RSS Ray Interviews Bob Cell, CEO of MyBuys, on how to use personalization to significantly increase online sales.

RSS Ray recently sat down with MyBuys CEO, Bob Cell, for the latest installment of Ray Raps. During the interview, Bob discussed how eCommerce sellers can significantly increase sales by personalizing each customer’s shopping experience. Enjoy the interview and be sure to catch Bob’s on-air interview with RSS Ray on February 4th, 2009.

Why is it important for an online seller to personalize the experience for a shopper?

As we’ve seen this holiday season, more and more shoppers are abandoning brick-and-mortar stores and going to the online store for convenience and better deals. But because there are so many choices, they’re going to go to the online store that really talks to them directly and serves them in the same personalized fashion as their favorite brick-and-mortar store.

The reason for online sellers to personalize their website is that when shoppers feel the site knows them, and shows them the products they want, and alerts them to sales and products that are relevant to them, they’ll keep coming back for more. Personalization creates customer loyalty and increases lifetime customer value, and when you show shoppers relevant products, they’ll buy more, which leads to bigger shopping baskets. 

When we refer to personalization, what’s the strategy that online sellers are using and why are they using it?

Personalization is a broad-based term that can mean anything from greeting a customer by name, to personalized product recommendations, to showing them items most recently viewed, to sending them personalized email alerts. Strategies can be as simple as the personalized greeting or as sophisticated as personalized landing pages and tracking shopper behavior over a long period so that recommendations are relevant in the areas of brand, category, pricing and promotion. 

What are the impacts of using personalization; what are the outcomes an online seller can expect?

Sellers will build credibility with shoppers, which leads to increased loyalty and overall increased lifetime value. One of the most powerful marketing tools is word-of-mouth, and a personalized site creates an experience shoppers will like and will want to share. If a shopper has a great experience on your site, they’ll tell others, and that will drive additional traffic. So not only will you make more money per shopper, you’ll expand your base of customers.  When we look across our customer base, the numbers speak to the outcome – on average, overall site revenue is up 5-20 percent, AOV is up 45 percent and conversion rates are up 90 percent.

What are some examples of personalization used by online sellers?

The classic example is Amazon.com—and at MyBuys we have many senior staff members from Amazon. You’re greeted by name, you’re shown relevant products, personalized landing pages, the gold box with top deals and personalized incentives, and so on.

I’ll take an example from our client base. SKECHERS tracks everything you buy or browse, then on Saturdays sends out email alerts with new products and products on sale that are directly relevant to you. That leads to high click-throughs and conversions: In fact, 7.8 percent of people that open those highly personalized emails go to the site and buy one or more pairs of shoes.

Another example from among our clients is Figi’s Gifts in Good Taste, a Charming Shoppes brand, which has a loyal customer base that comes to them to buy treats for themselves and gifts for friends and family. Figi’s presents “Other gifts that may interest you” recommendations that make it easier for the shopper by displaying products based on what the shopper has previously bought and what they’re looking at in the current session. This reproduces the feel of thumbing through a catalog online—with the added bonus of seeing only the gifts that are most relevant and appealing to you.

How does a company start creating a “store for every shopper?”

The secret is to get to know your shoppers. We do this at MyBuys—we build a profile for each and every shopper. When an online retailer signs up for our service, we take as much transaction history as they have available and we start to understand each shopper’s buying patterns and behaviors across brands, categories, pricing and more. We get a sense if a shopper is a trend buyer, bargain hunter, loyal to specific brands, etc. When that shopper comes back to the seller’s site, we incorporate that knowledge into the context of what the shopper is doing in the current browsing session. Then we show the shopper—just like a personal shopper would at a boutique—highly targeted, highly relevant, highly appealing recommendations. As the shopper moves around the site, it’s like shopping at their very own store, because the merchandise is tailored to them. That creates a “store for every shopper” experience. At MyBuys, we look at it as being able to have unique window displays for every shopper as they come to your store.

Explain for us the concept of dynamic merchandising.

