The Perfect Fit

Right off the bat, Casual Male XL has an advantage in e-commerce, says David Levin, president and CEO of Casual Male Retail Group Inc. “Men generally do not like to shop, bigger guys even less so,” he says. “It’s one step away from going to the dentist.”

Since getting many men into stores is a tall order, the retail chain also sells through a catalog and web site. In an effort to increase customer satisfaction and loyalty and boost conversion rates and sales in its online channel, the retailer decided to make the online experience for customers more personal and inviting. And when it comes to web personalization, the big and tall menswear retailer thought ... well ... big.

After almost two years of development, the result is Laurie, a personal shopping assistant who guides a customer through his own online store, which knows the customer’s exact sizes, fashion likes and dislikes, clothes in his wardrobe at home, which clothes not to show, and what he may be looking for at that very moment. She works 24 hours a day, seven days a week, helping men find their way around the store and offering them wardrobe advice.

This effort by Levin and technology, merchandising and marketing staff at Casual Male XL is a powerful example of e-commerce personalization, a selling strategy e-retailers have been pursuing since the dawn of Internet retailing. What’s more, to enable Laurie to speak to and be seen by customers, Casual Male XL is ahead of the e-retailing pack in its use of online video—a technology of significantly growing importance to web retailers, many experts say.

A tremendous advantage
Personalization is the future; if they haven’t already, e-retailers must begin personalizing their web sites now to ensure success, Levin warns.

“Personalization moves you away from scattershot methods for retaining customers and can help boost sales,” Levin says. “You must understand individual customers through their shopping and buying habits and their needs and wants, and then cater to them.”

For instance, Levin says, Casual Male won’t waste time pitching suits to someone who’s never bought a suit. “Instead, if we look at his purchases and see that he loves a certain brand of casual shirts and a new shipment of the shirts arrive, we’ll send an e-mail addressing the customer by name and letting him know more of his favorite shirts are in stock,” Levin says. “He then can link to his personal Casual Male XL web site, where they will immediately be displayed.”

Ultimately, personalization helps retailers get deeper into customers’ lifestyles, Levin adds, and better understand what customers want.

Many industry observers agree with Levin, predicting that if ­retailers don’t gain a deeper understanding of customers’ shopping behavior and product preferences, they will find it difficult to get deeper into customers’ wallets. This new necessity in e-retailing is driven in large part because the industry is reaching a point where the battleground is shifting from price and product to customer experience, says Tamara Mendelsohn, consumer markets analyst, Forrester Research Inc.

“Retailers that do personalization first will immediately have a leg up on their competitors,” Mendelsohn argues, “because ­making the customer experience more relevant increases the likelihood of customers returning.” While personalization will be a great competitive advantage during the next couple years, she adds, it quickly will become “a must have.”

Monogrammed baggage
Back in the day when the phrase “dot-com” did not yet have monogrammed baggage, personalization was touted as a web tool that would change the face of e-retailing. But at the time, e-retailers did not have the infrastructure, the capital or the expertise to make personalization happen. As a result, many in the industry seeing the unmet expectations of personalization branded it another example of hopeless hype.

But personalization is back—and this time, it’s personal.

In fact, it’s being given robust new life by retailers who believe there are few higher priorities in e-retailing today. Also referred to as “relevance,” personalization now is being used by these merchants in sundry ways that would stun even the truest believers of the mid- to late ‘90s.

Personalization is a marketing, merchandising and selling technique that uses information technology to draw conclusions based on customer shopping and purchasing data. The technology uses those conclusions to automatically create a unique e-commerce web site experience or highly targeted e-mail message for individual customers. Internet technology presents the unique experience in ways that are instantly recognizable (displaying a person’s name and preferred product categories, enabling social networking), behind-the-scenes (displaying individual products that data analysis has determined the customer may like), or a combination of the two.

Additionally, moving beyond the passive role of having their data analyzed, customers can play an active role in creating a customized web site experience—answering questionnaires, creating or ­participating in blogs, dreaming up Top 10 lists, and undertaking any number of other actions designed to enable the e-retailer to better get to know them.

A good example of personalization both in front of and behind the camera is the site experience offered by Netflix Inc. The DVD rental colossus addresses ­subscribers by name on its pages, spells out the basis upon which specific film recommendations are made, and offers social networking functionality that enables subscribers to link up to make recommendations to one another as well as take a peek at what their online friends have been watching.

Under the surface, Netflix uses proprietary technology, dubbed Cinematch, to predict whether subscribers will enjoy a movie based on their browsing behavior, rental history and the number of stars subscribers give films. For example, when a customer comes to Netflix, Cinematch behind the scenes creates a unique home page for him. If he awards 5 stars to “Goodfellas,” “Death Wish 4: The Crackdown” and “The Texas Chainsaw Massacre: The Next Generation,” odds are highly likely that the customer’s personalized home page will not feature the likes of “Beaches,” “Steel Magnolias” or “Fried Green Tomatoes.”

Is this really relevant?
It all comes down to what is relevant to customers, be it displaying the right DVDs, flowers or coats for them to browse, linking them to web retailer-hosted blogs on topics of interest to them where fellow customers discuss trends and review products, or sending them highly targeted e-mail messages that contain promotions and offerings on products they likely will enjoy.

