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800.416.4959/CODE: 693666
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Today’s Speakers
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Housekeeping…
• How to get “The Executive Guide to Captivating Customers” White Paper
All attendees will receive via emailAvailable to download on the MyBuys website
• This Webinar will be recorded and available for viewing on the MyBuys website
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MyBuys – The Personalization Experts
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Why MyBuys Commissioned This Research
To uncover the gap between consumer demand for
personalization and current merchant execution
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About the e-tailing group
14 years e-commerce consulting
Author, It’s Just Shopping
50+ years traditional retail and catalog experience
Fortune 500 client projects ranging from strategic planning, merchandising, marketing, to technology development and messaging
Proprietary research studies on mystery shopping and merchandising,
marketing and EMC (Evolving Multi-Channel Consumer), In-Store Pickup and Gift Registry
e-Commerce expert and frequent speaker at industry events, trade associations
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Today’s Agenda
I. The Consumer Point-of-View
II. The Merchant Perspective
III. The e-tailing group Personalized Product Recommendations Checklist
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I. The Consumer Point-of-View
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Consumer Survey Objectives
• To understand how consumers value personalized shopping across channels
• To learn how purchases are impacted when there is a personalized shopping experience
• To see how email can be effective as both customer service and promotional when personalized based on past purchases and/or preferences
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Gender63% Female37% Male
Age range12% 25-3428% 35-4430% 45-5430% 54+
HH with or w/o Children62% None38% Presence of
Children
HH Income• 4% Under $25,000• 4% $25,000 - $35,000• 10% $35,001 - $50,000• 23% $50,001 - $75,000• 21% $75,001 - $100,000• 5% More than $100,000• 5% Prefer not to respond
Education• 8% High school graduate• 23% Some college; no degree• 35% College graduate• 9% Some graduate school• 25% Post-graduate degree
Online survey of 1,345 adults who shop online 4+ time annually,spending $500 or more via the Internet
Methodology – Demographics
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Overview of Consumer Feedback
• Shoppers want - and expect - more personalized online shopping experiences based on past purchases and behavior
• Personalized product recommendations are convenient, save time and help shoppers make better choices
• Shoppers perceive that the Internet is the channel where they are best known and receive personalized recommendations yet merchants do not know shoppers as well as they should
• Shoppers are “significantly to somewhat” more loyal to a retailer that provides them with a personalized online experience
• Personalized product recommendations are valued throughout the online shopping experience
• By improving the personal relevance of related products shown, merchants have an opportunity to gain incremental sales
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For greater convenience and time savings, shoppers want - and expect - more personalized online shopping experiences based on past purchases and behavior
I expect that my shopping cart would be saved for future visits so that I don’t have to go to all the trouble to find the products I had previously selected.
66%
I expect that my shopping experience online would be personalized based on past purchases.
39%
Greeting me by name is nice, but I would like to see more of a personalized shopping experience based on past purchases and behavior when I visit a website.
30%
I want my shopping experience online to be more personalized so it saves me time when making purchase decisions.
30%
I would be willing to provide personal information in exchange for a more personalized shopping experience.
19%
Which of the following best describes your feelings about personalization online? Check all that apply.
I expect that my shopping cart would be saved for future visits so that I don’t have to go to all the trouble to find the products I had previously selected.
66%
I expect that my shopping experience online would be personalized based on past purchases.
39%
Greeting me by name is nice, but I would like to see more of a personalized shopping experience based on past purchases and behavior when I visit a website.
30%
I want my shopping experience online to be more personalized so it saves me time when making purchase decisions.
30%
I would be willing to provide personal information in exchange for a more personalized shopping experience.
19%
Which of the following best describes your feelings about personalization online? Check all that apply.
The Consumer Point-of-View
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75% will trade privacy for personalization. 40% of shoppers have no privacy concerns; 35% enjoy receiving personalized recommendations although they consider them somewhat invasive but still enjoy PPR
I have no privacy concerns. 40%
It feels somewhat invasive but still enjoy seeing the personalized recommendations.
35%
It feels invasive and would prefer not to see such recommendations. 14%
I am somewhat turned off from shopping at that retailer. 7%
I am completely turned off from shopping at that retailer. 3%
How would you rate your feelings regarding any potential privacy concerns when receiving personalized product recommendations?
I have no privacy concerns. 40%
It feels somewhat invasive but still enjoy seeing the personalized recommendations.
