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Case Study: How a Retail Company Increased Web Sales Order Value 60% via Automated Personalization

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Company: Personal Creations
Contact: Nancy White, Director of E-commerce
Location: Lemont, Ill.
Industry: Retail, B2C
Annual revenue: $50,000,000
Number of employees: 144

Quick Read:

As a company specializing in customizable gifts, Lemont, IL-based Personal Creations knew a thing or two about personalization. It also understood the power of offering product suggestions—or upsells—to personalize customer shopping experiences and increase sales.

The problem was this lean organization, mostly made up of warehouse staff, didn't have the time or resources to hone its online upselling efforts; its customers, accordingly, were presented with generic recommendations (sometimes, of products no longer available) that suppressed the true potential of that technique.

So when an automated solution that would not only take over but also likely improve the time-consuming task became available, Personal Creations chose to try it. Within a year and a half, that decision more than paid for itself, resulting in 25% more online sales conversions than before the implementation, as well as 1.5 times as many items per order and 60% larger order values.


Challenge:

For personalized gifts retailer Personal Solutions, matching up complementary items for a monthly catalog was one thing. Manually serving up suitable recommendations and keeping up with seasonal inventories for real time online sales without any kind of automated process was quite another.

"The whole concept of cross-sells is somewhat labor-intensive when you're doing it on your own," said Nancy White, director of e-commerce at Personal Creations.

For the company's small Web department, coding each of the 100+ new products that came out every season, and further associating those with related items for upsell, was a time-consuming project. The department didn't have the resources to effectively analyze customer behavior, so recommendations were based on little more than item groupings within the company catalog. And the effort to subsequently update recommendations when an item went out of stock, or was out of season, soon lagged.

"It was difficult for us to have someone constantly going back and reviewing those [against inventory levels] and changing out cross-sells as seasons and products changed," said White.

As a result, unavailable items or "blanks" would sometimes pop up in the spaces reserved for recommendations, and the opportunity to showcase other available products was missed.

Campaign:

In March 2006, Personal Creations implemented the Resonance automated Web 2.0 personalization platform, a hosted service developed by San Diego-based Certona Corporation, and started by testing the application on 50% of its online traffic.

Unlike those who continued to receive Personal Creations' manually inputted recommendations, the test-sample visitors were profiled in real time (anonymously) and presented with recommendations based both on their clicks and on the real-time preferences of other users interested in the same items, as determined by Certona's algorithms.

The new system also ensured that only in-stock and in-season items appeared in the recommendations.

"If we had an item that was out of stock or no longer for sale, it was removed from the daily feed [sent to Certona], so there was no longer an issue with serving up suggestions that were not available," said White.

Results:

The Resonance solution significantly outperformed Personal Creations' manual process—boosting online sales conversions 25%, generating a 60% larger sales order value on average, and increasing items per order by about 150%. As a result, the retailer transitioned all of its traffic to the service by August 2007.

"The number of images and variety of product [Resonance] can serve up is greater, more beneficial and profitable than doing it manually," said White. "We're driving larger orders and more conversion off its recommendations than we were with our own."

Personal Creations now plans to extend this success by applying the technology to additional facets of its Web business. It is already in the process of automating its "best seller" promotions for each of its five major categories, and is also preparing to incorporate the solution into its email campaigns and homepage personalization efforts.

Lessons Learned:

  • For best results, actual customer preferences should dictate recommendations. Due to time and manpower constraints, Personal Creations used to simply assume which items would make appropriate cross-sells, and those were largely based on product groupings within its catalog (i.e., the items that seemed to belong together). The Resonance solution, on the other hand, achieved better results by analyzing actual customer preferences in real time and serving up recommendations that reflected users' interests. "Not every customer is looking for the same suggestions that are offered in our catalog," acknowledged White.
  • Automation can produce several advantages. For Personal Creations, the Resonance application not only improved sales by offering more targeted recommendations, but also allowed the company's limited human resources to be reallocated toward other needs. "When there's a program that more than pays for itself and frees up employees time to focus on other parts of the business, there are more benefits than just your numbers," said White.

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Kimberly Smith is a staff writer for MarketingProfs. Reach her via kims@marketingprofs.com.

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