June 29, 2009, 12:00 AM

A little personalization goes a long way for e-retailers

Retailers become more savvy about how to personalize the web experience and present product reviews.

When consumers shop via their PCs they gain the convenience of being able to buy from the comfort of their couch, they save time, and they save money on gas and often taxes. They also have the luxury of choosing from a much broader selection than a bricks-and-mortar store typically offers.

What they sometimes lose, however, is the personal touch of a sales associate who can speak with them about what they are looking for and their price range and make customized recommendations.

This, industry experts say, makes personalization, reviews and recommendations a top priority for e-retailers. Such systems, if implemented correctly, can go a long way toward filling the customer service gap some consumers find when they move from shopping in stores to online.

Getting noticed

A Forrester Research Inc. study found 54% of U.S. online shoppers notice product recommendations on e-commerce sites, and 34% of those shoppers have made purchases based on recommendations.

But it’s important to find the right type of recommendations system, and retailers should test a program before they implement it.

Online retailer Footwear etc. recently found this out firsthand. The merchant increased by 75% sales from product recommendations after it began using a new system on its e-commerce site, Footwearetc.com.

In an A/B test of the new on-demand recommendation engine delivered over the Internet against recommendations developed by Footwear etc.’s merchandising team, the third-party engine produced a 54% increase in the recommendation click-through rate. That led to a 75% increase in sales from recommendations and a 69% increase in the average value of orders stemming from recommendations, the retailer says.

“We were very impressed by the dramatic lift in revenue we received over our manual ones,” says Mike Baranov, Footwear etc.’s director of online operations.

When adding recommendation systems, analysts say retailers should implement systems that zero in on shopping behavior, not demographics. How those behavioral profiles are built, however, depends on the system. Some programs build profiles for shoppers based on their actions as individuals on a retail site. Others create profiles based on the activity of all shoppers, then base suggestions on the profile the shopper seems to fit given her current behavior.

Both methods rely on anonymous cookies that give each customer a tracking identification number, allowing retailers to monitor the consumer’s behavior. E-retailers place JavaScript tags on pages to track events such as clicks, what the shopper has viewed and time spent on pages, and send the data to a recommendations server.

Some online merchants hit shoppers with recommendations right from the home page. In this case, returning shoppers navigate to the site and are shown items the retailer thinks they will like. However, more often, retailers do not display recommendations until the shopper delves deeper into the site and navigates to category pages, product pages, search results pages or shopping carts.

Showing appropriate items to consumers at key times can significantly drive sales, but perhaps the most potent recommendations are those that come from fellow shoppers. That’s why retailers may want to consider implementing ratings and reviews in addition to personalization.

1.5 million reviews

Online retailer eBags believes customer reviews are so important it has made sure its retail site can handle unlimited ratings and reviews. User-generated reviews now number more than 1.5 million on eBags.com, and one product has been reviewed 4,000 times.

“The thing that is really important is how much people write. Even in negative reviews this is helpful,” eBags co-founder and senior vice president of marketing Peter Cobb says. “What we’re really saying is ‘it’s your whiteboard.’”

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