JD.com and Alibaba create indexes to identify Chinese shoppers’ spending trends, which help retailers gain insight.
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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.
“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.