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How to measure the impact of Personalization on your digital business?

Since you have reached this blog, you must have a successful Digital business up and running and are looking at personalizing your customer interactions.

Well, the positive impact of personalized recommendation on conversion, upsell and cross sell revenue is a well-known fable. But how can a business quantify and measure its true ROI value?

The ROI of personalization

Hyper personalization as a digital strategy is proven to have a direct impact on ROI.

While more than 80% percent of the companies have adopted some kind of personalization to boost their online businesses. The true power of personalization is realized by using AI powered recommendation to help businesses reach out to their target segment with the right information at the right time through the right channel.

According to Mckinsey Insight, the benefits consist of up to 50% reduction in acquisition costs, ~15% revenue uplift and ~30% increase in marketing spend efficiency.

Calculating the ROI from personalization essentially appears to be pretty straight forward, isn’t it? Just compare the profit from digital channels the quarter after implementation and the previous quarter.


Wish it was that simple…

Most businesses find it difficult to quantify the end results of personalization because of the lack of understanding on how it drives ROI. The impact of personalization is felt across various KPIs and customer touch points. Understanding these metrics and measuring them right is necessary to truly study the impact it creates for your business.

What should you measure?

Returns from digitization strategies like personalization can be tricky to calculate due to the fact that it affects quite a few metrics. Choosing which ones to focus on and identifying the areas relevant to your business’ revenue creation is the key to getting it right.

Here is a list of what you should measure while calculating your business’ ROI from personalization:

  1. Revenue per visitor (RPV) : Measures the revenue generated every time a customer engages with you digitally, for example during a website visit. Can be used to estimate the value of a new user.

  2. Revenue-per-visitor
  3. Monthly volume of unique visitors : It measures the total number of new digital visitors within a given period of time. It helps understand the actual reach of your business and the impact of marketing campaigns. This metric is the foundation of several traffic and engagement metrics.

  4. volume-of-unique-visitors
  5. Conversion rate (CVR) : It measures the percentage of online visitors or customers who take a desired action in a given time period. The most common example of conversion rate is the percentage of website visitors who make a purchase on site. Anonymous personalization can boost first time visitor conversion by manifold.

  6. Conversion-rate
  7. Average order value (AOV) : It shows us the average amount spent every time a customer places an order online. It is an indicator of sales revenue.

  8. Average-order-value
  9. Cart Abandonment Rate : It shows the percentage of online customers who add items to a cart and leave without making a purchase. It compares the total number of shopping carts created to the potential customers who leave the site without buying anything.

  10. Cart-Abandonment-Rate
  11. Average revenue per user (ARPU) : Measure the revenue generated per user or unit through digital channels. It helps understand a business’ revenue generation capability and track growth per-customer. It additionally shows the amount of money that a company can expect to generate from a single customer.

  12. Average-revenue-per-user
  13. Customer lifetime value (LTV) : It shows the total amount of money a customer is expected to spend on your business or products. It is in simple words the revenue you receive from a particular customer within a time period. It includes all the purchases and re purchases made.

  14. Customer-lifetime-value
  15. Bounce rate : It depicts the proportion of visitors who leave a website after having viewed a single page. A high bounce rate is indicative of an unappealing homepage.

  16. Bounce-rate
  17. Return on ad spend : This metrics shows how much revenue is made for each dollar spent on advertisement.

  18. Return-on-ad-spend
  19. Add to cart rate : Measures the ratio of visitors who have added an item to their cart at least once during a session. It gives good insight into the effectiveness of product selection, marketing efforts and site usability.

  20. Add-to-cart-rate
  21. Page views : Number of unique pages within the site a customer visits on a digital platform.

  22. Page-views
  23. Click through rates (CTR) : The proportion of visitors who click on a hypertext or hyperlink or CTA link to a particular page or site. It is also considered as the number of clicks received on each digital advertisement.

  24. Click-through-rates
  25. Customer acquisition costs : It provides the approximate cost that will be incurred to acquire a new customer.

