Getting personal

Retailers are turning to site personalization tools to get more intimate with customers

Web site personalization is much like the dating process. Building a relationship between e-retailer and customers means getting to know what customers like and, equally important, dislike, then ensuring they get what they want.

If an online retailer can analyze customer data and use the results to offer products that a customer wants, sales will happen and the customer will keep coming back. And if there isn’t rapport between parties early on, there won’t be a second date.

E-retailers today are deploying or contemplating web site personalization technology tools to bond with customers and shoppers. In some cases, search and web analytics technology is helping e-retailers customize product presentations based on how a shopper enters a web site. In other cases, online retailers are mining customer behavior and expressed wants and needs to build product selections, or to omit products customers aren’t interested in. In addition, some e-retailers are asking customers outright what they want via onsite and e-mail surveys

Speaking to customers

“Our new personalization tools will let us greet customers and speak to them about their last purchases,” says Teresa Ide, director of e-commerce at online pet supply retailer Jeffers Inc. “Then we can suggest other products according to what they buy. We get opportunities to upsell and cross-sell by drawing customers in and that also supports our relationship.”

Web site personalization has been around as long as retailers have been selling products online, but its use is by no means universal. Preliminary results of the Sixth Annual Merchant Survey by The E-Tailing Group Inc. indicate most e-retailers aren’t plumbing the depths of web site personalization technology. Only 48% of 150 respondents are doing a “limited amount” of web personalization, while 32% said they greet returning customers by name. “It’s very rudimentary,” says Lauren Freedman, president of the Chicago-based research and consulting firm.

While most e-retailers agree that site personalization is important—another 34% plan to add the function in 2007, reports the E-Tailing Group survey—many place other e-commerce projects higher on their to-do lists. “E-commerce is all about prioritization,” Freedman says. “E-retailers have a lot to do and site personalization has not risen to the top.” Indeed, 15% of respondents said they have no plans to add site personalization.

Merchants generally agree that when they embark on web site personalization, it must go beyond the traditional “Welcome ‘Customer Name’” concept. And most e-retailers have every intention of going beyond the basic site personalization tools, says Chad Doiron, senior strategist at Kurt Salmon Associates, a retail consulting firm specializing in strategic planning and marketing. “We see them working to leverage the technology to their advantage and many are in the early stages of execution,” he says. “They now have technological capabilities to improve data management and the cleanliness of data to get valid analysis and input on customers, in order to make buying recommendations.”

Make a plan

For some e-retailers, site personalization technology is in hand, but not the plan for how it will be used. E-retailers that use web analytics to draw on customer buying data, for example, must decide how to use the data to construct specific promotions, Doiron says. “It’s not so much a technology question—whether they are able to do it—but it’s understanding what kind of offer they want to make,” he says.

For instance, e-retailers that base promotions on customer shopping history, which Doiron asserts not all of them look at, have to decide whether to extrapolate their perception of the customer’s intentions or just offer a shirt similar to what they bought before. “It comes down to a question more of what they are doing than what they want to do,” he says. “They have a database, computing horsepower, sales information and a historical perspective. They have to use those tools to decide the best offer to make and then execute it with the customer.”

Maternity apparel retailer DueMaternity.com, for example, is gathering data on its expectant parent customers with data mining, page registration and survey tools. When they return, the site remembers if they have unbought items in a shopping cart, automatically inserts name and address into the shipping form and presents personalized products, says Albert DiPadova, who co-founded the business with his wife Shannon in 2004. “We’re trying to go one step further and allowing customers to pick up where they left off,” he explains.

San Francisco-based Due Maternity has four stores in addition to the web site and it gathers online shopper data by asking shoppers to register. The company sorts customers by due date and tailors personalized messages and promotions according to before and after the baby is born. For instance, expectant parents might receive a message about skin care while a post-birth message would address nursing products.

Customers also can set up their own web pages by virtue of registering on the site. A template enables them to choose the baby’s astrological sign and build a countdown calendar with the baby’s name highlighted on the page. Another feature lets customers post photos to share with family and friends. The tools keep customers coming back and afford Due Maternity repeated opportunities to present special promotions available only to those registered.

The data mining tools to capture customer data were developed in-house by Due Maternity’s long-time freelance web developer, who worked with web page design tools from Yahoo. “Because Yahoo made its PHP technology available we were able to capture some individual information and store it,” DiPadova says. PHP is a scripting language tool used to pull information from a database and display it on a web page.

Personalization as a byproduct

Through its own efforts, Due Maternity was able to store and integrate customer data with Yahoo’s shopping cart technology. “Yahoo was surprised how far we’ve gone with it,” DiPadova says.

Due Maternity also recently began using MarketTools Inc.’s Zoomerang onsite customer survey technology. “That provides us very flexible survey templates and reporting,” DiPadova says. “And our own data capture provides us some basic marketing reports that help us better understand where our customers are coming from, such as online or from print advertising,” he adds.

ShoeMall.com, part of Mason Companies Inc., took a slightly different route to site personalization and rolled it into a web site redesign. The redesign was led by Fry Inc. and site personalization was a byproduct of that effort, says Adrienne Hartman, Internet director. Web analytics and data mining tools are new to ShoeMall, but will help the company bond with customers.

“Site personalization was a new arena for us,” she says. “We knew some of the basic information about our customers, such as order history, but we looked to Fry for assistance.”

