Richard Buettner Internet Consultant

In one of my earlier posts I talked about the definition of Personalisation. Since recommendation and personalization technology is still an underleveraged weapon for SMBs and should be part of every internet marketing strategy I am going to outline today the benefits and trends of this technology / approach and in particular for SMBs.

Being one of the top 5 web trends of 2009 according to ReadWriteWeb amongst others research companies there’s pretty a buzz around this concept.

So why all this buzz? Firstly personalisation technology goes along rather well with the general principle of web 2.0 (buzz!). It touches all the areas like information sharing, interoperability, user-centred, collaboration and real-time. Secondly it is accepted and wanted at the supply and demand side. Aberdeen predicts that “85% of all companies will have some elements of personalization to reach unique customers and specific market segments within the next 24 months”. eMarketer found out in 2007 that 72% of all online shoppers found recommendations helpful and 64% purchased as a result of a personalised recommendation. We are in 2009 so you can confidently add 5-10% on each of these numbers. By looking at the various websites of personalisation vendors one can notice in average they promise by using their technology an increase in conversion rates up to 90%, an order values rise by 45% and sales uplift from 10-30% and.

Sounds good? Sure, but lets have a look at today’s reality now. The most successful ecommerce sites routinely experience transaction closure rates in the range of 8 to 10 percent of visits, with the average across all of ecommerce pegged at a dismal 2.8 percent. Bounce rates frequently exceed 50 percent, and customer engagement with most sites is so low that customer loyalty is virtually nonexistent. Some of this can be attributed to everyone’s use of the web as a tool for research that ultimately leads to purchasing the best deals online or at brick and mortar establishments, where store conversions are in the 40-plus percent range. However, the primary reason for the failure of online retailing to convert customers at acceptable rates is because often small ecommerce websites have been a one-size-fits-all proposition. Small and medium online retailer websites contain a user interface, content, and presentation that remain static for every visitor. This occurs even though we intuitively know individuals have unique motivations and communication preferences. Shoppers rely on different information and different types of websites when making a buying decision.

Personalization technologies dynamically alter sites in real-time to provide a customized experience for every visitor to a site. Such applications or services identify an individual’s preferences, then delivers on-the-fly adjustments that make each customer feel the site was built just for him. The visitor feels instant rapport with the site, resulting in a deeper level of engagement and dramatically higher conversions.

Sites using personalization and recommendation tools are able to benefits from:

• Convert more browsers into buyers
• Increase order values
• Customer retention, customer loyalty and enhance lifetime customer value
• Serve content more efficient and surface long tail products
• Understand your customers
• Serve up an individualized look and site content for each customer
• Develop more effective merchandising and marketing programs

When it comes to benefits for online visitors one has to bear in mind that consumers are generally attracted by personalised content. A recent ChoiceStream survey showed that 78% of consumers are interested in receiving personalized content. Personalisation and/or recommendation are widely accepted amongst consumers, in many cases they can act as a competitive differentiation between websites. Web recommendations are the online equivalent of a store or sales associate approaching a customer browsing in a particular department/venue and saying, “Here’s a special you may be interested in.” Especially SMBs originating from an offline retail world need to see that consumers are often persuaded by this approach, as it helps them to discover products and solutions that they might not have been familiar with otherwise.

Generally users benefit from:

• They find what they were looking for
• It takes less time than usual
• They may also find a few extra things that they weren’t specifically looking for
• They received useful, community-based suggestions and probably pay more attention to them than they would do to traditional adverts (this means gaining from the virtual community / wisdom of the crowds to lead them to relevant content and resulting in serendipity)
• After this positive experience, they’re likely to return to the site

If you require further information (e.g. figures or ROI numbers) please fill out the form or just give me a call.

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