Until recently, online sellers have manually merchandised their sites, so that every time a shopper views a certain pair of cargo pants, the site recommends the same T-shirt and socks. Every shopper sees the same things.

In contrast, dynamic merchandising leverages a daily, weekly, or monthly product feed so that the recommendation engine constantly has access to the latest assortments and pricing. It can then, dynamically and in real time, decide what to display in the recommendation zone on each page for each shopper. Not only is it dynamic in that it’s not serving up manually pre-set offers, it’s dynamic because the merchandiser doesn’t have to manually make those assignments. So it’s both dynamic and personalized for each shopper.

What impact can recommendations have for both the shopper and the seller?

For the shopper, a site with recommendations makes them feel comfortable, and mimics their favorite, personal, in-store shopping experience. It also creates good will and loyalty, and makes them trust and value the site and come back for more. For the seller, recommendations boost average order value, raise conversion rates, and from our experience at MyBuys, boost overall online revenue by 5 to 20 percent.

To give a specific example from our client base, Scentiments.com is an online discount fragrance retailer in Southern Florida that combines dynamic, personalized email alerts with a personalized experience on the website. This holiday season, Scentiments ran several promotions, and relevant products were recommended to specific customers on their 700,000-name email list. The CEO, Howard Wyner, received many thank-you emails from shoppers saying, “Thank you for alerting me to the price drop on my favorite fragrance. Emails like that, and the experience I have on your site, will keep me coming back only to Scentiments for my fragrance purchases.”

How can personalization be adapted through the customer lifecycle?

The MyBuys methodology I’ll describe is based on our team’s 100-plus years of e-Commerce experience. At the beginning of the customer lifecycle, you have to get to know them. We do that by inviting shoppers to sign up for email alerts—they can ask to be told about “more products like this,” can specify brands and products, can ask to be notified when their favorite items go on sale, and so on. Alert sign-ups help us get to know the shopper. The next steps are getting to know them better as they repeatedly visit the site, making recommendations, and adding to their profile. The way we do that is to store every click they ever make, so your company’s recommendations to them are 100 percent relevant and their profile gets more and more comprehensive. The next stage is to make them offers in real time while they’re shopping.

You also need to pay attention to where you place recommendations, which can also evolve through the lifecycle. There are key strategic site placements, or “site recommendation zones,” which are on a category or brand page, the product-detail page, most importantly in the shopping cart, at order confirmation and, to make them even more loyal, in the email where you ask them for a review. Customers like to share their experience with other shoppers. You can make recommendations at the point of that review request, which often drives people back to the site to buy more.

You can also drive shoppers back to the site by putting abandoned shopping cart items, new products, or sale products—or a combination of the three—into an email alert.

To sum up, get to know shoppers by asking them their preferences, continue to get know them better by building their profile, communicate with them throughout their buying experience with personalized offers at the various places on the site, and send them the right alerts and right incentives to keep them coming back for more.

Why not set up cross-sells manually?

Because it’s extremely labor- and cost-intensive. We have clients who, before they engaged us, spent anywhere from 12 to 200 hours a week above and beyond regular job business hours building these manual recommendations. And manual cross-sells get stale—no one wants to see the same recommendations every time they come to a site for new ideas. Tastes change, they may be shopping for someone else, the recommendation may no longer be relevant for that shopper (if it ever was), etc. One size fits all no longer works for today’s savvy online shopper.

Are there certain styles of recommendation formats (best sellers, discounts, etc.) that appear to work better than others?

It depends on the merchant, their assortments and their target shopper. At MyBuys, our mantra is Test, Test and Test, and Optimize, Optimize, Optimize. We constantly test to find the highest-converting words to use to frame the whole recommendation zone and what words to use to frame the actual product recommended. We find it’s different for every single retailer. For some of our merchants, formats as simple as Top Sellers and On Sale work well. For others, we use Recommended Just for You, You May Also Like, Related Products or Great ideas.
For a purchase like electronics, where the shopper is doing lots of research, he or she will probably want to know why you are making the recommendation, so Related Products works. But for something that’s more of an emotional buy, like jewelry or apparel or gifts or housewares, it’s more effective to use You May Also Like, or Hot Seller—anything that has more a qualitative than quantitative angle.

