Today, we announced ATG’s acquisition of CleverSet, a leader in automated personalization and recommendations technology. With this acquisition, ATG can now offer online sellers the “best of both worlds” in personalization, delivering an optimized e-commerce investment for our customers and an optimized buying experience for their customers.

The announcement and the CleverSet site have plenty of detail about why we think CleverSet has the best technology of its kind on the market. But for years we have touted ATG’s rules-based approach as the optimal way to personalize the online shopping experience, so you might (quite logically) ask if this acquisition of an automated personalization vendor signifies a shift in ATG’s philosophy. The short answer is “not at all!” But I suspect you might like a little more detail, so here’s the story…

The two approaches to personalization are actually highly complementary. The rules-based personalization on the ATG platform can be ubiquitous across the site, and its flexibility allows companies to apply personalization strategies in many different ways. ATG’s personalization is most effectively used in situations where the merchant has a defined and well-understood market segmentation, and understands what the likely best cross-sell offer would be for particular purchase histories and behaviors. ATG allows the merchant to take total responsibility for and total control over creating, managing, and adjusting those business rules.

CleverSet personalization is different from ATG’s in that it is automatic. It “learns” based on the statistical relationships of data. Today, CleverSet focuses on automating product recommendations, and is extraordinarily useful to merchants who don’t necessarily have strong knowledge about what the best cross-sell offer might be for a particular customer. CleverSet is also valuable to merchants who simply don’t have the time, resources, or inclination to build and manage their own rules.

We expect that our customers will continue to use ATG personalization when they want to have close control of their personalization rules and integrate personalized search (show this group of sweaters to fashionistas and another group to others). They will likely use CleverSet more broadly to fully automate the personalization of offers and content when rules aren’t defined explicitly. And these are not mutually exclusive – we actually expect companies to use both implementations together. For example, a merchant could write a rule to do targeted cross sells to a particular segment and also use the CleverSet recommendations on the same page to help drive some other recommendations.

Similar to our eStara brand of products, CleverSet is platform-agnostic and will be offered on demand, delivered in a Software as a Service model. This makes CleverSet an easy add-on to any e-commerce Web site, whether or not it is built on the ATG platform.

We are absolutely thrilled about this acquisition – not only because we are getting great technology, but also great people who fit well with our organizational culture. I look forward to sharing more details when the deal closes. 

Personalization is hot again. 

Just when some believed the term “personalization” was in danger of becoming outdated, there seems to be a revived interest in it. The term is still misunderstood and for that reason is often not used.  New terms like behavioral targeting, precision marketing, and micro segmentation now come up in common marketing conversations, and often replace the more general notion of personalization. But the concepts are still the same and the value is even greater. Content targeting, collaborative filtering, one-to-one marketing, guided navigation… these are all personalization concepts that have been around since the 90’s. But it seems eTailers have finally moved beyond the early hype cycle and have found practical ways to implement and manage dynamic sites that “personalize” the experience, segment their sites and improve the quality of their recommendations.

By most people’s definition, personalization is about delivering “the right content to the right person at the right time through the right channel”.   What is the right content?  The simple answer… the content that converts the looker to a buyer or the one-time buyer to a loyal customer. 

At the heart of managing personalization is the ability to dynamically modify or configure the content of a web site based on who the user is, what the user is doing, or what the user saw, bought or saved.   Why is this easier today?   The difference today is in the easy-to-use business tools that give marketing managers and merchandisers the ability to easily define online segments, tag content (products, reviews, articles, etc.) and create rules to fully-automate real-time intelligent targeting.  Implementing personalization no longer requires Java PHDs and savvy Java scripting that is hard to maintain.

Why is personalization more effective today?  One theory I have… sites are taking a more basic approach.   Rather than implementing rocket science technology to “guess” at customers’ intents and preferences, eTailers are simply asking web site visitors a few key questions like brand preference, price range, product attributes, lifestyle questions, etc.  This information enables very accurate recommendations. The key: consumers, especially the younger generation, are more willing to share information online in return for this “value”. A recent article in eMarketer.com discusses how consumers generally like personalized offers, at least on e-commerce Web sites.  And although one-third of respondents to an Avenue A | Razorfish study were concerned about the privacy implications of personalized recommendations, more than seven in 10 said they found them helpful.

