How to Use Next Best Action Marketing in E-Commerce

Sep 6, 2023 11:30:00 AM
11 min read

Person with a pointing upwards, with a lightbulb above their head as though they've had an idea.Ask most consumers today, and they’ll tell you they want to be seen as an individual, not a demographic. This means meeting their specific needs at every stage of their shopping journey. Successful e-commerce brands know how to leverage strategies to enhance the overall customer experience. But not all marketing methods are created equal—or meet growing customer expectations.

There is one strategy, however, that is gaining traction, thanks to its focus on data. Next Best Action (NBA) is an effective tactic that can be applied across various intersections to create a seamless customer experience. In this blog, we’ll delve into what Next Best Action means, the benefits and challenges that come with it, and share key NBA strategies and applications to help deliver delightful customer experiences, and give your revenue a boost too!

Understanding Next Best Action  

The Next Best Action framework may seem complex, but it’s actually pretty simple—once you understand its purpose. This data-based approach utilizes machine learning to identify the best action to take to engage a customer after they’ve taken an action (or sequence of actions).

Curious shopper looking through magnifying glass.Rather than adopting a one-size-fits-all approach, NBA relies on insights from previous shopper sessions to tailor interactions based on customers' preferences, behaviors, and past interactions. This approach helps online retailers move beyond traditional segmentation to offer personalized touchpoints that align with each customer's journey and goals.

And because it’s automated and self-optimizing, NBA is always improving while requiring minimal intervention.

Benefits and Challenges of Next Best Action Marketing

Implementing an NBA e-commerce strategy comes with its own set of advantages and disadvantages:

The pros: 

  • Data-Driven Decision Making – NBA relies on data analysis, providing
    valuable insights that can inform marketing strategies and product offerings.
  • Enhanced Customer Experience – When shoppers find what they're looking for quickly and easily, it can lead to a more delightful journey.
  • Personalization – NBA enables highly individualized interactions, increasing user engagement and satisfaction.
  • Reduced Decision Fatigue – Customers are presented with options
    tailored to their needs, reducing the overwhelming feeling of having too many choices.
  • Customer Retention – Personalized experiences can reduce churn and increase customer lifetime value.
  • Increased Conversions and Revenue – By presenting customers with relevant products or services, NBA can drive higher conversion rates and sales.
  • Competitive Advantage – E-commerce brands that effectively implement NBA can differentiate themselves by offering a more unique shopping experience to each shopper.

The Cons 

  • Data Privacy Concerns – Gathering the necessary data for NBA can raise privacy concerns among customers and must be done responsibly to avoid potential risks.
  • Complex Integration – Implementing NBA can be technically challenging and may require substantial IT or ML resources and expertise.
  • Algorithmic Biases & Complexities – If not carefully managed, NBA algorithms can perpetuate prejudices present in historical data, leading to unjust or discriminatory recommendations.
  • Over-dependence on Technology – Relying solely on NBA algorithms could lead to neglect of the human side of customer interactions, which is essential for building strong relationships.
  • Customer Perception Some customers may find too much personalization intrusive or pushy, leading to resistance or even aversion to the platform.
  • Costs – Developing and maintaining NBA systems can be pricy, especially since the ROI might not be immediate or guaranteed.
  • Scalability – As the customer base grows, ensuring NBA systems can handle increased data volume and user interactions without sacrificing performance is crucial.

Data is Everything

The foundation of NBA lies in the data you gather because it provides insights into customer behavior, preferences, and trends. Some next best action strategies for what types of data to collect include:

  • Person with computer chip brain. An exclamation mark is seen next to them, as though they've had an idea. Behavior tracking, such as page views and clicks
  • Purchase history
  • User account and/or profile creation
  • Wishlist and saved items
  • Customer service interactions
  • Real-time interactions, like live chat sessions
  • Mobile app analytics

Once you gather the data you need, you can analyze it to identify patterns, trends, customer preferences, and other interests of your shoppers that will help you build accurate customer profiles.

Tip: Transparency is crucial to building trust with your customers. Always communicate your data collection practices and seek explicit consent from users before collecting their information.

Next Best Action Strategies and

With the abundance of choices available to consumers, providing a personalized and seamless shopping journey has become a necessity. This is where Next Best Action shines. Here’s how e-commerce businesses can effectively apply NBA to achieve their marketing strategies.

