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Personalized e-Commerce Sites Can Increase Conversions by 70%

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by Mark Nagaitis

Today's most successful e-commerce sites routinely experience transaction closure rates in the range of 8 to 10 percent of visits, with the average across all of e-commerce pegged at a dismal 2.8 percent. Bounce rates frequently exceed 50 percent, and customer engagement with most sites is so low that customer loyalty is virtually nonexistent.

Some of this can be attributed to everyone's use of the web as a tool for research that ultimately leads to purchasing the best deals online or at brick and mortar establishments, where store conversions are in the 40-plus percent range. However, the primary reason for the failure of online retailing to convert customers at acceptable rates is because historically, e-commerce websites have been a one-size-fits-all proposition.

For example, the majority of e-commerce websites contain a user interface, content, and presentation that remain static for every visitor. This occurs even though we intuitively know individuals have unique motivations and communication preferences. Shoppers rely on different information and different types of websites when making a buying decision.

New Levels of Customer Insight

New web personalization technologies dynamically alter sites in real-time to provide a customized experience for every visitor to an e-commerce site. Such software identifies an individual's preferences, then delivers on-the-fly adjustments that make each customer feel the site was built just for him. The visitor feels instant rapport with the site, resulting in a deeper level of engagement and dramatically higher conversions.

The next level of web personalization technology departs significantly from earlier technologies by not identifying customers based on demographics, purchase history, or statistical information, such as "40 percent of buyers who bought X purchased Y as well."

Instead, new technologies rely on expert systems based on time-tested principles of behavioral psychology and psychological linguistics that determine each user's preferences in real time. This way, the software delivers a context-sensitive, instantaneous, completely personalized experience as customers navigate the website.

Not intended to replace traditional web analytics and demographic data, these new personalization technologies complement and provide a different view of the customer for the e-marketer.

The software essentially takes the driving principles of building rapport in the offline world to the online realm. In the same way that skilled communicators use both verbal and nonverbal cues to determine the best approach, new web personalization software considers a number of key factors -- including selected language usage, information presentation preferences, referrer type, mouse speed, mouse path on the screen, scrolling, time on page, and more -- when developing a "portrait" or psychographic profile of each website visitor.

The bottom line is that deep personalization techniques have delivered far more relevant web experiences, increased conversion rates by 70 percent, and reduced ad campaign costs by as much as 50 percent. This has a significant impact on search-related advertising as well -- including PPC content advertising and keyword targeting -- by making the ads more effective and reducing advertising costs.

How It Works

The new web personalization software collapses a wealth of information gathered via website users' online interactions into eight portrait types. Each portrait is unique and responds to different triggers in language and site features.

Once traffic on an e-commerce website has been analyzed and segmented by these eight behavioral types, adjustments can be made to the outbound marketing mix to attract the behavioral segments who are already coming to the site and converting to sales in significant numbers. These behavioral segments are already aligned with the website content, and driving more like-minded visitors to the site is the easiest way to increase conversion rates.

Conversely, behavioral segments that are underrepresented in the website traffic can also be attracted via outbound marketing, but analysis and modification of the website content, navigation, and site layout will need to be made to avoid misalignment or dissonance for those behavioral segments once on the site.

If these behavioral segments are not comfortable with the buying experience presented to them on a given website, they will simply abandon, and the outbound marketing spend will be wasted.

Searching for a Personalized Experience

Optimizing outbound marketing to align with website traffic presents many opportunities for e-marketers to drive traffic and increase sales conversions. Outbound marketing activities include direct mail, print advertising, online banner advertising, and PPC content advertising.

One of the fundamental tenets of linguistic psychology is that language predicts behavior, and in this context, the language used in advertising can be optimized to appeal to selected behavioral segments.

For example, let's look at Google AdWords, which allows e-marketers to create ads and select keywords. When people search on Google using one of the advertiser's keywords, the ad may appear next to the search results. Google considers this to be advertising to an audience that's already interested in your company or products.

In addition, Google offers what it calls content advertising: online advertising through its content network -- websites, news pages, and blogs that partner with Google to display AdWords ads. The goal here is targeting the right user in the right context.

Using advertiser-selected keywords, Google's contextual targeting technology matches ads to web pages in its content network that are most relevant to a specific type of business. Google offers placement targeting for specific sites or sections of sites where advertisers want their ads to appear.

Aligning ad language in all of these search-based Google advertising products with web personalization software can drive highly targeted traffic to an e-marketer's website, resulting in substantially higher sales conversion rates.

To illustrate how combining search advertising with web personalization might work in practice, consider an AdWords ad as it is used for one of the behavioral portrait types.

One of the eight portrait types is highly influenced by references and recommendations, especially those from peers or those they aspire to be peers with. This portrait type also doesn't take action without recommendations, case studies, or some other form of acceptance or recognition.

The easiest way to catch their attention is with messaging that infers value by virtue of wide acceptance, such as testimonials or awards. When shopping, these portrait types typically have a predefined need -- but they're open to different products that will meet that need. They love online communities (especially affinity groups) and product forums.

Search advertising optimized for this behavioral portrait type should contain:

  1. Recommendations
  2. References
  3. Awards
  4. Images of people like the targeted audience

You can also grab this portrait's attention by focusing on a goal:

  • "Whiter teeth in a week! See before and after photos."
  • "A faster way to a cleaner house. Read what your neighbors say about our new service!"
  • "All the best designer shoes in one store. Bring your friends and find all the shoes you want at prices you want to pay."

Combining Google search advertising's emphasis on context and keywords with web personalization technology results in attracting customers who are contextually qualified and predisposed to respond psychologically to specific language, buying behaviors, and information presentation.

The ads direct customers to landing pages or web pages on the advertisers' e-commerce sites that are optimized for these behavioral types through use of specific language, type of information presented, images, and site navigation.

New web personalization technologies use behavioral psychology and psychological linguistics to dynamically and transparently provide customers with a comfortable online shopping experience. These new technologies are a natural complement to traditional web analytics and demographics products that have been used for years by e-marketers; they provide a different type of valuable insight into the customer mindset.

Once e-marketers analyze their website traffic by behavioral segmentation, targeted outbound marketing messaging can be used with search advertising to drive specific behavioral segment traffic to e-commerce websites, where personalization software will ensure the online buying experience is the best it can be. Early e-commerce customers of this new web personalization technology have experienced sales conversion increases as high as 70 percent.

Editor's note: This article first appeared in the June Issue of SES Magazine.

Mark Nagaitis is the CEO of 7 Billion People. His 20-plus years of experience include engineering, marketing, and executive roles at technology providers like Sun Microsystems, Hewlett-Packard, and Compaq. Mark's focus throughout his career has been identifying new markets and developing and introducing ground-breaking products into those markets.


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