Personalization Solution: Addressing E-Marketing Challenges

With market volatility causing Internet stocks to fall back to earth, traditional measurement tools such as price-to-earnings are suddenly back in vogue among investors.

As a result, increased pressure is being placed on e-marketers to make efficient and effective marketing decisions that contribute directly to their company's bottom line.

Endless spending on high-priced marketing and advertising campaigns is no longer the norm in the online world. Negative publicity directed at the dot-coms that spent, on average, $2.2 million of their venture funding for each 30-second ad during the Super Bowl is evidence of this changing trend. In fact, producing memorable ads that generate Web site traffic is now considered only half the battle for building a Web site's success. Strategies that turn browsers into buyers and create loyal repeat purchasers are the key to increasing a Web site's marketing return on investment and subsequent long-term success.

But for many e-marketers, anticipating and meeting customers' needs in real time and building one-to-one relationships that promote customer loyalty continue to be their greatest challenge.

Personalization: The Solution

Personalization tools — technologies designed to tailor an individual's Web experience so that content is directly relevant to that individual — are key to meeting this challenge. Many industry experts place personalization technologies among the most critical factors shaping the future of the Internet.

At the core of a robust personalization solution is a complex recommendations engine that creates the most direct path to only products and information that customers want to see or in which they might be interested. The technology eliminates most of the effort exerted by customers to navigate blindly through a site to locate a desired page. Instead, personalization works behind the scenes to learn about the preferences of each site visitor by observing customers' active browsing and purchasing behaviors. By making connections between these pieces of information, personalization technologies are able to place the ideal product, content and resources in front of each individual customer — all in real time.

These connections are vital. Not only do they enable a Web site to tailor its customers' experiences but also they empower a Web site to anticipate and meet, in real time, the needs of each one of its customers with increasing precision.

Anticipating Customer Needs: Converting Browsers Into Buyers

During the 1999 holiday season, media coverage and industry analysts pointed to a lack of customer service among many of the Internet's best-known Web sites as the cause of customers' frustration with online shopping. In addition to missed shipment deadlines and back-logged orders, online customers expressed frustration with the endless pages of product directories and ineffective search engines that make up many Web sites.

Enhancing customers' Web experiences by better anticipating and meeting their needs with personalization technologies could be the key to providing superior customer service for next year's holiday shoppers. By identifying and immediately responding to customers' preferences, Web sites using personalization technologies can develop relationships with customers that last beyond a single purchase.

For example, two people from the Northeast visit a music site. One is a 30-year-old man, and one is a 65-year-old woman. If the site is not powered with personalization, both will likely be shown the same static product recommendation, or the site will require them to search for their desired music on their own. Either way, the site is likely to lose both customers to a competitor offering a more service-oriented Web experience.

However, a site powered by a personalization technology will immediately begin learning about these individuals as soon as they enter the site by collecting information from their click streams and purchasing behaviors. For example, the woman might have purchased a jazz CD, while the man might have gone directly to the classical selections. Based on this information, targeted product and content recommendations will appear immediately in an effort to capture their attention.

On their return visit to the site, the personalization technology will have automatically filed this information and will tailor future music choices to suit their interests. Over time, recommendations will become increasingly more precise as the personalization technology learns more about each customer.

Evaluating a Web Site's Personalization Needs — Choosing a Provider

While there are several personalization technology providers to choose from, most of them differ by how their technology is delivered, how it integrates into an existing system, how long it takes to integrate and what resources are required for integration in terms of budget and technical resources. It is essential that you understand the full range of options.

Questions Web site marketers should answer include:

* What is the growth rate of your Web site? You'll need a personalization solution that will allow you to expand your product offerings over time while still providing your customers with tailored recommendations for new and existing product lines.

* How easy is each solution to integrate into your existing systems? For example, some personalization technology providers require a site to integrate additional hardware or software, which can take several months to complete. Others work on an outsourced model and require no hardware or software additions, significantly cutting integration time.

* What resources will you need to commit to a personalization solution? Time and budgets are, for most marketing departments, finite. A lengthy integration time can take needed resources away from core site development and delay launch dates. A shorter integration time means having personalization up and running on your Web site quickly, generating faster returns on your technology investment.

With a return to more value-oriented investing, demonstrating a responsible and effective marketing strategy will be essential for all Web sites. Personalization technology is one effective tool for improving customer experience, enhancing the service offering and marketing in a focused and strategic fashion. All of these benefits should help you sell more products and share more information with your target audiences.

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