My caution to eTailers: Some of you are abusing this power and using consumer provided information to spam them.  This abuse of consumer information will create distrust with your brand and distrust with the general online shopping ecosystem.  Consumers are willing to partake in an online dialogue with online sellers.  If you focus on returning immediate “value” in return for sharing information, consumers will share.  They want you to help them find the right product or the good deal or the interesting accessory.  But if you begin to intrude upon their lives and take up their scarce time reading junk, they will begin to balk at this sharing.

Technorati Tags: personalization, behavioral targeting, precision targeting, micro segmentation, do not track, e-commerce, online shopping, Web advertising, Web marketing

Too many times, I’ve seen eTailers take the wrong approach at trying to match products with shoppers. At the extreme, is the “show them everything” approach. You can recognize this approach right away when you see an overly crowded home page with dozens of products, promotions and offers that scroll down several pages. eTailers throw everything but the kitchen sink at a visitor in hopes that something sticks. Another approach is to use click behavior to drive business rules that target content based on placing the shopper into a dynamic segment, i.e. a segment that is determined real time based on what the shopper has been doing on the site. Once their segment is determined you can start to filter out content that is irrelevant and make recommendations that make more sense. This can be very effective but takes a sophisticated personalization engine to pull off. 

Yet another approach that is gaining in popularity is what I often refer to as “guided selling.” It’s brilliant in its simplicity. Rather than guess at a customer’s intent or needs, simply ask them. For example, check out Road Runner Sports. They’ve got a huge selection of shoes available, but to help you save time, they ask you a few simple questions to fine tune your search (e.g. what is your arch type,  what surface do you run on, etc.) A few basic answers let them personalize the experience without guesswork. Another site to look at is Personal Shopper. They go to the extreme of allowing you to fill out a preference profile. Completing this form establishes your interests and preferences enabling their recommendation engine to make more intelligent suggestions. A simple version of guided selling - sometimes called “faceted search” or “guided navigation” - also lets you fine tune search results. You see this on sites like Best Buy’s that let you select brands, price range and features on the left navigation to fine tune your search and return personalized search results. 

Interestingly, even Google is starting to personalize search results. Although out of the gate, they are trying to “guess” at better results based on your search history, over time I’m sure they’ll move toward more explicit “guided search.”  (See my comment on the Read/Write Web post…) Google is already encouraging users to set up a profile… it’s only a matter of time before this information is leveraged to produce more intelligent search results. Bottom line, consumers are willing to share information with you in exchange for value (saving them time and money). 

So if you’re not sure what the online consumer is trying to find, think about simply asking them.

Technorati Tags: e-commerce, Road Runner Sports, Best Buy, Personal Shopper, Google, personalization, search

Knowing something about the web user is at the heart of online personalization…it’s about targeting the right content to the right person at the right time… and to do that you need to understand the user’s intent. Here at ATG, we’re passionate about personalization and treating online shoppers uniquely and individually based on who they are and what they’re trying to accomplish. Well, it looks like Google has joined our personalization party. Based on some articles and blog posts I’ve recently read, Google is clearly rallying around the use of personalization to better target both ads and search results.

I thought this Google quote from a recent Financial Times article stated the challenge in making an online experience more relevant and hence more useful:

“We cannot even answer the most basic questions because we don’t know enough about you. That is the most important aspect of Google’s expansion.”

The article goes on to state… The race to accumulate the most comprehensive database of individual information has become the new battleground for search engines as it will allow the industry to offer far more personalised advertisements.

Wow… we have a race to know as much about me as possible. That’s a little eerie and big brotherish. But I’m not sure I mind if you make my life easier. What’s at stake? Plenty for the Google advertiser. After all, more relevant ads mean more effective adword campaigns and better ROI on marketing investments.

What’s in it for the consumer? That’s a little more controversial. The hope is that Google, by using past end users online behavior and preference data, will improve relevancy of the search results and content presented for consumers. In other words, we find what we’re looking for more often and more quickly. Some fear there’s a privacy issue in storing all the personal information to accomplish this. I’m less concerned about that… I’m comfortable that Google’s data will not be shared outside of Google and that it is secure. What I wonder is if Google can really “guess” at what I’m searching for and return content that makes more sense based on the past keywords I’ve typed. I can see frequent cases where past keywords might not even be relative to the search at hand and in some cases make the results worse. In fact, I would argue that the Google user, and users of search in general, have become very savvy at typing in the right combination of keywords and are more likely to get more relative responses if they’re totally in command. Time will tell.