Walking into a shoe site

ShoeMall.com’s redesigned site launched in September 2006 and the retailer now can show targeted content based on a customer’s prior experience on the site. Fry offered options such as defining walk-in vs. registered shoppers and presenting specific products or product groups from a shopping cart or wish list. ShoeMall is determining how many of the targeted content tools it will deploy and plans to begin testing all of them once it has fully implemented web analytics technology, Hartman says. For example, using the site manager tool from Fry, first-time shoppers will see a generic home page. But returning customers are greeted by name and can see their favorite shoe styles based on past views and purchases.

In the five months since the site personalization feature rolled out, the company has received positive feedback, Hartman notes. “Customers like the fact they don’t have to log back in and they can see their order history,” she says. The latter point is important because some shoppers reorder the same shoe style regularly.

E-retailers have different specific reasons for pursuing web site personalization technology, but cementing ties with the customer is the focus. Higher conversion rates follow if the customer gets the impression of being treated like an individual, experts say.

Determining how to measure the effects of deploying personalization tools often outweighs the challenge of deciding what technology to use, says Darryl Gehly, executive vice president at Molecular Inc., a web technology consulting and implementation firm. “The biggest challenge is to truly understand what the e-retailer hopes to achieve with the tools,” he says. “Often the premise for developing or buying tools isn’t sound, such as ‘because everyone is doing it.’ And without true metrics in place they will have a hard time deciding if it is beneficial.”

Due Maternity has decided that the investment in personalization has been beneficial. It attributes multiple gains to its site personalization efforts, led by a sales increase of about 30% over 2005. “We also made great gains in web community members,” DiPadova says. “We can reach out to more than 50,000.” Due Maternity community members get special offers and weekly deals on the site and via e-mail. The apparel featured in the offers, such as a $20 discount on a $98 outfit, usually sells out before non-members ever see it, he adds.

DiPadova notes that the site personalization technology cost $30,000 to $40,000 and includes most of the site design work and back-end programming.

Considerable savings

Building the technology in-house meant considerable savings for Due Maternity. DiPadova, whose background includes digital media development, estimates it could have cost at least $100,000 “just to get set up. And I recently talked to a company that would have recreated what we have for $200,000,” he says.

One drawback to self-developing site personalization technology is that it can take longer to implement than if a retailer were to contract with a third party. DiPadova estimates his system could have been installed in half the six months it ended up taking. “But our budget and the time it would take finding someone capable of doing it limited our options,” he says. “Due Maternity has grown organically from the start. We took revenue we had on-hand when we launched and have moved along as fast as we could with the resources we had.”

E-retailers don’t have to spend a lot of money on site personalization tools if their underlying system architecture is sound, says Gehly, the consultant. Today’s service-oriented architecture enables site developers to place data on a page based on the type of data. Most e-retailers who are building new sites are using service-oriented platforms, Gehly says. But some still are using older three-tier technology and it limits what they can do with personalization. “It’s easier and less expensive to present information, such as products viewed and purchased when it’s in a service-oriented environment,” Gehly says.

While cost factors are relative, smaller retailers—those selling $10 million to $50 million via e-commerce—need to make a commitment to technology, Gehly advises. “They have to place their bets,” he says. “It’s clear e-commerce is going to continue to grow. If they are going to be in the e-retail space, they’re going to have to bite the bullet.”

Know what you want

But the key is to understand the desired outcome, more so than selecting the technology. “If you want a site that allows you to personalize content, you have to look at the revenue you are driving through the online channel and what kind of ROI you would get by adding personalization,” Gehly says. “If a retailer is generating $5 million through the online channel, what’s the incremental gain from adding personalized content? The real expense is in the diligence of execution.”

For instance, Jeffers, which operates JeffersPet.com, wants site personalization to yield conversion rate and sales increases, says Ide, the director of e-commerce. But the online pet supply retailer knows there’s a step between deploying technology and logging revenue.

Jeffers is working with InterCerve Inc.’s nTarget site and e-mail personalization technology. The software greets customers by name, presents past purchases and suggests other products based on previous visit registration and log-in. The personalization technology rolled out in February with a customized e-mail campaign. The e-mails generated $100,000 in sales on the day after it debuted—a company record, Ide reports.

One of the limiting factors for e-retailers who have not deployed site personalization is a shortage of detailed data on customers. At PetsUnited LLC, personalization is on the agenda, but the company needs more customer data, says CEO Alex Tabibi. “We are going to allow people to personalize certain spaces and pages, but right now there’s not enough information other than for very superficial things,” he says.

PetsUnited, which operates Dog.com, Horse.com and Bird.com, has data on customer purchases and products they have viewed, “but those don’t give more than a fleeting glance of what the client’s true needs are,” Tabibi says. Among the additional data the company plans to gather are number of dogs, breeds, ages and birthdates.

A history lesson

Customer history is important for other retailers as well, but in some cases the marketplace is dictating the timetable for site personalization. For example, Infinity Resources Inc., parent of DeepDiscountDVD.com and DeepDiscountCD.com, is keeping it simple and focusing on combining the sites into DeepDiscount.com and adding books and video games, says David Barker, vice president, e-commerce marketing.

“As we gain more history we may change things to show more relevant products to our past customers,” he says. “But as we combine product lines, we want to see the mix. We know how they shop for DVDs and CDs, but the rest is unknown.”

For many e-retailers, how customers respond to merchandising techniques is largely unknown. But with more sophisticated technology like web site personalization tools, that mystery soon could be cleared up.

billb@verticalwebmedia.com