement in terms of
personalization efforts. Therefore, the retailers that get personalization right
in their physical stores stand to gain a valuable edge on their competition.

Shoppers are generally happy with impulse purchases

they didn’t originally plan to make.
Consumers satisfied with the impulse purchases they make by channel:

82% 84% 84%

ONLINE CHECKOUT EMAIL BRICK & MORTAR

72% 76%
ONLINE AD PUSH NOTIFICATION

Even if they don’t like it… they’ll likely keep it.

While 15% of people reported being dissatisfied with their last minute purchases,
only 5% of shoppers reported actually returning those items they were dissatisfied with.

The 2017 State of Personalization Report 9

Who’s spending on impulse?
Men are more likely to make unplanned, impulse purchases — and
spend more on them — than women.

15% more men have made an impulse purchase in the past three months
than women.

Men are spending more across every channel:

Gender and channel breakdown of consumers that spent more than
$50 on impulse purchases in the past three months:

Online checkout Email

MEN 28% MEN 28%
WOMEN 15% WOMEN 18%

In-store Based on an ad
MEN 35% MEN 26%
WOMEN 12% WOMEN 13%

Push notifications
MEN 23%
WOMEN 9%

Millennials are the most likely generation

to make impulse purchases.
Millennials are by far the most likely generation to make impulse purchases, although
Gen X and Boomers are spending more when they do so. 28% of Gen Xers and 27%
of Boomers report making impulse purchases of over $50, compared to 20% of
Millennials who spent this much. Millennial spending power will only increase over
time, so brands are well-served to offer them personalized experiences today.

63%
28% 27%

The 2017 State of Personalization Report MILLENNIALS GEN X BOOMERS 10

Key Finding 4
There is a wide disconnect between
consumer expectations and their actual
in-store experience of personalization

The personalization breakdown by channel:

Shoppers use many channels to browse, communicate, and shop, and not
all are created equal. We asked consumers in which of those channels it was
most important to have a personalized experience. Then we asked where
brands are succeeding, and where they need improvement.

Where matters most? What’s winning now? What could be better?

# 1 # 1 # 1

WEB WEB BRICK & MORTAR

# 2 2
# # 2

CUSTOMER SERVICE EMAIL CUSTOMER SERVICE

#3 # 3 # 3

EMAIL CUSTOMER SERVICE ONLINE ADS

# 4 # 4 #4

MOBILE APP MOBILE APP WEB

The 2017 State of Personalization Report 11

 What does the disconnect between
consumer expectations and their experiences
of personalization mean for your brand?

Website
If you are going to personalize one digital channel, make it your website.
28% of consumers say a brand’s website is the most important channel for
personalization, and nearly half (49%) rank it in their top two most important
channels for personalization.

Email
After all these years, email matters as much as ever. Email remains the
primary way we identify ourselves online, and all smartphones come with
an email app pre-installed. A third of respondents said email was in their top
two most important channels for personalization. Consumers are also making
purchases via email, ranking email second (after online checkout) as the
channel most likely to drive their impulse buying.

Mobile apps
The customers who have downloaded a retailer’s mobile app are among the
most engaged—after all, they took care to install the app, and marketers
need to stay tuned to this channel. These customers tend to skew towards the
younger demographics.

Percentage of consumers listing mobile apps in their top two most important
channels for personalization by age:

31% 27%
19%

MILLENNIALS GEN X BOOMERS

However, if you are going to have an app, it can’t operate in a silo:

63% of shoppers said they expect a brand’s mobile app to “know” what they
purchased on the brand’s website.

The 2017 State of Personalization Report 12

The breakdown of personalization
by offline channels
The in-store shopper experience and other interactions with
customer service lack the kind of customization that consumers
have come to expect online. But if retailers can figure this out, the
opportunity to increase loyalty — and revenue — is huge. As we
reported earlier, consumers in brick and mortar stores are willing
to spend more money on unplanned purchases than consumers
within any other channel — but only if retailers can provide them
the personalized experience that they crave.

In-store
Only 17% of consumers think that retailers are currently customizing
the in-store experience.

This drops to 14% when looking at women only: Men are 50% more likely
than women to say that retailers are already customizing their in-store
shopping experiences.

41% of consumers say that they expect representatives in a brand’s

physical store to know what they have purchased online, yet only 19% have
experienced this.

In-store ranked first among the channels customers think need the most
improvement when it comes to personalization, with 24% of consumers
ranking it the number one channel in need of personalization.

Customer service
Customer service ranked second when it came to listing the “most important”
channels to have personalized by brands, behind only the web experience.

The 2017 State of Personalization Report 13

Make personalization possible
with Personas by Segment
The growth of channels for customer communication, sources of user data,
and need for near real-time updates makes achieving personalization a difficult
technology challenge. To execute personalization effectively, brands must
create a single view of the customer that spans channels, employ flexible and
dynamic segmentation, and make consistent customer data accessible in all of
their marketing tools.

Personas was built to do just that.

To learn more, visit: segment.com/personas