“Retailers can create more meaningful relationships with customers through relevancy. In other words, when a merchant decides on something to say, customers will listen—and that translates, for example, into higher click-through rates on e-mail campaigns and increased ­attention from the merchant’s customer base,” says Forrester Research’s Mendelsohn. “Quite simply, ­relevancy translates into more business and loyalty.”

Some industry experts, though, are not completely sure about the effects of personalization. But there’s an unusual caveat to their stances.

“The arguments for personalization depend on what one defines as such,” says W. Gregory Dowling, senior analyst at JupiterResearch. “When we ask consumers what is going to make them purchase again from a retail store, we do not see a huge percent saying personalization is what they need. In one survey, for instance, only 5% of respondents said personalized e-mail would make them buy more often from an e-retailer.”

But here’s the caveat: Do customers know when they are being treated personally on an e-commerce site? Put another way, can customers perceive the value of that which they cannot perceive?

“In many people’s minds personalization has meant tangible things like having the ability to recognize an individual customer and welcome her back by name,” Dowling says. “But helping customers find the right products and make decisions is essential to successful e-commerce transactions. And things such as previously viewed products or the display of merchandise likely to be of interest, which is managed behind the scenes, will assist consumers in making the correct decision.”

As for those 95% of survey respondents who did not believe personalized e-mail would make a difference in their shopping decisions, many have definitely been fooled. “JupiterResearch also has found that highly segmented and targeted e-mails can lead to conversion rates 80% higher than non-targeted e-mails,” Dowling says. “In this example personalization is offering the right choices to the right people at the right times. So personalization seems to be flying under some ­customers’ radars.”

Thus, when it comes to industry executives interpreting studies and surveys, and conducting their own, the real question is whether customers are aware of things being personalized. “Today, customers still are hung up on fast shipping and promotions,” Dowling adds, “more so than understanding the technology behind these things.”

As for customer hang-ups, Casual Male XL is betting that massive personalization of its e-commerce site—creating unique online shopping experiences for every customer—will result in customers hanging up more clothes from the retail chain in their closets.

Last month the retailer had online video-based personal shopping assistant Laurie make her debut in Boston and San Francisco. The printed receipt for an in-store customer in either of the two cities now includes an individual URL for his personal Casual Male XL e-commerce site, adorned with clothes, shoes, accessories and other products all in his size and style and based on his anticipated needs as deduced by analysis of that customer’s purchase history and other information in the company’s database.

After a few months of testing in the two cities, the multi-channel retailer will roll out Laurie nationwide next year in tandem with a new customer loyalty program.

IRCE 2008 Conference Multi-Media CD-ROM

“Personalization offers a huge opportunity for us to increase the spend of existing customers,” Casual Male XL CEO Levin says. “Our in-store customers shop us 2.2 times a year. With the right accessibility and stimulation to see new products, they eventually could be shopping weekly, knowing they do not have to come into the store again, which is a challenge with many of our customers.”

Some industry experts back Levin up. An increase in personalization will translate into an increase in frequency of customer visits—this is where e-retailers will see the highest impact of personalization, says Craig Smith, founder and managing director at Trinity Insight LLC, a research firm that specializes in the web user experience. “Shoppers will quickly realize that the e-retailer has a site that specifically meets their needs. Consequently, measuring return visits and the percentage of revenue by return customers will gauge the stickiness of the site based on the enhanced user experience.”

Casual Male isn’t the only fashion retailer delving into personalization. What’s good for the goose is good for the gander, after all. And Baby Phat, an e-retailer of clothes and accessories for teen and tween girls, has been trying personalization on for size.

Very fast results
One of 25 designer, celebrity and luxury brand fashion sites managed by e-commerce site builder and manager eFashionSolutions LLC, BabyPhat.com’s conversions rose 10.7% and average cart size rose 10.4% within 30 days after implementing a rules-based engine that dynamically optimizes merchandising on the site based on a visitor’s behavior. During the same time, revenue per site visitor jumped 22%.

The e-retailer uses Sento Corp.’s rules-based engine, called the Customer Experience Platform, an on-demand service that analyzes customer behavior in real time, enabling sites to dynamically provide messaging and offers based on that behavior. Registration is not required to capture data on the customer’s behavior as she travels through the site. The platform tracks that behavior by tagging, similar to how web analytics captures customer behavior.

But unlike web analytics, which collects behavior data and shows patterns, the Customer Experience Platform feeds the data into its rules-based engine—with rules set by the retailer’s merchandising team—that automatically and in real time puts up messaging and offers based on the behavior of the individual visitor while the visitor is still in session. It also can mine the historical behavior of a customer to dynamically put up offers and messaging for visitors when they return to a site.

BabyPhat.com set the engine rules for upselling, using them to offer color-matched accessories to a visitor based on what she places in her cart. But the active personalization by customer, the capacity that characterizes the platform, also lets site operators set rules for the engine based on other factors, such as geo-location-based rules, which can present offers and messaging based on a visitor’s IP address; or rules based on a customer’s value, the company says.

