Optimizing Personalization

This article was published in a special edition of Website Magazine (June 2009 - distributed early next week). To ensure you receive the valuable insights published in each special monthly issue, upgrade to a professional-level membership today at WebsiteMagazine.com.

Giving Customers What They Want with the Privacy They Deserve

E-commerce and Internet marketing professionals have always grappled with personalizing online content for each visitor while preserving privacy. Many have given up, relying instead on opt-in initiatives such as newsletters, RSS alerts and social networking tools. Others spend enormous amounts of time and money monitoring and manually updating their sites at great expense while lowering profit margins. Neither of those options deliver sustainable results.

In response, leading technology firms offer Web-based self-optimizing behavioral targeting and personalization solutions that help firms of all sizes increase online conversions, average order value and online revenues while still protecting the visitor’s right to privacy.

How it works

Instead of requiring demographic or classification information, these dynamic systems automatically generate representations of visitors solely from current website interaction. These self-optimizing tools leverage visitor traffic patterns to provide the most relevant Web experience without the need for any personal information, third-party cookies or special interaction with the individual. This allows retailers to transparently target each visitor individually, without compromising privacy.

This is the most effective way to deliver content, because consumers present the most accurate representations of their interests and needs at that time — not the demographic information they filled out months ago. As a result, self-optimizing behavioral targeting solutions make it possible to enhance a site’s product cross-selling, up-selling and content personalization capabilities while preserving privacy. These types of solutions also provide an enhanced Web experience for the customer by bypassing a requirement to fill out  pop-up surveys or lengthy, intrusive online registration profiles. And, they don’t track visitors site to site.

Proof in results

A leading American catalog merchant and online retailer implemented a third-party, self-optimizing behavior targeting and personalization solution prior to the 2007 holiday season. Since then, the company’s e-commerce site witnessed an increase of more than 15 percent in converted online visitors and an increase of more than 18 percent in direct revenue contributions. Moreover, the system provides higher clickthrough rates on content as well as increased conversions, site stickiness and repeat purchases. It also eliminates the tedious task of manually generating product recommendations and personalized promotions to online visitors.

Other retailers claimed that such systems accounted for 20 percent of their online revenues. The average order value from visitors who acted upon the platform’s automated, personalized recommendations was more than 60 percent greater than those who didn’t. Such testimonials speak clearly to the value of these solutions to add to the bottom line.

Editor’s note: Due to the competitiveness of this industry, businesses such as those mentioned above, prefer not to release the names of the systems they use. The purpose of their secrecy is to give themselves an advantage over their competitors.

Intelligence benefits abound

Self-optimizing behavioral targeting and personalization solutions also provide significant intelligence-gathering capabilities, including shopping basket analysis, expert systems, content analysis and collaborative filtering algorithms. By profiling entire individual click stream behavioral patterns, the systems focus on person-to-content affinities and are not limited to content-to-content modeling often represented by, “people who bought this item also bought these items.”

Self-optimizing solutions are completely data driven, thus processing large and diverse transaction histories. Furthermore, these types of systems do not rely on anything other than the user’s interactions. This greatly simplifies integration and unified content profiles across all types, from text to multimedia. Solutions can scale to large user bases and catalogs while providing acceptable runtime performance.

Personalization in all environments

Because of their automated profiling, content neutrality and adaptive content indexing, these types of systems can be embedded into almost any environment that can capture online behavior. Moreover, self-optimizing solutions allow like-minded visitors to be dynamically grouped together for predictive purposes. This provides additional functionality to such applications as community radio, movie guides, gift registries and social shopping.

These systems can also be combined with other enterprise data to produce broader predictive models of customer behavior. Doing so extends their benefits to off-line campaigns, like direct mail, telemarketing, media advertising and customer loyalty marketing campaigns.

Benefits to any organization

Virtually all types of businesses see value from self-optimizing behavioral targeting and personalization solutions. An added attraction is that these systems can usually be implemented in just days or weeks. So, very quickly businesses can begin understanding behaviors without invading personal privacy. The result is building long-lasting and profitable relationships with consumers.