Bottom line, there are limits to how far online personalization could go and should go… The answer may lie somewhere in the middle of using past behavior and current intent. Personalization technology is more powerful if it uses both implicit and explicit criteria to target content. But the key is balancing what the customer tells you to purposefully use vs. using some artificial intelligence to return the “right” content. If you’re implementing personalization on your eCommerce site, be careful to understand the user’s intent when you create rules to target your content. Past historical data can be a good indicator, but it’s not always relative to the search at hand, or in the eCommerce case, the purchase at hand.

Technorati Tags: Google, personalization, privacy

On to the “Maximizing Your Marketing Investments to Attract the Right Visitors” panel, including:

• Kelly O’Neill, Product Marketing Director, ATG (moderator)
• Cindy McGuire, Web Content Manager, Casual Male Retail Group, Inc.
• Joey Wilson, Director of Marketing Strategy, Sapient
• Karen Weber, Assistant Vice President, e-Marketing, Irwin Union Bank
• Link Walls, Senior Product Manager, Search Services, ChannelAdvisor

One topic the panel spent a lot of time on is optimizing personalization. And, yes, it requires the brand maintaining control (there’s that word again). We’ve blown by the time when personas were enough. It’s now all about needs-based marketing that identifies and responds to what an individual customer needs right now and feeds them the right content and offers. Does this mean abandoning personas? No, of course not. It does mean, however, giving merchants the ability to dynamically change the site and marketing offers to motivate an actual individual.

Technorati Tags: e-commerce, personalization, needs-based marketing, Insight Live 2007

It’s true - personalization is the future; if they haven’t already, e-retailers must begin personalizing their web sites now, to ensure success.  It is a tremendously powerful way to move you away from haphazard methods for retaining customers, and can really help boost sales…

Retailers need to work on better understanding individual customers through their shopping and buying habits and their needs and wants - and then cater to them. The future is here - time to personalize!

Our friends at The E-Tailing group came out with some preliminary results of their Sixth Annual Merchant Survey: 34% of merchants plan to add the function in 2007. Are you one of them? More here

Technorati Tags: personalization, atg, e-commerce

MediaPost’s eMailInsider today looked at the effectiveness of the e-mail campaigns by a variety of retailers. Neiman Marcus (disclosure: Neiman Marcus is an ATG customer) is lauded as having “the most robust email marketing program.” This is noteworthy because, as I mentioned in my post about eTail, there is research that suggests that email campaigns have higher conversion rates than their search counterparts.

Also of interest in the discussion about the good job Target does segmenting its list and the company’s use of A/B testing with subject lines.

(Disclosure: both Neiman Marcus and Target are ATG customers.)

The MediaPost piece is another good reminder that the view of commerce needs to be a holistic one. Personalization and merchandising should come into play in all touchpoints within an integrated commerce experience - whether it’s outbound marketing, on-site capabilities and transactions or customer service.

Technorati Tags: e-commerce, personalization, merchandising, e-mail marketing

Last week, ATG exhibited at eTail 2007 Palm Desert. What follows is largely stream of consciousness notes of some of the interesting tidbits I heard.

I started the conference with my mini keynote, talking about how personalization was the key to taking advantage of the Long Tail, which led into my introduction of Chris Anderson. He referred back to my personalization pitch a couple of times – as I’ve mentioned before, I think there is a real synergy of ideas between the Long Tail and personalization. (Which I’m sure Chris will get into when he keynotes ATG’s annual user conference, Insight Live 2007.) One person asked about Barry Schwartz’s paradox of choice – the theory in his best-selling book is that people have too many choices. Chris countered that what you need is a “paradise of choice” – this connects back to how personalization helps you find what you want in the Long Tail.

Someone quoted research that 25% of visitors to the top 40 e-commerce sites are driven there by an email blast. 28% are driven there by a search engine.  Email-driven visitors have a higher conversion rate and satisfaction.

There was a panel on ratings and reviews – Home Depot, Smart Bargains and Petco spoke – two are using Bazaar Voice, one Power Reviews. All views were very positive on both vendors.

Organic and Molecular stood out among the interactive agencies.