  26. Customer-acquisition-costs
  27. Marketing spend efficiency : Helps study the result of all marketing spend including ad spend. The calculation varies according to the marketing objectives and strategies. Marketing spend for digital channels can be calculated as

  28. Marketing-spend-efficiency
  29. Retention rate : Shows the number of customers who make repeat purchases and keep using your product over an extended time period. This shows the level of customer engagement and loyalty.

  30. Retention-rate
  31. Attrition rate : The percentage of customers who do not buy your products or services anymore. Also known as churn rate and a decrease in this number is a sign of good user experience and improved service performance.

  32. Attrition-rate
  33. Returning visitors : The percentage of returning visitors indicates the level of engagement on various digital channels. Higher return rates show that the content is relevant and compelling to the customers or visitors making them come back.

  34. Returning-visitors
  35. Average time on page : It measures the average time spent by a visitor on a landing page.

  36. Average-time-on-page
  37. Engagement rate : It is a social media metric which shows the total number of people who have actively engaged with a post. This could be in terms of actions like shares, like, clicks etc.

  38. Engagement-rate
  39. Leads and conversions from social media : he number of monthly leads and conversions from different social media channels. It shows the channel's efficiency in your marketing efforts.

  40. Leads-and-conversions-rate
  41. Loyalty signups : Number of customers who sign up for loyalty programs as opposed to the total number of customers.

  42. Loyalty-signups
  43. Sales per channel : This metric shows the percentage of sales from each channel by breaking down sales by the channel through which it was generated. It provides an insight into the effectiveness of different channels.

  44. Sales-per-channel
  45. Visits per channel : Percentage of visitors on different channels in a given time period. It helps understand the inbound traffic sources and identify most profitable marketing channels. Higher the number of visitors on a particular channel more its reach

  46. Visits-per-channel
  47. Time to conversion : Average time taken to convert and new lead or visitor into a paying customer. Lower time to convert means less chance of losing a prospective customer to a competitor.

  48. Time-to-conversion
  49. Open rates : Earlier considered as an email marketing metric alone, open rates that measures the percentage rate at which messages are opened and read by customers. WhatsApp has the highest open rates among all business communication channels today.

  50. Open-rates
  51. Newsletter SignUp Conversion Rate : Measure the revenue generated per user or unit through digital channels. It helps understand a business’ revenue generation capability and track growth per-customer. It additionally shows the amount of money that a company can expect to generate from a single customer.

  52. Newsletter-SignUp-Conversion-Rate
  53. Traffic from social media : This metric is helpful to monitor the traffic inflow from social media channels. It is the percentage total customer visits through social media channels alone. It is an effective metric to determine the source of your website traffic.

  54. Traffic-from-social-media
  55. Revenue from upsell : Revenue generated by upselling a product/service resulting in higher AOV. Upsell can happen at 3 stages :

  56. a. Pre transaction - here the upsell happens before the customer has initiated a transaction e.g. recommendation of a bundle sent to customer over email leading to higher AOV from bundle. Here, the complete revenue from the Call-to-action can be taken as upsell revenue.
    b. Transaction - in this scenario the upsell happens at transaction stage e.g. upsell from in cart recommendation
    c. Post transaction - here the additional revenue is in the form of upsell in repeat purchase e.g. Bigger box of cereal
  57. Revenue from Cross-sell : Additional revenue generated from sale of related products e.g. insurance for mobile phones. Typically, cross sell happens at the time of transaction and is measured as total revenue generated from cross sell CTA’s

What does personalization impact?

AI powered recommendation enables businesses to reach out to their target segment with the right information at the right time through the right channel.

Using dynamic customer profiling and detailed understanding of customer context, enterprises can offer hyper personalized recommendations to customers and first time visitors alike to increase conversion, upsell and cross sell.

Leverage dynamic customer persona with contextual data to offer hyper personalized user experience and boost your business ROI with Amigo CX recommendation engine. Head over to our website to know more.