E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
Carefully implementing the right personalization techniques and technologies to enhance online merchandising, marketing and shopping can help cross-sell and upsell, retain customers, and boost sales.
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.”
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.”