Remember the first time you ran an A/B test? You had probably heard of this powerful technology that would improve your site and make you more money, but you weren’t exactly sure how to get started. So you read up on the basics and eventually, after some trial and error, you got that first test running. Since then each test got easier. Today you’re running tests on the regular.
Except now all of those feelings are flooding back to you with the buzz surrounding the newest optimization technique — personalization. You keep hearing you should do it, but how? Where do you start? What does it even mean?
This article will cover the basics so that you can start personalizing your site today. And with a little practice, personalization will become just as second nature to you as A/B testing.
What is personalization?
Let’s start at the beginning: personalization is showing targeted content to specific segments of your visitors. Personalization comes in two flavors: algorithm-based, and rules-based.
Algorithm-based personalization uses a machine learning algorithm to automatically decide what content to show each visitor. It makes this decision based on a person’s demographic information and past behavior, among other signals. Netflix’s recommended movies are an example of this type of personalization.
With rules-based personalization, you create targeting rules to segment visitors, and decide what content to show each segment. For example, you can show return visitors a message welcoming them back. The experience can also be dynamic, changing based on each person’s behavior. This is the type of personalization that Optimizely makes really easy, and what I’ll focus on for the remainder of this article.
The Building Blocks of Personalization
To personalize your site, you run campaigns to show targeted content to your visitors. There are 3 pieces of information that every campaign needs:
- Who: which visitor segments (also known as audiences) are you targeting?
- What: what content are you showing each audience?
- Where: which page(s) will you show personalized content on?
The shoe audience likes shoes, and the hat audience likes hats, so we run a campaign to give each of them what they want.
To decide the who, what, and where of your campaign, you should create ahypothesis for why a personalized experience will increase conversions. Just like with A/B testing, a good hypothesis is the key to creating successful campaigns that are good for both your customers and your business.
In order to form a good hypothesis, and to measure the success of your campaign, you need a primary metric to optimize. You can (and should) measure multiple metrics to gauge the health of your campaign, but you should have a single metric that is the ultimate measure of the campaign’s success.
To measure the success of your campaign, Optimizely Personalization uses a holdback. A holdback is a small percentage of visitors (5% by default) that see your site’s default experience instead of the personalized one. We then calculate the improvement by comparing the conversion rate of the personalized experience to the default experience. By doing so, you always know the impact of your campaign, and can modify or stop any campaigns that are underperforming.
Once you’ve got your hypothesis and primary metric, you can bring everything together with this hypothesis template:
By showing [what] on [where] to [who], [primary metric] will increase because [rationale].
To learn more about coming up with campaign ideas and good hypotheses, this article on A List Apart is a great resource.
Campaign Setup
With a good hypothesis to guide you, it’s time to translate your ideas into an actual campaign.
Who: Audiences
The first step of setting up a campaign is to choose a group of audiences to target. You should aim for a group of audiences that match the following criteria:
- High reach: Your campaign should reach a large percentage of your site’s visitors to maximize its impact. A campaign with a 10% lift sounds great until you realize it only reaches 5% of your traffic, which translates to a 0.5% overall increase in your site’s conversion rate.
- Mutually exclusive: A good group of audiences overlap with each other as little as possible. Visitors can technically belong to multiple audiences at once, which can make it difficult to control the content a person will see. It can also lower your campaign’s reach. If audiences do overlap, however, our product will ensure people only see one experience per campaign. One technique for making mutually exclusive audiences is to choose a visitor attribute, such as location, and create an audience for each value (e.g. west coast, midwest, and east coast).
- Not too many, nor too few: The more audiences you want to target, the more complex your campaign will be. You’ll have to create rules to define each audience, and produce content for each one. But too few audiences may lack impact because the content isn’t specific enough.
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