How recommendation engines are transforming customer experience in retailby David Hunt Data Geek and Analytics Fanatic
IoT is the next big thing in retail. While many enterprises have started employing IoT in their businesses, the use cases pertain mainly to supply chain and operational efficiencies. However, when we talk about enhancing customer experience in a retail set-up, a lot remains to be accomplished. Big data in retail is the next ocean that we must explore.
Only 3-4% of all customers that visit an ecommerce website end up purchasing a product. When the conversion rates are already so low, no business can afford to lose a prospect in today’s era. It can be a deal-breaker. According to a recent ecommerce analytics survey, almost 70% respondents said that a lack of personalized experience stops them from making a purchase. What is the way out then for ecommerce companies?
One new-age way of delivering an exceptional customer experience to shoppers is with AI-powered recommendation engines. A recommendation engine can understand and predict customer requirements and provide them tailored product recommendations just as per their taste. What salespeople do in brick-and-mortar stores can be done by AI –which is helping customers find what they are searching for and suggesting them based on their preferences and taste.
Recommendation engine is an AI-based technology that recommends options and preferences to shoppers based on different parameters such as past purchases, search trend and history, buying frequency etc. Further categorizations include demographic, sociographic, etc. This is done by storing data from all past customer touch points and running AI-based algorithms on the data. Customer personas are created and stored and later matched and served all in real-time. Some real-life examples of this are product recommendations on ecommerce sites like Amazon, video recommendations on YouTube, friend recommendations on Facebook, etc. Let us see how recommendations have transformed the ecommerce industry and why all ecommerce companies must adopt a recommendation engine.
1. Deeper insight into customers and thereby enabling better targeting
Recommendation engines enable ecommerce companies to leverage big data in retail and gain deeper insights into the customer’s habits and preferences. This allows them to better target prospects, stock inventory that’s right, and improve marketing campaigns. The strategic business decisions can be improved by the insights that would lead to better ROI.
2. Recommendation engines greatly improve customer experience
Improving customer experience is one of the main objectives of retail and ecommerce companies today. It leads to improved brand experience, brand loyalty and brand advocacy. Customer lifetime value is greatly increased by a recommendation engine. Customer retention is higher and they keep returning back to enjoy the experience of shopping.
3. Recommendation engines enable improved customer engagement
Personalization of ecommerce is a game-changer and leads to high engagement rates on the portal. It not only impacts the final stage of buying but the entire ecommerce journey.
Recommendation engine helps with engagement process because they do not concentrate on the purchase part only. They focus on the process as a whole to ensure a high-level customer experience. That's how they enhance customer engagement. Higher customer engagement leads to higher customer satisfaction. And customer return rate is also higher.
Using advanced analytics, customers can be sent notifications about a preference of theirs, that has recently come to the store, or remind customers about unfinished transactions and many more.
4. Recommendation engines increase sales
The primary role of a recommendation engine is to recommend the right product, at the right price, at the right time, and in the right place. The idea is to predict and fetch what the user could be searching for. This optimizes the sales journey of the prospects and increases the conversion rates on the ecommerce site. Eventually, the sales boost and the revenue increases naturally.
5. Increase traffic on the website
With personalized content on the website and offers that match customer requirements, return traffic is very high for such websites. Because of high engagement rates on the website, the page authority of the website also increases which in turn results in better traffic through organic means. It is to be understood that good experience on the website has many side benefits such as word of mouth popularity, brand loyalty, brand advocacy and much more.
Overall, a recommendation is a must for all ecommerce websites. Brands use it to increase average order value, number of items of order, convert shoppers to customers, and ultimately increasing the top line. Underneath a recommendation engine, advanced algorithms using AI enable a brand to realise its ultimate goal – customer delight.
Created on Mar 25th 2020 01:59. Viewed 331 times.