Personalization is extremely important because there are so many other merchants out there, says Bernt Ullmann, president of Phat Fashions LLC, which operates BabyPhat.com. “The consumer can choose to go to any number of brands. In this day and age, it makes a difference if we feel people or merchants care about us. And personalization is the most effective vehicle to show that you, the customer, are important to us. This fosters brand loyalty and repeat customers.”

YOU’ve got mail
While e-commerce site personalization can create the personal touch that leaves an impression in customers’ minds and make them want to return, another type of e-commerce personalization reaches out to customers to persuade them to pay another visit.

Segmenting e-mail list databases to the extreme, then producing very specific language, content and merchandising for the e-mail message to be sent to each ­segment has proven ­successful for many Internet ­retailers. Such is the case at HancockFabrics.com. The merchant is using relevance-driven ­marketing technology from MyBuys Inc. to generate personalized e-mails to repeat customers. It launched its new e-mail campaign, which includes an RSS feed, in August.

“We are doing back-in-stock and new item notifications for customers who have shown interest in such items. These focused e-mails have produced a 15% conversion rate for back-in-stock items and 7% for new items,” reports Daniel Fager-George, senior manager of online services at HancockFabrics.com. “We had to place a little bit of extra code on our web site, automate the language and use basic text links in product descriptions to achieve all this. But this work enables customers interested in an out-of-stock or new item to simply click on the embedded link and sign up for a notification based on their preferred form of communication, e-mail or RSS feed. They then will receive a notification as soon as their item is in.”

This kind of personal, customer relationship and service, which many shoppers feel is so lacking in stores today, is something that eventually could set e-commerce apart from its sister sales channels. The bottom line: It is something that, to one degree or another, is expected by ­customers—whether they see it or even whether they are unaware because it is operating behind the scenes—when visiting an e-commerce site, asserts Gene Alvarez, vice president of CRM and e-commerce at researchers Gartner Inc. Alvarez specializes in e-commerce site personalization.

“At bare minimum today, when you log onto a site you better be presented with a hello in front of your name. But that is barely personalization,” Alvarez says. “True personalization is contextual relevance. If I’m a time-over-money shopper, I want things that help me better understand and qualify products very quickly. Conversely, if I am a discount shopper, I always want to know what promotions are running along with some recommendations. These are much more personalized experiences for me than birthday reminders.”

Ultimately, of course, personalization efforts—be they e-mail, site experience, blogs, social networks or any number of other possibilities—must lead to business improvements to justify their existence.

So virtual personal shopping assistant Laurie over at Casual Male XL better get moving.

“Tangibly, our personalization efforts must increase the number of times a customer shops online with us within a year; that will increase our market share. And we want to get more spend from people on an annual basis,” says CEO Levin. “Intangibly, we want to make customers happy, make them feel special—this is his personal place to shop, and he’s being treated with TLC. This is what will differentiate us from everyone else in our market.”

bill@verticalwebmedia.com

CRM not as easy as it sounds

Personalization and CRM have more than just the customer in common—they both share a similar history. Just a few years ago the industry was abuzz about customer relationship management software and how retailers could implement it and quickly make customer service more helpful and effective. But the buzz died and CRM seemed to have disappeared. It turned out many retailers simply weren’t sure about CRM.

While retailers know managing relationships with customers is fundamental to long-term success, many today haven’t yet decided whether making an investment in technology is the answer to helping them manage interactions with customers. And for those merchants who have begun formal, technology-driven CRM efforts, they’re coming to terms with the fact that CRM requires much more than installing software and rebooting. For them, the realization has begun to hit that CRM is much more than just software in a box. It actually is a collection of strategies, processes and techniques that encompasses marketing, sales and customer service—and it all is fueled, not wholly cured, by the information technology.

“You simply can’t suddenly say, ‘Hey, let’s buy a CRM solution,’” says Jeff Roster, vice president of retail industry market strategies at Gartner Inc. CRM today is in what Roster calls the “trough of disillusionment.”

“After the initial noise and unrealistic expectations faded away, retailers began to work on CRM and found that it is not as easy as it sounds,” he says. “Now they’re winnowing away at the hype and looking for value. If there is value, it will rise out of the trough; if not, it will fall off the charts.”

The level of noise about CRM remains very low because the retailers who have decided to pursue it still are working on it—there simply is not much to talk about yet, Roster adds.

Retailers that opt to work on CRM will succeed, and save money on I.T. investments, by first determining precisely where they need the help of the processes and technologies, says Zachary McGeary, associate analyst at JupiterResearch. “All interactions with customers are critical to managing customer relationships,” he states. But all retailers are not the same, and all retailers do not have the same strengths and weaknesses, he adds.

“Retailers should go to vendors that can give them only what they need,” McGeary says. “A retailer may only need help with marketing, or just sales or service, and they need to be able to buy functionality in modules.”

Retailers also must know that it will take significant time and effort before they can connect all the customer-interaction dots via new processes and technologies, says Liz Herbert, senior analyst at Forrester Research Inc. And for those retailers who haven’t yet considered CRM, she has succinct advice: “E-retailers need to be looking into it.”