March 1, 2010, 12:00 AM

Sponsored Supplement: Expanding the reach of personalization

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“Personalized ads drive three to five times more revenue than other online ads because they get the shopper to products they want quicker,” says ChoiceStream’s Johnson. “The quicker shoppers get to the product they want, the quicker they put it in the cart and proceed to checkout.”

With the cost of pay-per-click ads on the rise, personalized banner and display ads offer retailers an economical alternative for reaching consumers with relevant offers. “Paid search is getting so expensive that personalized ads are a good alternative for retailers,” says Coremetrics’ Squire. “Retail marketers are looking seriously at expanding their relationships with ad networks because of the opportunities personalized ads represent.”

As alluring as the possibilities of personal ads on the web may be, retailers will want to exercise caution. Most consumers do not expect to click on a banner or display ad and arrive at a landing page featuring the exact products they recently viewed on a retailer’s site.

“It can be a little unnerving for consumers because it is so unexpected,” says Squire. “There is a fine line between creating a relevant, personalized shopping experience through a personalized ad and retailers showing how much they actually know about the customer. Retailers may be better off using information about the customer to create a personalized brand ad that draws the consumer to their site with the intent of seeking out a desired product.”

Coremetrics’ AdTarget application captures customer data to create personalized display ads. Customer behavior patterns and product preferences are continuously captured across all channels used to update customer profiles.

More engaging e-mail

E-mail is another important marketing vehicle that retailers can personalize, to generate a boost in open and click-through rates without necessarily increasing the frequency of mailings. For instance, a shopper that has viewed a product several times online is more likely to respond to an e-mail letting her know that the item has gone on sale.

Sending e-mail alerts that notify consumers about special offers on products they have viewed or the arrival of items previewed in advance or that are back in stock all provide a call to action for the consumer to purchase that product after opening the e-mail message.

“A personalized e-mail creates a better reconnection with a product or brand the customer has shown interest in than a standard marketing message,” says MyBuys’ Cell. “These types of messages show the consumer the retailer is actually paying attention to their interests and is committed to matching its marketing efforts to what they want.”

Retailers sending out personalized MyBuys Alerts as part of their e-mail marketing campaigns can increase sales revenues for those campaigns up to 10%.

First-time visitors

Personalization need not be limited to consumers who have previously visited a retailer’s site or purchased there. It’s now possible to customize the experience of a consumer on her first visit to a retailer’s site. That kind of experience can persuade a consumer that this retailer truly understands her needs, and help make her a long-time customer.

But how does the retailer know what this visitor wants? Tracking the search terms the shopper entered that led her to the retailer’s site provides the first clues to her interests.

By matching the search strings entered by the consumer to similar search strings entered by customers that made a purchase, retailers can show products, price points and even suggest alternatives that get the customer on the right path to the product they want.

“Between 35% and 40% of new customers enter a retail site through a search engine and paying attention to the search keywords entered that led the consumer to the site can help retailers immediately create a personalized experience for the first-time customer,” says Squire.

Search engine queries also provide a consumer’s geographic location via the IP address. Retailers can use geographic data to suggest products purchased by customers from the same area.

“If a first-time customer from New York is looking for an Italian cookbook and customers from New York tend to buy a certain edition Italian cookbook, the retailer wants to be sure to display that cookbook to that new customer,” says Znode’s Vishwanathan. “First-time customers usually belong to an audience the retailer has served, and personalization for the first-time customer is about determining which audience they belong to and presenting brands and products specific to that audience.”

Besides analyzing the search terms the consumer entered, retailers can use other information about how a consumer navigates a site to personalize the new visitor’s online shopping trip. Information to be tracked includes product categories and pages viewed, price points, and the types of pages the visitor views.

“If a shopper is looking at a couple of brands of cameras at a certain price but does not buy, the personalization engine can be programmed to suggest alternative brands in that price range,” says Cell. “Retailers who know what matters most to a customer are more likely to make product recommendations that convert into a sale, much like a suggestion from a personal shopper in a store.”

Retailers feed clickstream and customer data to MyBuys, which uses it to build individual customer profiles stored on its servers. MyBuys looks for trends in clickstream data, such as price points, favored product categories, preferred colors and favored brands.

Once such preferences are identified, values are assigned to them based on the role the preference is likely to play in the purchase decision, and that enables MyBuys to make a recommendation tailored to that shopper. Scoring algorithms are used to weight attributes within the profile based on customer behavior patterns and to optimize recommendations for each customer.

Offline, too

Retailers that collect information from every interaction with a customer are in a position to personalize the shopper’s in-store experience, as well. That enables the retailer to take advantage of cross-sell and upsell opportunities at the store checkout counter.

Such personalized offers can be triggered by a loyalty card swiped at the point of sale or by asking the customer for her e-mail address or phone number, any of which can be used to access the customer’s profile.

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