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BW ONLINE DAILY BRIEFING |
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How Personalization Keeps Online Buyers Coming Back E-commerce sites that give users what they need -- and can't get offline -- create the most loyalty Online stores draw lots of attention from millions of daily visitors, but they fail to turn even a significant minority of browsers into buyers. Sure, most Net merchants have made progress on site performance, including search, design, and real-time inventory availability, but they still struggle to win customers and repeat buyers. Overall, 70% of all E-commerce sites convince less than 2% of their visitors to buy, according to a study released in June by Forrester Research. Nearly 80% of retailing newcomers -- those selling online for less than 18 months -- turn less than 2% of their browsers into buyers. And among more seasoned retailers, 62% fare no better than the neophytes, Forrester says. The sites that do well -- those with conversion rates exceeding 4% -- tend to be retailers of goods people have previously researched, and replenishment items such as cosmetics or office supplies, according to the study. So how can E-tailers create cash-register loyalty? Some experts say the trick isn't so much emphasizing creative marketing and merchandising campaigns as it is focusing on personalization (see BW Online, 7/12/99, "The New Magic Bullet for Attracting Web Visitors"). By now, they point out, personalization techniques have matured beyond the basic collection and analysis of consumer data from pages that users customize themselves to creating sites that give users a unique, personal experience and level of service that can't be mirrored in local malls. LITTLE LOYALTY. Yet, even while some online retailers have been using personalized promotions for several years via targeted E-mails or recommended items based on previous purchases, less than one-third of the sites Forrester studied use loyalty programs to lock in frequent buyers. This is true even though novices say they believe personalization is the best way to convert browsers into buyers at their stores, Forrester says. "The problem is that [novices'] first priority is to attract first-time online buyers," says Paul Hagen, a Forrester analyst involved in the study. "In fact, 61% of all online retailers value driving new visitors to their sites over creating loyalty and collecting data." And he points out that even though first-time online buyers satisfied with the experience demonstrate loyalty, it's to the Net and not to any one particular site. Hagen maintains that the difference between E-commerce and content sites that will succeed online and those that won't will be the level of personalized experience they offer. "It's not just about offering customized weather and sports scores. It's going to be more about letting the user put his entire identity online safely." The trick to personalization is getting the visitor to reveal as much as possible about his or her buying preferences and habits. "Consumers will heavily guard their data because they know that their information is worth money to sellers, and that by disclosing it, they're more exposed to marketers' intrusions," says Hagen. "To get customers to 'spend' this currency, retailers must explain how they will use the data and clearly present the benefits created for consumers" (see BW Online, 7/15/99, "Web Privacy: People Will Tell All -- for the Right Price"). USER FEEDBACK. Lane Paxton, director of business development for Web calendar site Abrio, says this is exactly what his site does. "We give people content they can use, and as long we provide this, according to what they say they want, we'll be in business." For example, Paxton says as a result of user feedback, Abrio is rolling out an interactive address book that will send E-mail birthday reminders. To be an E-commerce winner, merchants must react to customer needs based on such data as order history and point-of-sale info to decide which goods should be sold, Hagen says. They should take advantage of their knowledge by precisely directing promotional offers. And they should entice consumers to reveal data by appealing more readily to specific buying behaviors, such as targeted discounts on brands, sizes, or styles, he adds. "Many consumers are willing to 'spend' their personal data in return for time or money savings," Hagen says. "Leaders will build a central data repository to support great personal shopping." Smart sites will also offer better customer service via regular site updates, E-mail notifications, and even human interaction for technology issues and security concerns, he says. For example, Amazon recently sent a "we're sorry" E-mail with a 10% rebate after a six-hour outage. Such practices contribute to Amazon's 66% repeat-buyer rate, an company spokesman says. SELECTIVE REVELATIONS. Despite all this "give and take," research shows that users value anonymity on the Web as much as service and convenience. What they reveal to one site, they don't necessarily want another to know. "That's why we require users to log in every time they come to the site," Abrio's Paxton says. "It's kind of annoying. But we thought long and hard about it, and decided it was necessary for data security." Consumers can already request credit information -- and find out who is asking for their data -- from companies such as Experian and Equifax. "My Yahoo! and My AOL will increase their lock on consumers by adding a 'data-access check' module," Hagen writes. "Along with portfolio and calendar information, consumers will use this central panel to identify who the site has allowed access to [consumers'] personal data, who has used the information, and also to solicit 'pay-for-data' promotions." Just how personal will the Net become? It's hard to tell, but given where things are heading, users will soon see their own reflections on their favorite sites. By Stefani Eads in New York _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ |
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