Personalization Metrics - Metrics ... or enterprise platform. In fact, ... Personalization has...

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  • Contact us: Todd Scholl(858) 369-3888tscholl@certona.com

    Personalization Metrics

    Introduction

    Todays ecommerce world is nothing short of overcrowded. Customers literally have hundreds of choices when it comes to one single product, and loyalty to one online resource isnt typical behavior online. With overwhelming choices, its easy for customers to become frustrated as

    targeted recommendations often solve this problem for customers, leading them to the right products on your site again and again.

    Personalization has been an integral part of ecommerce for years. As retailers attempted to provide a personalized shopping experience for their customers, recommendation engines helped automate the task of manual merchandising. By automatically recommending products to customers, retailers were able to create an online experience that not only gave customers the level of individualization for which they were looking, but also helped spur additional purchases.

    personalization solutions. By serving up product recommendations and promotional

    in customer loyalty and retention, while at the same time drive more sales and conversions. Few successful ecommerce sites are without a recommendation engine, whether serviced in-house, via a third-party solution vendor, or enterprise platform.

    In fact, in todays online marketplace, the question is no longer whether an ecommerce site has personalized recommendations. It has instead matured to where and how they are being used. In general, recommendations help your loyal and repeat customers by delivering a personalized shopping experience and providing relevant suggestions for similar and/or alternative products, value-added accessories, cost savings and much more based on ones needs and behavior in real-time. But recommendations also assist new visitors by facilitating discovery and availability of your companys product catalog and engaging them the moment they arrive to your

    she buys.

    The real question for most retailers, though, is how to measure the success of these recommendations. In a time where every single click a customer makes is converted into measurable data, gaining a clearer picture of the key performance indicators (KPIs) involved in measuring personalization success is an absolute must.

    Personalization Metrics

  • Table of Contents

    Introduction..................................................... 3

    Segmentation.................................................. 4

    Demand............................................................. 5

    AOV...................................................................... 6

    Conversion Rates............................................ 8

    Abandoned Carts......................................... 10

    Non-Responders.......................................... 12

    Wrap Up........................................................... 14

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    Personalization Metrics

    Introduction

    Todays ecommerce world is nothing short of overcrowded. Customers literally have hundreds of choices when it comes to one single product, and loyalty to one online resource isnt typical behavior online. With overwhelming choices, its easy for customers to become frustrated as they try to find the right product at the right price. But personalized, targeted recommendations often solve this problem for customers, leading them to the right products on your site again and again.

    Personalization has been an integral part of ecommerce for years. As retailers attempted to provide a personalized shopping experience for their customers, recommendation engines helped automate the task of manual merchandising. By automatically recommending products to customers, retailers were able to create an online experience that not only gave customers the level of individualization for which they were looking, but also helped spur additional purchases.

    Today, there can be little doubt about the true benefits of these powerful personalization solutions. By serving up product recommendations and promotional offers that are unique to an individual customer, online retailers can achieve increases in customer loyalty and retention, while at the same time drive more sales and conversions. Few successful ecommerce sites are without a recommendation engine, whether serviced in-house, via a third-party solution vendor, or enterprise platform.

    In fact, in todays online marketplace, the question is no longer whether an ecommerce site has personalized recommendations. It has instead matured to where and how they are being used. In general, recommendations help your loyal and repeat customers by delivering a personalized shopping experience and providing relevant suggestions for similar and/or alternative products, value-added accessories, cost savings and much more based on ones needs and behavior in real-time. But recommendations also assist new visitors by facilitating discovery and availability of your companys product catalog and engaging them the moment they arrive to your site. Their primary effect is focused on what a shopper buys, not necessarily if he or she buys.

    The real question for most retailers, though, is how to measure the success of these recommendations. In a time where every single click a customer makes is converted into measurable data, gaining a clearer picture of the key performance indicators (KPIs) involved in measuring personalization success is an absolute must.

    The Definitive Guide to Measuring Success

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    The Purpose Behind Measurement

    At Certona, we power the personalization solutions for many of worlds largest online retailers. Since our platform launched in 2005, we have been accumulating extensive historical data on how customers purchase and interact with our clients recommendations. We consult our partner clients on the best practices for measuring the effectiveness of recommendations and educate them on avoiding the pitfalls of misinterpreting data to ensure personalization remains as effective as possible.

    To assist those responsible for ensuring the customer experience remains positive while sales remain high, the personalization team at Certona has developed an industry wide reference guide. By helping to define the KPIs involved in successful transactions, a deeper understanding of concepts such as demand, non-responders, average order values, response rates, and conversion rates can be attained to truly categorize achievements at every level. Every month well discuss specific KPIs, what they mean, and how to use them in your business plans.

    You Cant Improve If You Dont Know What Or How To Measure

    In the world of ecommerce, there are a variety of different options when it comes to metrics. Without a good framework, accurate interpretations of these metrics can be challenging. Todays merchandising, online marketing, and ecommerce managers have complex jobs from optimizing their customer experience and site design to maximizing sales and managing ROI of their technology partners all without disrupting the shopping funnel. Like any business investment, they are accountable for measuring the return of their personalization efforts. With so much at stake, where is the best place to start?

    Before you can define what metrics work best with regard to personalization engines, you must understand one key factor. Todays methods for benchmarking are often hampered with inconsistent tracking and reporting metrics that are out of context with regard to the segment group targeted, the date range in which the purchase is occurring, and the channel and vertical in which the personalized recommendations are used. Clearing up these inconsistencies is the only way to truly measure the effectiveness of your personalization efforts.

    Part 1: Segmentation Defined

    Who Are You Targeting? Carefully defining the target of your personalization efforts is essential. To accurately measure how recommendations perform in a given vertical or channelwhether it be web, email, mobile, contact center, or in storeonline and multi-channel retailers must first distinguish between customers who interact with the recommendations and those who dont, called responders and non-responders respectively. Responders are typically your best customers. They spend more time on your site, convert more often, spend more, and have a higher propensity to return than non-responders. As a result, they have distinct conversion behavior that must not be mixed in and confused with the conversion behavior across all shoppers in a channel.

    Also important to consider is which responders are relevant to your underlying business goals. Are your personalization efforts directed at shoppers of a particular category, brand, or location? This is important, for example, if youre trying to boost sales on the West coast,

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    but youre mainly converting East coast shoppers. Staying mindful of who you are targeting will keep your success in perspective.

    When Are You Targeting?Date range is just as important as the segment group. Seasonal trends are certainly a factor, but other date concerns can be, too. For example, if youre running a particular sale, you may find different results. New campaigns, whether marketed to email audiences, television viewers, social networking contacts, or the general public through direct mail, can all have an effect on sales and online behavior.

    What Are You Targeting?Recommending products is the bread and butter of todays personalization solutions. However, virtually every aspect of the shopping experience can be personalized. The metrics used to evaluate personalized banners, video content, or landing pages are not always appropriate for measuring the effect of product recommendations.

    Where Are You