35%
It feels invasive and would prefer not to see such recommendations. 14%
I am somewhat turned off from shopping at that retailer. 7%
I am completely turned off from shopping at that retailer. 3%
How would you rate your feelings regarding any potential privacy concerns when receiving personalized product recommendations?
The Consumer Point-of-View
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Merchants do not know shoppers as well as they should as 39% scored favorite merchants 5 or less on a “ten-scale”
On a scale of one-to-ten how well do your favorite merchants know you as a customer where ten implies they know you extremely well?
3% 3%
5%
8%
20%
14%
19%18%
5%4%
one two three four five six seven eight nine ten
On a scale of one-to-ten how well do your favorite merchants know you as a customer where ten implies they know you extremely well?
3% 3%
5%
8%
20%
14%
19%18%
5%4%
one two three four five six seven eight nine ten
The Consumer Point-of-View
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Shoppers perceive that the Internet is the channel where they are best known and receive personalized recommendations
Knows you best
Knows you least
4 3 2 1
Internet 45% 17% 13% 25%Store 18% 37% 30% 16%Catalog 6% 37% 48% 9%TV Shopping Network 31% 9% 10% 50%
Comparing online to store-based selling, which of the channels where you shop typically knows you best? Rank 1-4 where 4 is the channel that knows you best and makes recommendations tailored for you.
CHANNELS
Knows you best
Knows you least
4 3 2 1
Internet 45% 17% 13% 25%Store 18% 37% 30% 16%Catalog 6% 37% 48% 9%TV Shopping Network 31% 9% 10% 50%
Comparing online to store-based selling, which of the channels where you shop typically knows you best? Rank 1-4 where 4 is the channel that knows you best and makes recommendations tailored for you.
CHANNELS
The Consumer Point-of-View
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81% of these shoppers find value in truly personalized products on a site because they are convenient,save time and help them make better choices
Personalized product recommendations are convenient and save me time.
24%
Personalized product recommendations allow me to make better choices.
21%
I never notice products that are personalized during my web shopping experience.
19%
I find them helpful and often make a purchase. 13%
I find them valuable and make a purchase once in a while. 37%
I find them valuable but don’t typically make a purchase. 34%
How do you typically react when you see products that are truly personalized for you on a website? Check all that apply.
Personalized product recommendations are convenient and save me time.
24%
Personalized product recommendations allow me to make better choices.
21%
I never notice products that are personalized during my web shopping experience.
19%
I find them helpful and often make a purchase. 13%
I find them valuable and make a purchase once in a while. 37%
I find them valuable but don’t typically make a purchase. 34%
How do you typically react when you see products that are truly personalized for you on a website? Check all that apply.
The Consumer Point-of-View
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77% of the time a merchant’s personalized recommendations result in additional product purchases
Beyond the product you bought, how often do youpurchase an additional product based on a
merchant's personalized recommendations?
2%
19% 18%
6%
56%
All the time Some of the time Once in a while Never Never noticed
Beyond the product you bought, how often do youpurchase an additional product based on a
merchant's personalized recommendations?
2%
19% 18%
6%
56%
All the time Some of the time Once in a while Never Never noticed
The Consumer Point-of-View
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Over 1/3 (36%) of shoppers are “significantly to somewhat” more loyal to a retailer that provides them with a personalized online experience
When receiving a personalized experience from an online retailer how much impact does that have
on your loyalty to that particular retailer?
9%
27%
40%
24%
Significantly more loyal Somewhat more loyal Mixed bag dependingon current needs
Not necessarily moreloyal
When receiving a personalized experience from an online retailer how much impact does that have
on your loyalty to that particular retailer?
9%
27%
40%
24%
Significantly more loyal Somewhat more loyal Mixed bag dependingon current needs
Not necessarily moreloyal
The Consumer Point-of-View
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89% of these shoppers feel that products suggestedon a site are specifically tailored for them only some of the time or once in while
How often do you feel that the products suggested on a websiteare tailored specifically for you?
2%
38%
49%
5% 5%
All the time Some of the time Once in a while Never Never noticed
How often do you feel that the products suggested on a websiteare tailored specifically for you?