Gary Briggs, CMO, on how eBay runs marketing:

• Positioning = battle for the mind – Meaning = promise for the heart
• They focus a lot on customer feedback.  They do “voices” = big distribution list for customer feedback, 700 employees on distribution list, he gets several email a day on this list from customers. They also do “views” where they go out and sit with a customer for a full day watching their every move to see how they work with eBay. And “visits” where they talk to consumers (as opposed to customers, who are sellers). Their main metric is “share of wallet” – of the money people spend to sell their stuff, and the money consumers spend on line, how much does eBay get. In marketing, they work on both “drumbeats” (stuff you have to do day in day out) and “rockets” (big periodic programs).

A panel on new projects with Neiman Marcus, Overstock.com, Ice.com, others ended up focusing on “customer experience” as major thrust for new projects. This is a term we’ve used on and off for a couple of years…interesting to see it coming more into vogue. (Disclosure: Neiman Marcus is an ATG customer.)

VP of marketing and development of Jones Apparel spoke on technology innovation – focused on Ajax. He asked “why innovate”, and said ROI was an ok reason, but the best reason was because it was fun for developers. He has 18 developers working on Jones sites. He used GAP as example of cool use of Ajax, also the Amazon diamond finder and Netflix quick pop. He said a trend was to drop support for non-javascript/non Ajax browsers – he said Gap has done this.

These notes only begin to scratch the surface of a very interesting conference. Please add to these observations in the comments!

Technorati Tags: eTail, chris anderson, long tail, the long tail, personalization,  e-commerce,  barry schwartz, paradox of choice, marketing, customer experience, ajax, bazaar voice,  power reviews

Check out the featured campaign on Sephora’s site, which encourages women to take the Valentine’s Day gifting ritual into their own hands. Talk about personalization in the extreme!

(Disclosure: Sephora is an ATG customer.) 

2/13 UPDATE: It looks like Sephora has changed its featured campaign, so the link above will no longer take you to any V-day content. But, you can read about it (and similar approaches from other retailers) here.

Technorati Tags: sephora, valentine’s day, personalization, eCommerce

OK, so maybe my subject line goes a bit far, but Google’s recent announcement about its enhanced personalization capabilities is another important indicator of the importance Web users are putting on their own individual, contextualized experiences. Nowhere is this having a more profound effect than in the world of eCommerce. In future posts, I’ll look at the “how to” of great personalization, but for now, let’s take a moment to look at the two major factors that are making personalization a “must have” for Web sellers:

The rise of the “Millennials”

This catchy term refers to people born between 1982-2000. Current estimates from Resource Interactive peg their collective spending power at $200 billion, with 5-17% spent online. (Perhaps more immediately relevant, though, is the influence Millennials have on the rest of the household’s spending.) A look at some commonly held characteristics of this group make it obvious why personalization is key. Millennials are:

• Perpetually connected (to each other and the wider world) via the Internet, text messaging, cell phones, etc., which serves to stratisfy communications
• Remember, personalization is about showing the right content, to the right person, at the right time
• Multi-tasking and productive, which means they are constantly filtering out “non-relevant” content and messages
• Optimistic and entitled. This group assumes success (in the case of eCommerce, this can be defined as quickly finding and buying exactly what they are looking for) and demands involvement in achieving that succes
• Fickle. If you don’t immediately meet their needs, they are looking for somebody who will
• Driving other generations’ behavior. Not only do Millennials influence purchasing decisions now, but they also serve as the model for how others may soon expect to be treated

Clearly, these characteristics are already driving behavior online. According to Forrester Research “Nearly half of consumers who visit a landing page leave in under 8 seconds. To build relevance, brands must start with segmentation models that enable personalization and deliver targeted function, content and images.”

Chris Anderson’s Theory of the Long Tail

I cannot do this theory justice in the space of one blog post (plus, I’m sure you are quite familiar with it anyway!), but the relevant highlights include:

• Demand for products available only online is potentially as big as for the biggest sellers available in physical stores
• Unconstrained by shelf space and distribution, narrowly targeted goods are now economically attractive
• Online, one size need not fit all

So if we are to have more and more selection in an online store, targeted and narrower niches, viewed by people who will leave quickly if you show them irrelevant content — the only answer is advanced personalization.  That is where Google is going, and that is where every ecommerce platform provider must go, and where every online seller must go, or risk becoming quickly irrelevant themselves.

In future posts, we’ll dive further into the attributes that contribute to an optimally personalized experience.

Technorati Tags: eCommerce, google, chris anderson, the long tail, long tail, millennials, personalization