The New Must Have Accessory for Online Retailers? Recommendation Engines

These days, recommendation engines are so common on larger online retail sites that you might not give them a second thought. Amazon and eBay have long been using personalization technology to create a shopping experience that’s highly customized.

The whole area of collaborative filtering, the behind-the-scenes technology used to drive customized recommendations, has advanced to the point that now, it has become easier than ever to implement without the huge investment in development. It doesn’t even have to degrade site performance like it did in the old days.

Susan Aldrich of the research firm Patricia Seybold Group believes recommendation engines will become commonplace next year. A survey Seybold and the Institute Telecom Paris conducted with 100 European and U.S. companies indicated that every one of the responding companies was planning to add a recommendation engine if it didn’t already have one.

Aldrich thinks one main reason for the new popularity of recommendation systems is advances in collaborative filtering. She says it uses modern web analytics instead of longs lists of business rules. The new systems are easier to update and more efficient.

Companies like Webtrends and MyBuys are on the forefront of collaborative filtering. Webtrends just announced full availability of its “Optimize Profile Enhanced Targeting” solution. It provides marketers with the ability to deliver a personalized web experience based on past behavior of visitors on their websites. Casey Carey, vice president at Webtrends, says profile-based onsite targeting “presents a great opportunity to maximize relevance, increase conversion rates, and ultimately see a significant return on [users’] marketing investments.”

MyBuys, which provides personalization for multi-channel retailers, has introduced “Kinetic Advertising.” According to CEO Bob Cell, this “is a format that enables our display ads to incorporate movement, that let users interact with them and see a dynamic set of products that fit their profile.” With a Kinetic ad unit, says Cell, you can “populate a custom set of products and offers based off a shopper’s interactions with a brand that are specifically tailored to that individual.”

Aldrich draws an intriguing analogy for the recommendation engine – she likens it to a global positioning system. “If a site visitor doesn’t take the recommended path,” she says, “it will come back and recommend another path.” A key strategy of the recommendation engine is to use a site visitor’s known shopping history to put “them on a shopping path that other shoppers with similar interests have taken before completing a purchase.”

Not surprisingly, says Aldrich, companies making use of or planning to implement recommendation engines see value in cross-selling and upselling. Obviously , if an online retailer can get a customer to make an additional purchase at the same time as he or she is buying a product, the incremental cost for the sale is negligible. Recommendations, says Aldrich, have “high impact on conversions and order size.”

Expect to see more recommendation engines popping up on even smaller online retailers’ sites as plug-and-play collaborative filtering technology becomes more widely available.

About Barry Silverstein

Barry Silverstein is a freelance writer/marketing consultant. In addition to writing for ReveNews, he is a contributing writer to Brandchannel.com, the world’s leading online branding forum. He is the author of three marketing books, The Breakaway Brand (co-author, McGraw-Hill, 2005), Business-to-Business Internet Marketing (Maximum Press, 2003) and Internet Marketing for Technology Companies (Maximum Press, 2003). Barry ran his own Internet and direct marketing agency for twenty years. You can find Barry on Twitter @bdsilv.

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Barry Silverstein is a freelance writer/marketing consultant. In addition to writing for ReveNews, he is a contributing writer to Brandchannel.com, the world’s leading online branding forum. He is the author of three marketing books, The Breakaway Brand (co-author, McGraw-Hill, 2005), Business-to-Business Internet Marketing (Maximum Press, 2003) and Internet Marketing for Technology Companies (Maximum Press, 2003). Barry ran his own Internet and direct marketing agency for twenty years. You can find Barry on Twitter @bdsilv.

One Response to The New Must Have Accessory for Online Retailers? Recommendation Engines

  1. Laura Barnes says:

    I would like to introduce an application – myBantu. It is a recommendation engine. myBantu is a free online personal assistant that helps you in dining, movie, shopping and local business needs. It gives very personalized and relevant recommendations, opinions from friends and web world, online coupons and more. Essentially it combines the wisdom of the web, wisdom of social networks & experts and makes life easier. I strongly recommend this app for personalized recommendations. One could also get his/her friends/family opinions on the products instantly. See http://www.mybantu.com/.

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