2%
38%
49%
5% 5%
All the time Some of the time Once in a while Never Never noticed
The Consumer Point-of-View
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Shoppers indicate it is ”very to somewhat valuable”to receive personalized product recommendationin each of these website locations
Product pages 76%
Personalized home page 75%
Category page 74%
Shopping cart 70%
Order confirmation 67%
Shipping confirmation 65%
Brand page 63%
Email with product recommendations specific to past purchase 62%
Email after purchasing a product asking for a rating and reviews 61%
Thank you page after checkout 55%
Personalized Product Recommendations Ranked Very Valuable, Valuable & Somewhat Valuable (5-3)
Product pages 76%
Personalized home page 75%
Category page 74%
Shopping cart 70%
Order confirmation 67%
Shipping confirmation 65%
Brand page 63%
Email with product recommendations specific to past purchase 62%
Email after purchasing a product asking for a rating and reviews 61%
Thank you page after checkout 55%
Personalized Product Recommendations Ranked Very Valuable, Valuable & Somewhat Valuable (5-3)
The Consumer Point-of-View
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By improving the personal relevance of related products shown, merchants have an opportunity to gain incremental sales
I usually peruse those products and once in a while purchase one of them. 53%
I have looked at those products in the past and they don’t seem to be the types of products I would consider buying.
23%
I don’t look at those products because they’ve never been on target in terms of products I would likely buy.
11%
I purchase a lot of gifts online and am not often interested in buying additional items at that time or in the near future.
10%
I usually peruse those products and always purchase. 2%
When you are shopping on a merchant’s product page or in the shopping cart, which one of the following has typically been your experience when you see “Customers who bought this product also bought these products?”
I usually peruse those products and once in a while purchase one of them. 53%
I have looked at those products in the past and they don’t seem to be the types of products I would consider buying.
23%
I don’t look at those products because they’ve never been on target in terms of products I would likely buy.
11%
I purchase a lot of gifts online and am not often interested in buying additional items at that time or in the near future.
10%
I usually peruse those products and always purchase. 2%
When you are shopping on a merchant’s product page or in the shopping cart, which one of the following has typically been your experience when you see “Customers who bought this product also bought these products?”
The Consumer Point-of-View
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Placement – Personal Home Page
Amazon Educated Shoppers About
Personalized Product
Recommendations
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Placement – Product Detail Page
“More Great Finds” •You may also like• Top sellers• New• Great choice
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Placement - Category Page
Captivate customers
immediately in the category
page
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Placement - Brand Page
Customized selection of
branded goods
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Placement - The Shopping Cart
Fuel last-minute impulse buys
This Season’s Essentials You Might Like/Deal of the Day
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Post-order, shipping and order confirmations are where shoppers most value receiving personalized recommendations
COMMUNICATIONSVery
valuableValuable
Somewhat valuable
Not very valuable
Not at all valuable
Shipping confirmation 40% 12% 13% 17% 17%
Order confirmation 39% 14% 14% 17% 16%
Thank you page after checkout 11% 16% 28% 25% 20%
Email after purchasing a product asking for a rating and reviews
10% 16% 35% 21% 17%
Email with product recommendations specific to past purchase
9% 15% 38% 22% 16%
Post-order, how valuable is it for you to receive personalized recommendations within each of the following communications?
COMMUNICATIONSVery
valuableValuable
Somewhat valuable
Not very valuable
Not at all valuable
Shipping confirmation 40% 12% 13% 17% 17%
Order confirmation 39% 14% 14% 17% 16%
Thank you page after checkout 11% 16% 28% 25% 20%
Email after purchasing a product asking for a rating and reviews
10% 16% 35% 21% 17%
Email with product recommendations specific to past purchase
9% 15% 38% 22% 16%
Post-order, how valuable is it for you to receive personalized recommendations within each of the following communications?
The Consumer Point-of-View
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Placement - Order Confirmation and Thank You Page
Merchandised for incremental sales
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Placement - Shipping Confirmations
Sell and support
opportunity
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Placement – Post-Order Merchandising
Specific coordinating product sent
via email
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Personalized email alerts are powerful toolsthat can broaden perceptions and increase sales
I believe this kind of communication is much more valuable than a generic promotion likely sent to all customers.
37%
I sometimes respond to these emails purchasing one or more of the products. 34%
I respond the same as general communications. 30%
I always open these kinds of communication. 24%
This retailer is customer-centric and truly provides a service. 17%
I always respond to these emails purchasing one or more of the products. 3%
What is your perception when receiving an email alert to let you know about products/ promotions tailored for you or for backordered products you previously attempted to purchase? Check all that apply.
I believe this kind of communication is much more valuable than a generic promotion likely sent to all customers.
