Customers love the personal touch. From emails that address them by name, to personalized product recommendations, ecommerce in 2018 is more connected with the customer than ever before.
Advancing AI technology helps ecommerce websites drive online sales by analyzing consumer behavior online, anticipating their next move and presenting shoppers with options that feed directly into their interests.
Personalized product recommendations are more than showing a little ad for your customers to consider. Amazon invests 70% of their marketing resources to product recommendations, and when you look at the impact, it’s easy to see why.
While relatively few people actually click on product recommendations, the visitors that do click end up generating huge profits for ecommerce websites. Research from Demand Ware shows that 7% of visits result in a click on a product recommendation, yet that drives 24% of total orders, making up 26% of total revenue.
Ecommerce personalization not only enhances the customer’s online shopping experience, but it is also an increasingly essential part of online business.
Why Are They Crucial for Ecommerce?
Marketers who deliver relevant messages and content to their customers will see much higher engagement on their ecommerce site. Over time, this strategy enhances the customer experience, which leads to a host of great benefits for both the customer and the company:
- Saves the customer time – 74% of people get annoyed when websites aren’t tailored to their interests. You can save them time and reduce your abandoned cart rate with personalized product recommendations that offer shoppers a direct shortcut to items they actually want.
- Reduces workload – Staying on top of recommendations, coordinating products and trying to upsell based on analytics would be a mammoth task to manage manually, even for a small customer base. Using a recommendation engine to automate all of this will reduce the workload on your business, saving time and money.
- Boosts conversions – According to WooCommerce, product recommendations lead to a massive 915% boost in conversion rates. Just like candy bars at the checkout counters, the concept of strategic product placement works a charm, especially if it’s done in a personalized way that considers what people are already buying.
- Increases Average Order Value (AOV) – After shoppers click on product recommendations, they become more open to impulse purchases. This leads to a higher average order value, which generates higher revenues and profits. After enlisting the help of Segmentify, iLoveVideo.tv saw a 25% jump in their AOV.
How Do They Work?
In the simplest terms, personalized product recommendations work by making “the right offer, product or campaign, to the right person at the right time.”
With the use of artificial intelligence, ecommerce businesses can collect data on their site visitors such as page views and past purchases, then organize them in groups according to set behaviors. From there, it’s possible to personalize the shopping experience by offering specific products and campaigns that the customers will already be interested in.
Over time, with more data and analysis, this strategy will become more refined, which makes it more effective, allowing you to discover what works and what doesn’t.
Product recommendations have been proven to increase returning visits, with 37% of clicks on product recommendations eventually leading to future sales. This is a fantastic return for ecommerce sites, especially considering how much of the process can be automated.
The copious flood of content online today can be overwhelming for internet users, often to the point of overwhelming them. The fundamental reason for the success of personalized product recommendations boils down to the fact that they guide busy consumers to exactly what they want, cutting through all the clutter.
Shoppers that click on product recommendations convert 3.7 times more than people that only use search. That ratio increases to 4.2 times as much when shopping on mobile.
The question isn’t whether or not you should use product recommendations, but how can you use them to maximize your profits?
How to Implement Product Recommendations
The benefits to ecommerce success are clear. Now let’s consider the best practices to get the most out of personalized product recommendations.
- Start Slow, Build Gradually
When you learn that shopper who click on recommendations spend up to 5x as much per visit, you may feel like taking a gung-ho approach to overhauling your ecommerce website. Resist the temptation. Start off slow with one product type, before building up recommendations based on your analysis of what works and what needs to be improved.
- Hand More Control To AI
As far as micro-level decisions and tactics are concerned, machine learning is faster than you. Accept that and let it take over those tasks, freeing you up to focus strategy. This will drive productivity and increase your ecommerce personalization experience in the long-run.
- Review and Refine
Personalized product recommendations are not a set-and-forget strategy. Conduct tests to find the best methods and continue to adjust in order to drive growth. PacSun used personalization as their roadmap, continually optimizing to drive massive success.
- Start with Clean Data
Data quality is vital to the success of ecommerce personalization. Start out with clean data, free of all corrupt or inaccurate records. This will allow the system to learn and make it easier for you to get true insights on the benefits of your personalization efforts.
- Look to new recommendation options, such as email and personalized search.
When your product recommendation strategies are yielding consistent results, you can look to extend the ecommerce personalization by adding recommendations to other aspects of your site and marketing:
- Home page
- Profile page
- Category page
- Search results
As AI continues to gather data, you will be able to create more value with predictive content. This will increase site visits and on-page time.
Ecommerce Personalization is Key to Success
The impact on online sales makes it an essential part of any ecommerce site in the digital era. While the need to learn and implement new tools and processes may seem daunting, the benefits to your bottom line are undeniable.
The businesses who embrace the power of AI and invest the time to optimize their product recommendations will rise up above the competition, leading to much greater success in the long run.