Strategy: Deliver personalized shopping experiences.

Happy customer interacting with sales associate at checkout. A thumbs up is seen in a bubble above, suggesting a good experience.

Enhancing e-commerce personalization is an unending endeavor that directly affects customer engagement,  satisfaction, and ultimately, sales. This must-have strategy is so essential, 89% of all marketers are currently investing in it. (Source: ProfitBlitz)

Next Best Action Applications

1. Product Recommendations

Machine learning algorithms, including collaborative filtering, content-based filtering, and hybrid approaches, can analyze data like customer preferences and browsing history, which can then be used to provide personalized product recommendations. This not only increases the likelihood of conversion but also enhances the customer's perception that your brand is understanding of their needs.

Mobile shopper being served a pop-up. Behind the shopper, is a graph showing an upward revenue trend, suggesting the pop-up is increasing revenue. For example, if a customer has been looking at face moisturizers, an e-commerce platform might recommend related products like serums or under-eye creams. These recommendations can be displayed on product pages, in email campaigns, or even during the checkout process.

2. Customized Content

Whether it's email marketing or on-site content, NBA enables brands to deliver relevant content that resonates with individual customers. This can include product descriptions, landing page layouts, and videos that align with the customer's interests—all of which lead to increased engagement and a higher chance of shoppers returning to your online store in the future.

3. Tailored Promotions and Discounts

Illustration of a coin. Use NBA to offer deals and incentives that are relevant to each shopper's preferences and buying patterns. For instance, you could use geolocation data to provide promotions that are pertinent to a user’s current location. By sending targeted promotions that align with your customer’s data, you can make them feel valued and understood, leading to a more positive shopping experience.

Related: 5 Hyper-Personalization Methods That Get Results  

Strategy: Elevate customer support.

Illustration of a green arrow pointing upwards. Enhancing the level of customer service is crucial for providing a positive e-commerce experience. NBAs for real-time customer support in e-commerce can provide timely assistance and solutions to customers as they navigate your online store.

Next Best Action Applications 

1. AI-Powered Chatbots & Virtual Assistants

Chatbot talking with customer through a smartphone. Chatbots and virtual assistants provide instant and personalized assistance to customers, guiding them through their shopping journey, helping them find products, letting them easily compare options, and enabling them to make informed decisions. These computer-generated programs can handle everything from routine inquiries to order status updates to personalized product recommendations. The bonus? They’re available 24/7.

2. Live Chat Assistance

NBAs can provide insights based on user history, giving live chat agents access to the most pertinent information quickly and effectively. By analyzing customer profiles, interactions, and purchase history, for example, NBAs are able to come up with personalized solutions that your agents can use to rectify any problems sooner than if they were starting from scratch.

3. Real-Time Order Tracking

Illustration of a magnifying glass. Most customers keep tabs on which stage of the shipping process their order is currently at. Fail to provide this information, and you could be setting yourself up for lost customers (and revenue). Instead, use NBA to identify and offer the most relevant real-time order tracking notifications and updates, so customers can stay informed about the status of their purchases without having to contact support.

Tip: Don’t forget about self-serve FAQs. These can be compiled using data like search queries and customer service history.

Strategy: Increase revenue.

Boosting sales is a key objective for every e-commerce brand. Using NBA
strategies can significantly impact an e-tailer’s revenue by increasing customer engagement. And we all know that the more engaged your shoppers are, the better your chances of converting them.

Next Best Action Applications

1. Showcase Supplementary Products  

Open backpack filled with different school supplies. When customers are presented with relevant upgrades or complementary options during their shopping journey, they are more likely to increase their spending, positively impacting your revenue. Use NBA to identify opportunities for upselling and cross-selling, based on browsing history, purchase history, or a user’s current cart contents. If a shopper has a gaming system in their cart, for example, you could highlight a video game or extra controller.

2. Abandoned Cart Recovery

cart - emptyWith nearly 70% of shoppers ditching their items before exiting a site, abandoned shopping carts are the bane of e-commerce existence. Fortunately, NBAs can turn this challenge into an opportunity. By monitoring and analyzing instances where users add items to their carts, but don't complete the purchase, you’ll be able to send timely and tailored reminders to customers who have left items behind.

You can also use NBA to identify the ideal time to offer incentives like discounts to encourage them to complete the purchase.

