E-commerce has come a long way from the days when the focus was primarily on the "nuts and bolts" of doing business on the Web. Back then, usability, content, and structure were the priorities for online retailers looking to create scalable, high-performance sites. More recently, however, trailblazers such as Amazon.com have demonstrated the powerful commercial advantages of personalized online shopping and changed the rules when it comes to customer engagement.
Research shows that recommendation tools and e-commerce personalization positively drive key metrics including revenue, conversion, average transaction value, and time-on-site. What's more, personalization makes it possible for online retailers to measure and reward the behaviors of shoppers in a way that drives loyalty, builds trust, and enforces brand differentiation — all of which is key in today's crowded online marketplace.
It's interesting, therefore, that in a recent survey by ChoiceStream, 59 percent of consumers indicated they receive poor product recommendations online. The results suggest that many retailers are still not tapping into the Web's ability to create a highly tailored and customized experience for their site visitors — potentially jeopardizing customer relationships and likely leaving money on the table.
Personalization Done Right
So what are the five steps a company should take to segment its customers and effectively personalize the experiences those customers have on its site?
- Track consumers' actions — Determine what customers and prospects searched for, what pages they navigated to, which items they investigated, and which items they put into their shopping cart or purchased. This will enable a business to identify critical "indicators of interest."
- Leverage search history — Use a customer's search history to display a personalized starting page and offer landing pages that make it easy for the customer to find what she's looking for. For example, if her history indicates a preference for electronics, the first stop (the landing page) should be in this section of the Web site, and the business should couple that with any relevant product-related offers — boosting the visitor's sense of recognition.
- Analyze customers by context — Use Google referrals, for example, or search trails or engagement patterns to gather context-based information. Combined with a user's profile information and purchase history, a company can provide highly personalized product recommendations to deliver the ultimate shopping experience.
- Use individual targeting rules — Algorithmic personalization collects data over time, but merchants with fast-moving inventory or extensive product categories can take advantage of behavioral targeting to determine which products, content, or promotions are shown to which customers.
- Create rules-based "cross-selling" recommendations — Generate a set of appropriate, defined products to prompt add-on purchases. Query recommendations can be provided in real time, and vendors can repay loyal customers by providing special offers to regular buyers.
For multichannel retailers, the mobile phone is emerging as a highly valuable channel for customer communications and commerce. The rapid consumer adoption of application-laden smartphones, such as the iPhone, that harness the power of the Internet means that customers now have access to a Web-enabled world of information at their fingertips, at the precise moment they're making a buying decision.
Retailers able to delivering mobile versions of their Web sites to consumers on the move will be able to add an extra dimension of brand value right at the point-of-sale, engaging with in-store shoppers in real time, offering targeted promotions that elicit an immediate response.
Delivering personalized content to mobile devices, however, is more of a challenge — obstacles include the restrictive size, resolution, and "surfability" of the user interface — but businesses should not be put off. By tracking consumers' habits and browsing behaviors, retailers can still create a mobile experience for customers and potential customers "on the go" that's as tailored as the traditional online one.
Until now, personalizing the individual experience online has been complex and difficult to execute well. But today's personalization technologies enable retailers doing business online to extract commonalities, associations, and cause-and-effect relationships to seamlessly and automatically deliver recommendations and content appropriate to any environment — helping to create loyal customers and boost revenues.
About the Author
Carsten Thoma (firstname.lastname@example.org) is president of hybris U.S. and chief operating officer of hybris Group, a multichannel commerce software provider he cofounded in 1997. Thoma began his career at Hewlett-Packard, where he first developed his ideas for standardized yet highly innovative and flexible e-commerce software. For more information on hybris, visit www.hybris.com.
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