Editorial Articles

Behavioural targeting has for sometime been seen as the saviour of online advertising, giving publishers the ability to direct ads at consumers based on their web browsing history, with various reports claiming that the technique makes ads up to 300% more effective as they are much more relevant to the viewer.

The technology and concept is now making its way into the ecommerce sector in the shape of behavioural merchandising. First made famous by Amazon, as a science it has since evolved much further and should be considered as a crucial part of any online retailers’ programme to increase conversion rates.

Similarly to behavioural targeting, behavioural merchandising allows retailers to analyse customer behaviour and then place, promote and display products along their journey in order to drive sales. By looking at information on where visitors come from, what they search for, what they click on and what they buy, retailers can then “recommend” relevant products and promotions to each visitor at every point of interaction.

Behavioural marketing is probably at its most powerful when tied in with other key areas like onsite search functionality, allowing retailers a host of opportunities to upsell and cross sell. For example, auto complete functionality can be biased towards presenting products that fit the browser’s shopping history, and when it comes to presenting search information this can also be led by historical preference. This moves it away from the more obvious sales push around the “people that bought product also bought…” technique.

However, although the individual’s purchase history is important, we feel it’s actually more powerful to base this on crowd trends rather that specific individual purchases. After all, we all buy the odd random product on sites, so for example if you happen to have just bought an orthopaedic cushion for your gran the last thing you want is to suddenly start getting orthopaedic recommendations every time you revisit that particular online store. It’s a subtle but powerful difference in how behavioural merchandising can work and shows it is much more than just a recommendation engine.

Another key aspect to consider when looking at integrating behavioural merchandising is how suggestions change over time. If a customer repeatedly gets the same recommendations it is probably more likely to have a negative affect on conversion rates rather than a positive one. Again, linking this to trending is probably the most affective way to avoid this scenario.

Despite all this, behavioural merchandising is not without its issues or critics. Key areas being the fine line between tracking and snooping on people’s purchasing habits and the different legislations around Europe with regard to data protection. For example, in Germany while online retailers may be allowed to track a user’s journey during a session it is illegal for them to keep that information beyond the duration of the session. So building up a history of views and purchases is impossible. On top of this, German authorities are keen to see their stance become part of European law – although it is questionable whether the rest of the European community would accept this stance.

Furthermore, there are also currently huge discrepancies in costing and they are far from transparent, which makes life very difficult for ecommerce managers. As with areas like fuzzy logic searching, while a lot of vendors may claim that they offer it, the reality is that they are not offering a full-scale product. And while the automation aspect means it offers retailers an opportunity to cut costs of manual merchandising, while at the same time achieving better results, it can still be a difficult sell when considered alone.

It’s very difficult to attribute exact figures to the increase in conversion rates that come directly from behavioural merchandising, so it’s probably wise to take some of the figures bandied around with a large pinch of salt. But for large online retailers even a 0.5% increase is going to more the adequately pay for the upgrade in technology, so including behavioural merchandising should be a given.

One thing however that is clear, is that behavioural merchandising offers customers a personalised shopping experience that is not only much more relevant, but also trustworthy and that adapts to changing customer preferences automatically. And as online retail brands seek to gain a competitive advantage in what is becoming an increasingly competitive market, creating that sort of bond with your customers can only be a good thing.

Jonathan Ross is UK Business Development Manager for FACT-Finder