Project Personalization

You’ve learned a lot about web site personalization — enough to know that it will become standard fare on most web sites, especially those selling goods. But the challenge is in how to go about implementing a project of this magnitude and importance. So I’d like to share a few insights based on my recent contacts with the folks at Outpost Outpost.com regarding their extensive personalization projects.

A User Experience

Outpost.com (formerly Cyberian Outpost) was an early web shop with roots as a storefront computer retailer. Billed as a leading Internet-retailer, it offers a wide selection of competitively priced computer software, hardware, peripherals and accessories. The company’s goal is to deliver a user experience consisting of speed, convenience and highly personalized service. Outpost.com embarked on its personalization projects about two years ago in order to accomplish this goal.

Transparent Personalization

Chief technology officer Mike Starkenburg puts it this way: “We are delivering what we call ‘transparent personalization,’ where our customers can receive personalization across the many ways they communicate with us, through the web site, email or voice. Our customers will also know what is going on behind the scenes because they will control their own personalization.”

In the near future, Outpost.com will be giving customers access to a “control panel” where they can tweak their profiles, or let the system run automatically.

Outpost.com is currently testing a system that will enable personalization across all channels — web, email and voice. The system will also integrate other media including upcoming television and radio advertising.

“Personalization is very challenging. We have over 14 million unique profiles, over 95,000 product relationships, and limited web real-estate to present product recommendations,” says Starkenburg.

So let’s take a look at how this company approached its personalization projects.

Behind The Madness

Web budgets are increasing. The complexity of web development is increasing. This calls for a methodical approach to your personalization project. Based on conversations with Outpost.com, the steps listed below may help you tackle your projects.

  1. Team. Outpost.com creates a multifunctional team for each personalization project. The team is made up of one or more members from the following areas of expertise: Development, business intelligence (data mart), customer experience (content design and editorial voice), operations, and a business owner (i.e., marketing).

  2. Vision. I strongly suggest your web team create a vision for personalization. Outpost.com has this vision for its personalization initiatives: Delivering the best user experience based on speed, convenience and highly personalized service. According to Outpost, personalization is its entire business, and its vision reflects this. For some of you, personalization may be just one of your goals, so setting your vision accordingly is paramount. Here’s how Outpost.com implemented its vision:

    • Execute many small projects for each personalization technology (it has five different technologies).

    • Execute a project to integrate each personalization technology.
    • Execute a project to measure the return on investment (ROI) for each personalization project.
  3. Personalization Objectives. Outpost.com has three personalization objectives to enhance selling computer products on its web site. Because it offers so many products and has so many customers, Outpost had to analyze purchase history in order to set up rules. These relationship rules are critical to maximizing its “hit rate” or conversion of “look to book.”

    • Product relationships — Outpost.com conducted an extensive analysis of product relationships and found more than 95,000 relationships between products. However, it has only three spots to present product recommendations on a single web page. Thus, other relationships were added, such as user profiles and business objectives, in order to increase the likelihood of purchase or hit rate.

    • User relationships — Outpost.com presents products to customers based on today’s customer profiles, and as it continues to grow, this becomes more refined. An analysis of purchase history came up with rules to present the top three recommendations of interest for each individual customer.
    • Business relationships — Some days, Outpost.com needs to maximize revenue. Other days it may maximize profit margin. And still other days, it may want to increase the attach rate (number of products in a single order). The system also allows for rules associated with special promotions and new products. The rules are set manually in the system to accommodate these business objectives.
  4. Design. Outpost.com uses a three-layer design approach to personalization:

    • Top layer = presentation. The top layer focuses on how the information and products are presented to the customer.

    • Application layer = functionality. This is where multi-functionality resides. One application example is giving customers the ability to check order status.
    • Bottom layer = data mart. This is the heart of the system, where the data mart and logic is centrally located. All personalization systems tap into this layer, which also includes the reporting function.
  5. Evaluation of Application Products. Build or buy? This is the question — especially since personalization applications are still new and changing rapidly. Outpost.com looked at the market and did not find a single system that did everything it wanted. It decided to integrate several applications instead of building a system from scratch. It looked for applications that were open and could work together — especially when it came to sharing data across channels. Outpost selected BroadVision, Engage’s Accipiter AdManager, Rubric, Kana and Smith-Gardner applications, approaching integration with two initial steps:

    • Install and test functionality of the application itself.

    • Integrate one function at a time — for example, integrating BroadVision (personalization) and Accipiter AdManager (personalized ad serving) to ensure compatibility with central data mart.
  6. Testing. It’s extremely important to involve your customers in testing (and design if possible). At minimum, you’ll need to walk in your customer’s shoes regarding browsers and access speeds. Functionality, usability, editorial voice and visual imagery are all good candidates for user testing. Outpost.com put its systems in front of focus groups for testing and feedback.

Project Upsell

Let’s take a look at just one of Outpost.com’s personalization projects — upselling. Again, look at the methodical way of implementing the system.

  • Content — Outpost.com did a serious analysis of purchase history. It divided users into test groups. The two-week analysis looked at the three segments: 1) no upsell, 2) manual upsell (product people manually creating product relationships), and 3) manual and automated upsell rules based on purchase history. It measured hit rate, total revenue and total margin in each test group. It found that results from the automated rules test group exceeded expectations.

  • Presentation – To evaluate the best places to upsell on the site, Outpost is evaluating and testing locations such as product page, shopping cart and check out page. In the future it will integrate email into the upselling system.
  • Personalization – Outpost is currently testing its upselling system and expects good results based on early indicators.

Surprisingly, a 1 percent conversion rate from browsing to buying affects its bottom line dramatically. “Upselling can really improve our margins. For example, if we sell a laptop at 5 percent margin and can add a laptop case at 20 percent margin to that order, our margin on that sale is about 10 percent,” says Starkenburg. If you are in a competitive market with margins that are being squeezed, personalization can help.

Next Week: A visit with the Peppers & Rogers Group — the one-to-one marketing gurus.

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