What criteria are used to determine the best recommendation formats?

To get the highest-converting recommendations, a few things are critical. Number one, place the recommendation above the fold. (Though we’re often surprised by the high conversion rates even for clients who place recommendations below the fold.) The ideal location is on the right side, vertically formatted, above the fold—although horizontal and below the fold can also work. Another thing that can help with conversion is displaying the review rating directly under the product in its placement. And it’s key to test, test, test to see what framing words best complement your placement.

How is shopping cart abandonment impacted through personalization?

The number one strategy to tackle this issue with personalization is to put abandoned shopping cart items in personalized email alerts in the top left corner. Not only will seeing the abandoned item move the shopper to buy, but if you include other great products and attractive pricing, followed by a personal experience on the site, shoppers not only buy the abandoned item but add other items to their cart.

Does personalization invade shopper privacy?

MyBuys did a study in June 2008 with the e-tailing group and we found that 75 percent of consumers are willing to provide some meaningful amount of personal information in exchange for a more personalized, relevant shopping experience.
For direct contact, the best practice is to give people the ability to opt-in and opt-out. Second, alerts are similar to airline practices that allow you to sign up for updates on your favorite routes: MyBuys’ philosophy is that you’re alerting shoppers to things they’ve said they want to know about. The bottom line is that when you’re adding value, and enhancing the customer experience, and making it easier, faster and more fun to go shopping online, the consumer is not going to mind.

We looked at another angle of this question in a study conducted on our behalf by Harris Interactive, which polled 2,382 U.S. adults on their preferences and reactions to retail promotions in light of the current economy. The study found that retailers who promote price cuts without personalizing the message may not see sales jump—and could even lose customers. In fact, nearly half (48 percent) of online adults are annoyed by online promotions that are irrelevant to them and 43 percent say they would consider not visiting a Web site in the future if a promotion irritated them. So personalization actually reduces the chance that you’ll irritate customers or make them feel like you’re invading their privacy.

What are some specific personalization tips for holiday sales success?

What we’ve been seeing across our diverse merchant client base is that our sellers are creating more and more incentives for shoppers to buy. Free shipping or free shipping with minimum purchase, special clubs for discounts, and so on. The names of the game this season is discounts and bargains and free shipping. Also bundles—many of our clients are doing “gift with purchase” based on bundle purchasing. And, as I mentioned above when you combine these promotions with personalization, your chances of conversion are much higher.

One example is Cost Plus World Market they have 10,000 items for $10 or less on their site, and those items are flying off the virtual shelves. Shoppers are more willing to buy lots of small items rather than one large item. Sellers can incent shoppers with this creative merchandising, and then close them after they’ve spent enough money with the reward of free shipping.

With a new administration, it appears that the US government will be unveiling economic stimulus initiatives to encourage shopping.  What do you think online sellers can expect?

While there is no specific incentive credit that directly ties to the consumer per se, there appears to be major investments in the nation’s infrastructure that will create jobs.  The expansion of tax cut plans will create increased GDP and as a result will lift retail sales.  A portion of the infrastructure investments combined with Obama’s keen interest and knowledge of technology and his key Silicon Valley based advisors should lead to more ubiquity of broadband Internet which will ultimately lead to more online spend.  More people will be online more often and this will create more opportunity for them to go shopping.  As we see this infrastructure expansion, I expect to see online retail growth, which has doubled in the last 4 years, to be a trend that will continue.

What are the basic steps a company should take when establishing a personalization approach to online selling?

We all know personalization creates value.  I personally have spoken to over 500 clients over the past 10 years while working at companies like Kellogg’s and Blue Martini where I have been on the leading edge of personalization.  Over the years, I have sponsored and tested numerous studies.  Results are clear – relevance creates value across all channels.

To get started in establishing a personalized approach to online selling, it is important to note that creating relevance will be different based on the retailer, their systems, their assortment and their consumers.