37%
I sometimes respond to these emails purchasing one or more of the products. 34%
I respond the same as general communications. 30%
I always open these kinds of communication. 24%
This retailer is customer-centric and truly provides a service. 17%
I always respond to these emails purchasing one or more of the products. 3%
What is your perception when receiving an email alert to let you know about products/ promotions tailored for you or for backordered products you previously attempted to purchase? Check all that apply.
The Consumer Point-of-View
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Asking Customers What They Want
Favorites by• Category• Sub-category• Brand
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Personalized Email Alerts
Taking advantage of profiling by
promoting new products based on preferences
“Beauty Bye-Byes” online-only clearance
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Ratings and Reviews Email
Rate This Product
*****
Bring them back to buy more
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Shoppers want personalized experiences acrosschannels, yet 78% are only encountering them“some of the time” or “once in a while”
Q14
How often do you encounter retailers who provide personalized experiences in their stores, online and/or from their call centers?
4%
29%
49%
14%
5%
Most of the time Some of the time Once in a while Never Indifferent
How often do you encounter retailers who provide personalized experiences in their stores, online and/or from their call centers?
4%
29%
49%
14%
5%
Most of the time Some of the time Once in a while Never Indifferent
The Consumer Point-of-View
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The consumers have clearly set a high bar for the merchant community
To exceed their customer’s expectations merchants must decide how to tackle the
challenge of providing best-of-breed personalization
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II. The Merchant Perspective
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Over half the merchants still do not know how much up-sells and cross-sells contribute to overall revenue; for the most part known contributions remain under 7%
What percent of revenue are your up-sells and cross-sellscontributing to overall revenue?
8%5%
13%10% 8%
6%
50%
6%9%
13% 14%
5% 4%
49%
6%9%
12% 11%8%
5%
49%
7%11% 12%
9%5% 5%
51%
Less than 1% 1-2% 3-4% 5-7% 8-10% Greater than10%
Don't know
2008 2007 2006 2005
The Merchant Perspective
e-tailing group 7th Annual Merchant Survey
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Cross-sell/Up-sell and Personalization Have Not Yet Reached Top Priority Status
Growth areas: 2008 2007
Product enhancement
& Rich media36% 30%
International sites 19% 11%
New Metrics:
Adding customer generated content
54%
New backend system
26%
New Technology platform
26%
What initiatives are you planning to improve website performance?Check all that apply.
71%
67%
65%
65%
58%
55%
54%
43%
41%
36%
36%
32%
28%
28%
26%
26%
26%
22%
19%
76%
66%
70%
68%
55%
62%
47%
42%
35%
30%
38%
32%
30%
34%
21%
11%
More targeted email programs
Site redesign/upgrades
Adding or improving onsite search
Enhanced onsite merchandising features
Cross-sell/up-sell
Content development
Adding customer-generated content*
Overhauling shopping cart
Personalization
Gifting features
Product enhancement tools/Rich media
Enhancing customer service
Interactive tools
Analytics package
New backend systems*
Increased personnel
New technology platform*
Tools that automate functionality
International sites
2008 2007
Q3 * New metric
the e-tailing group 7th Annual Merchant Survey
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Merchant Survey & Objectives
Goal• To explore the merchant perspective on personalized
product recommendations:• Implementation • Current methodologies• Outsourced technologies• Retention• Budgets• Techniques• Performance rankings
24 merchants completed a 10-question survey;facilitated through personal interviews
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24 Participating Merchants
• ABT Electronics• Barneys• Boston Proper• Coach• Cost Plus – World Market• Danskin• Decorative Product Source• GSI• HP Home & Home Office• Intermix • Lucy
• Massey’s• Orvis• Palm Beach Jewelry• Patagonia• Pendleton• Petco• Rugs Direct• Stacks and Stacks• Staples• Wine Enthusiast• Wirefly
* The e-tailing group 7th Annual Merchant Survey, 1Q ‘08
A cross-section those who scored high in cross-sell/ up-sell contribution* as well as successfully demonstrated personalization efforts online
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Overview of Our Merchant Findings
• High awareness levels coupled with resource-strapped merchants make the opportunity one merchants must research and understand thoroughly
• Merchants perceive there has been an evolution and maturity to the software solutions available in today’s competitive marketplace
• Current personalization strategies center on manual efforts where processes accommodate unique merchant requirements
• The most significant benefits from mimicking the in-store experience in the online realm are increased sales, increased customer loyalty and improved overall customer satisfaction
• Merchants are more open to solutions that would be easy to test on a small scale
and then quickly “flip the switch” to full-scale implementation • Merchants want assurances that the personalization technology they adopt goes
beyond merely helping with customer acquisition, but rather ensures long-term retention of the customer
A large, unrecognized potential exists for merchants who captivate customers by employing technology to close this personalization gap
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Times are Changing
“We desired a plug and play approach…prior to testing one of these tools we were doing everything manually and it was a huge drain on resources.”