3. Subscription Models

creditcard-1Subscriptions generate a steady stream of revenue, making it easier to predict sales. Use NBA to gather data-driven insights to determine which products or services would be most successful in a subscription model. You can then introduce these options to customers who already purchase them regularly.

Once you have built your subscription base, you can keep utilizing NBA to optimize customer interactions throughout their subscription journey, which can be executed through relevant offers, recommendations, and bespoke messaging that enhances their overall experience.

Related: How to Create the Best E-Commerce Subscriber Experience

Strategy: Determine brand loyalty.

Implementing ways to measure customer loyalty is essential for e-commerce brands to retain and nurture their customer base. Fortunately, NBA can be used to encourage brand loyalty by rewarding repeat customers.

Next Best Action Applications 

1. Loyalty Programs 

Customers who regularly shop on your online store deserve to be rewarded. Implement a structured loyalty program that compensates shoppers for their purchases or other desired actions, such as customer referrals. From here, you can use NBA to offer exclusive discounts, early access to sales, or special promotions.

You can even target customers who are close to reaching loyalty program milestones by providing them with tailored incentives to make additional purchases and achieve those milestones. This not only encourages more frequent purchases, but also enhances customer loyalty and retention, leading to sustained revenue growth.

2. VIP Programs

ourstory_6@2xMuch like loyalty programs, VIP programs can offer exclusive benefits to loyal customers. With this program, however, you would create tiers that incentivize shoppers by offering better rewards and benefits based on a customer’s loyalty level. This can be determined through data such as purchase history, engagement levels, and recent purchases.

3. Customer Lifetime Value (CLV)

Understanding how much value each customer brings over their lifetime is an important part of measuring brand loyalty. And with NBAs, you can more accurately predict the CLV of each customer, as well as identify what actions to take to increase each shopper's lifetime value, such as increasing their average order value (AOV).

Tip: Find out how your customers feel about your e-commerce store directly from them by sending out regular surveys to assess their satisfaction and loyalty.

Strategy: Utilize predictive analytics.

Granify decision brain in a jar, deciding the optimal revenue path, leading to the larger of two money bags. Predictive analytics involves using historical data and advanced algorithms to predict future outcomes and make informed decisions. This can greatly reduce overhead costs and help online retailers zero in on what their customers want most.

Next Best Action Applications

1. Demand Forecasting

NBA's real-time insights can extend to inventory management and help optimize product levels and distribution. Use your historical sales data to predict future demand for products and adjust your inventory accordingly. This prevents overstocking or stockouts, and ensures that revenue is maximized through efficient stock management. You can also use predictive analytics to determine when a customer is likely to run out of a product and remind them to reorder—adding convenience for the shopper and repeat purchases for your business.

2. Dynamic Pricing 

Illustration of a pile of coins with dollar signs on them. E-commerce brands can use dynamic pricing algorithms to adjust pricing based on real-time factors like demand, inventory levels, and competitor prices. By offering personalized pricing, you can incentivize customers to make purchases, which helps drive conversions. This is particularly effective during sales events and promotional campaigns.

3. Seasonal and Trend Analysis

Using NBA data to predict seasonal trends and consumer preferences allows you to proactively adjust your product offerings and marketing strategies. By leveraging historical data insights, e-commerce businesses can make data-driven decisions that lead to improved efficiency, enhanced customer experiences, and ultimately, increased revenue and growth. This is particularly helpful during busier shopping times, such as peak season, which runs from mid-August to the end of December.

Related: Popular E-Commerce Trends in 2023: A Mid-Year Review

Final Thoughts

Shopper smiling with two shopping bags in hand. A speech bubble shows a 'thumbs-up' emoticon, conveying the shoppers satisfaction. The synergy between enhancing customer experiences and driving business growth can be achieved through the implementation of Next Best Action strategies. As technology continues to evolve, those who embrace NBAs will position themselves at the forefront of e-commerce innovation. By effectively adopting the Next Best Action applications we’ve recommended, your e-commerce business will be able to create more relevant, engaging, and personalized experiences for your customers, ultimately leading to increased customer satisfaction, loyalty, and sales.

The Next Best Action for Your Business

Two people high-fiving. Granify takes Next Best Action strategies to the next level with cutting-edge machine learning technology and data-driven insights. By analyzing vast amounts of shopper actions in real time, the Granify Brain delivers highly personalized experiences that drive conversions and delight customers.

Get Granified