Here is my advice:  First, ask yourself – in what ways do my consumers interact with my brand? What other ways can I engage them that I do not currently employ? What can be done to personalize and create an individual dialogue with my consumers?

There are many new things in the market right now, such as personalization for product recommendations, email alerts, landing pages, direct mail , catalog, promotions, follow-up support and call center.  You should evaluate all that apply to your business.

Next, determine what time and costs are required and balance them against the incremental gain you stand to make and stack rank your options based on ROI.  Test, evaluate, test again, always be optimizing.

Today, you will find that many of the solution vendors out there create so much value that they are willing to invest a lot up front in implementation so that they can then share the value on an ongoing basis.

Finally, be sure to integrate personalization across channels so that you can recognize your customer at the point of sale (POS), in the call center, online, and on support calls.  Use this in a holistic way so that your shoppers not only respond to your relevant interactions, but so they perceive you to be smarter and then, as a result they will be more open and appreciative of creating a relationship with your brand.

What criteria should a company use when evaluating companies to provide them with a personalization platform?

They should look for a vendor that offers personalization capabilities in a SaaS, Software as a Service, format—there’s no reason you should have to allocate extra staff or spend extra hours to get this done. Second, the vendor should build profiles on each customer. Look for a pay-for-performance model, because that gets “skin in the game” on the part of the vendor. Make sure the vendor has executives with experience in the e-Commerce space. And finally, look for a multi-algorithmic approach where it’s not a case of “one algorithm to sell them all.”

Can any size seller set up personalization systems or is this only for the big boys?  What can one expect to pay?

Personalization is for just about anyone. At MyBuys, we can work with clients who have as few as 500 or 1,000 SKUs all the way to millions of SKU’s. Personalization is a strategy that can benefit retailers large and small.
You should expect to pay a percentage of incremental revenue generated, depending on the margin of the products.

How is your company, MyBuys, helping online sellers and why do customers benefit from working with your platform and company?

MyBuys is the leader in cross-channel personalization for retailers.  We developed the company from the ground up to track and monitor every interaction every consumer has with each of our clients.  Being a team of e-Commerce experts has created the most sophisticated data model and algorithm portfolio that automatically creates 1:1 recommendations for consumers across channels.  We are the leader in recommendations and our personalized product and offer recommendations create the greatest lift for our retail clients.  Additionally, we are the only service that can actually live up to the holy grail of the close loop interaction of the consumer.  We watch every click of a consumer and follow up with personalized email alerts with the items we know they want. The responses we generate are 3-10 time higher than other email program and most importantly, are synergistic to existing email programs. Upon receiving an alert, when the shopper comes to the site, they are greeted with the same personalized experience.  As a result we are seeing recommendation conversation rates improve as much at 120 percent or higher.

At the end of the day, what we are seeing is that our clients get online lift between 10-20 percent of total online sales.

If you could invite any three people in the world over for dinner, who would they be and why would it be those three?

I would have to start with Albert Einstein, because I am always looking for ways to further improve our algorithms and I bet picking his brain would prove worthwhile. Also, University of Michigan football coach, Rich Rodriguez.  I am not sure how he let this happen; but he allowed us to go 3 in 9 this season.  So clearly he needs a little help from an alumnus, namely, me, who can give him some advice on strategy.  And finally, Jennifer Aniston, because this imaginary dinner is the only way I’ll ever get a date with her. Jennifer, if you’re reading this, please join us. I’m sure Albert and Rich would enjoy your company as much as I would.

Bob Cell is the CEO of MyBuys and is an expert in retail, advertising, and consumer products. Most recently, Bob was Chief Executive Officer of AdSpace Networks, where he led the company through rapid growth and strategic restructuring to focus on becoming a mall advertising network while also growing, and subsequently, divesting its CoolSign video merchandising enterprise business. Under his leadership as Chief Operating Officer at Blue Martini Software, a pioneer in e-commerce solutions, the market capitalization tripled, license revenue doubled, and net results increased by $40M.