How to Grow Customer Stickiness With Product Recommendations
A recent study from Infosys, Rethinking Retail, examined shoppers' rising expectations for a personalized, consistent brand interaction and retailers' attempt at providing an omnichannel, integrated shopping experience. One of the astonishing findings was that nearly a fifth of the consumers had never experienced a personalized promotion based on a previous purchase. Perhaps that was because a comparable proportion of merchants surveyed weren't making any attempts at offering one!
Should you go all out to personalize your customers' interactions and transactions with you? Let's find out.
Why Product Recommendations?
Product discovery is an important component of the online shopping experience. Consumers warm to a site that offers them personalized and handpicked recommendations over one that doesn't. Consider the stats revealed in this infographic from Invesp:
Explosive Visibility for Your Product Catalog
Many online stores have no dearth of distinctive items. Their basic problem is actually the exact opposite; because they have such a large inventory of products, showcasing every one of them and doing them all equal justice becomes a huge challenge.
The solution? A product recommendation engine helps an e-commerce business promote its entire inventory while being ultra-relevant to the visitor on its site. These engines combine user data, inventory data and business rules to create a personalized experience for each visitor in real time.
To put it very simply, product recommendations are created using the following:
- user information by analyzing behavioral data previously stored by the site and showing the visitor items that users with similar profiles purchased or bookmarked; and
- product information by crawling the site's catalog and showing items that are similar to what the user is currently browsing or searching for.
Exponential Conversion Rate
Besides showcasing your best-sellers, product recommendations have immediate payoffs. By showcasing items that are similar to or complementary to the items that a user is currently browsing, you widen the consideration set and increase the chances that at least one of the items will be liked by the user and added to their cart.
In other words, you're offering consumers the luxury of choice and getting in return the gift of higher conversions. An online personalization study by Barilliance showed that customers who click on product recommendations convert 5.5 times more than those who do not.
Easy Incremental Revenue
Not only do product recommendations improve conversion rates for items that a user was actually seeking out, they also help trigger impulse buys and add a tidy buffer to your margins through top-up or impulse purchases.
The Infosys study found that over 90 percent of consumers admitted to giving in to impulse buys when shopping online, which means nearly ALL your customers are candidates for a spur-of-the-moment purchase, if only given the right options.
Product recommendations tap into this low-hanging fruit of impulse purchases just the way a well-stocked checkout counter at your local supermarket makes those easy extra dollars (who among us hasn't picked up a pack of gum or fancy potato chips as they wait in queue at the cash register?).
Minimal Effort, Higher Loyalty From Buyers
Make it easy and users will love it. Google's simple yet user-friendly search experience or Apple's legendary focus on making its products as easy to use as possible are both reflections of this fundamental business principle that has led both brands to domination in their core markets.
Product recommendations make an online shopper's life easier by showing them up-front products that they would like to buy based on their past purchase behavior, profile information or even browsing patterns from their last visit. By removing the "cost of thinking" or digging through multiple pages on your site, you vastly improve the visitor's user experience, earning brownie points in the process.
The infographic by Invesp Consulting referred to above also reveals that 56 percent of online shoppers are more likely to return to a site that recommends products.
The Secret Sauce of Personalized Recommendations
Product recommendations that give a user that "aha!" moment may seem hard to build, but are actually not that complicated if you follow these fundamental principles:
1. Truly know your customer. Many websites try a method of implementing product recommendations by showcasing the same items to all users, irrespective of their individual tastes or what they're shopping for. This is not only a waste of time, it can actually be a huge turnoff for users as proved in this Online Personal Experience study.
With the proliferation of tools at your disposal today, there's no excuse to not know your customers inside out. Use analytics tools like KISSmetrics to build detailed user profiles that can be referenced to serve up relevant product recommendations. Data related to a user's purchase history, current and past browsing behavior, geographical location, and comparative data from other users are all key factors that go into building a solid product recommendation engine.
2. Treat new and repeat customers differently. Imagine being greeted with a "Welcome back!" at a hotel that you've never stayed at. Viewing a new customer with the same lens as an existing one has pretty much the same effect — it simply disorients the customer and makes for a bad first impression.
Make sure your recommendation engine can identify the difference between a new and returning customer. This can be done using cookies, user log-in data or session IDs, but it's something that cannot be overlooked.
Offer recommendations like "Most Popular in (Your City)" or "Best-Sellers" or even "What Other Customers are Viewing" to new users. These recommendations give a new visitor a bearing of the best your site can offer and allows them to pick from the trending items instantly.
Returning customers must see a "Last Viewed" box that allows them to pick up where they left off. A "Recommended for You" option takes into account buyer history and profile data of repeat customers to carefully curate items that will match the user's tastes.
By treating a returning customer like an old friend, you're telling them that they're important to you and laying the foundation of a lasting relationship.
3. Apply "Location, Location, Location" to your web pages. It's not just important to offer product recommendations; these recommendations should also be located in relevant locations. Take a page out of Amazon.com's playbook and place your recommendation widgets as strategically as possible. Consider the following places:
- on the homepage (e.g., "Last Viewed Items");
- on product pages (e.g., upsell widgets that say "Customers Also Bought");
- Within the checkout experience (e.g., cross-sell widgets like "Buy ________ for your ________"); and
- on the thank-you page (e.g., impulse buys combined with short validity coupons).
What's remarkable is that Amazon has not one but two upsell widgets on its products page!
By offering recommendation widgets in these high-traffic and easily spotted locations, you're making your users' lives easier. The reward? Users love sites that put their experience above all else, and return to such sites over and over again.
4. Recommend products via email. Email has proven to be time and again one of the most potent tools in a digital marketer's toolbox. According to the Direct Marketing Association, 66 percent of shoppers have made a purchase online as a result of a marketing email.
Consumers are now immune to token personalization tactics like adding their name to an email. However, they're more likely to open emails that allude to an item they like or recently viewed, even in the subject line. While you promote your newly launched products or build engagement with a fun contest via your email newsletter, don't forget to offer personalized product recommendations.
The desire for relevant content seeps into email communication as well. Your conversions are a direct indication of how useful your communication is to your users. At least 82 percent of consumers claim they shop more from brands that send them personalized product recommendations in their emails.
Email is a superb direct-to-customer and habit-forming platform that helps maintain top of mind brand recall and eventual brand preference among your customers. No wonder it was found to be the most successful personalization tactic over product pages and shopping carts by over 80 percent of the retailers who took part in a study conducted by the e-tailing group.
5. Build in social proof. You don't need me to tell you how important social media is to any online retailer's marketing strategy. But I'm not talking about social media here. Well, not entirely.
Consumers have a natural tendency to trust reviews or statements from fellow shoppers, for obvious reasons. By building in a social angle to your product recommendations, you're tapping into this primal instinct of a shopper to trust a third party more than the seller itself.
The Barilliance study I referred to earlier also reported that "what others buy" happens to be the most engaging recommendation type on e-commerce sites.
Rohan Ayyar is the regional marketing manager for India at SEMrush. His blog, The Marketing Mashup, covers digital marketing from the perspective of B2B, B2C, lead generation, mobile marketing, SEO, social media, content marketing, database marketing including predictive analytics, and conversion rate optimization. In addition, he'll look at emerging marketing technology and how marketers can use it. Reach Ayyar at email@example.com.