“A great deal of expertise is required to deliver optimal levels of personalization and leveraging the expertise of partners is often a preferred practice.”
“For us it’s like a spy book on the site where we can pick up on customer interests, including past history and current behavior.”
Personalized product recommendations are more feasible with technology serving as an efficiency model
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The Technology Has Matured
Optimal Merchant Criteria
Larger SKU counts
Broad assortment
High turn
“While these tools have been around for several years, I feel that they have only started to mature in the past 12-18 months. I strongly believe that they can affect the end user
experience by directing more relevant product.” “At the end of the day, the data is there, those who execute will monetize”
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Better Customer Experience & Increased AOV
“I like the idea of technology helping us increase the average order size while simultaneously creating a better customer experience. An accessory may make the difference in our low margin business and we need a service in place.”
The Bottom-Line
Larger basket size
Overall site revenue
Customer loyalty
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Higher Open Rates with Personalization
Techniques for alerts
Back-in-stock
On sale
New
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“We take a manual approach where recommendations are hand-selected by the merchant team for each product; applying our own business rules to these merchandising efforts based on internal know-how. Despite such a manual approach, we have good success with average orders containing 3-4 units.”
“Our process is to load product until the next season, which is typically six to eight weeks. We don’t really go in and make adjustments because for us there’s a point of no return.”
79% of Personalization is Done Manually
Current Personalization Strategies
79%
12%
62%
21%
0%
20%
40%
60%
80%
100%
Manual hardcoded
Internal, TopSellers
Other InternalStrategy
TechnologyProvider
% M
erc
ha
nts
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Obstacles and Challenges
In-house mindset
Significant technology investment
Belief that such efforts can be accomplished with existing technology
“It is difficult to manage our assortment manually; we have tested automated versus manual and automated wins out and could even get better if we weren’t constrained by our vendor and category rules. “
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Top Retention Tactics
Email Catalog and direct mail Customer service as a differentiator Assortment Promotions Loyalty programs Paid search Affiliate programs
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IV. Personalized Product Recommendations Checklist
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Personalized Product Recommendations Checklist
Prioritize personalized product recommendations as one of your key 2008 initiatives
Determine the level of automation and number of touch-points to address
Do your homework in advance, setting clear expectations with potential vendor partner
Define PPR’s potential from an acquisition as well as a retention point of view
Identify onsite and email requirements
Understand how these technologies will integrate with and impact current systems, and determine if the vendor offers ongoing support and optimization services
Know your business and the unique requirements of your brand, your category and your customers
Test a series of recommendation placements on your site to understand contribution to the bottom line
Evaluate email alerts and the role they can play in returning shoppers to buy
Put the tools in place to ensure accurate attribution
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III. And Now, a Word from Our Sponsor
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79% of Cross-selling is Done Manually
This is where MyBuys can help you!
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Select MyBuys Clients and Retail Categories
Apparel Hobby & Electronics
Footwear Home & Garden
Cosmetics & Jewelry
Sporting Goods
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The Benefits Our Clients Enjoy
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• All recommendations were static
• 85% of emails went unopened
• 50% of carts were abandoned
• Wanted to replicate in-store ambiance of personal service
Massey’s – Challenges
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The Solution – Get to Know Each Customer
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Massey’s Results
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Austad’s Challenges
• 12+ hours a week of extra programming for manual cross-sells
• E-mail open rate 15%
• Market demands customer retention since universe finite
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The Solution – Promote Sale Items
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Austad’s Results
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Lauren FreedmanPresident
the e-tailing group, inc.1444 W Altgeld Street
Chicago, IL 60614Phone: 773-975-7280
Fax: 773-871-3528Email: [email protected]
Web: www.e-tailing.com
Lisa Joy RosnerVice President, Marketing
MyBuysOne Lagoon Drive, S.120
Redwood Shores, CA 94065Phone: 650-591-0210
Fax: 650-591-0173Email: [email protected]
Web: www.mybuys.com
Q&A