Ecommerce Strategy - Personalization Tools

Personalization tools and techniques are considered significant building blocks for an ecommerce marketing strategy. Assuming that a well-developed personalization strategy has been vetted, we can begin exploring the ways to collect and analyze data most effectively to achieve our goals. The good news for ecommerce retailers is that there are many options along the price spectrum to consider, from revenue-based options to user-generated recommendations/reviews to more complex home-grown customized applications.

As with most technology solutions, personalization tools depend upon the data that must be collected from customers to provide a meaningful analysis. This data can be gleaned from user activity online such as clickstream behavior, or from user profiles, or by asking the user to answer several questions. Whichever process is followed, the software will then analyze this data via an algorithm that will then provide a unique experience to the customer(s). For example, a common approach is to provide cross-sell and/or upsell products based on adjacency or relevancy to a past or current purchase. However, most personalization providers make a distinction on how they display these results to the user (e.g. side-by-side, modal layer, etc.). Of course, the intent is to drive revenues by converting sales based on personalized results.

In order to increase online conversions, personalization solutions generally fall into five categories:

1. Versioning - displays different versions of pages based on segmented customers

2. Cross-selling - displays recommendations on a page(s)

3. Filtering - displays specific information based on customer's directive

4. Custom - displays options specifically aligned with an ecommerce provider's differentiated offering

5. User-generated - displays such as "top rated" or "most recommended" products based on community feedback and actions

Although there are a variety of personalization vendors, many of these are smaller VC-backed providers that are being consolidated (e.g. CleverSet recently acquired by ATG). Therefore, the alignment between strategic and technical capabilities should consist of a roadmap for incorporating prioritized personalization features to meet the overall ecommerce marketing goals.