For anyone running an online business, making sure that your key performance indicators (KPIs) are running at their optimal best is probably the beginning and end of your marketing campaign.
But what exactly are KPIs all about, and how do they affect your business? KPIs are nothing but the quantifiable elements of your e-store that allow you to gauge the success or failure of your virtual store.
They allow you to get an out of the box perspective of your business, thereby allowing you to take the right decisions based on actual facts and figures, as opposed to relying on your gut feeling or intuition.
The right KPIs – beyond basics
But, if you’re really looking to make KPIs work to your advantage, you need to make sure that you have some sort of basis or USP through which you can support these KPIs. Let’s take the classic example where most businesses judge their KPI based on the number of visitors that visit their store.
It’s not just enough that someone visits your store, browses a few items and then abandons his or her cart. You and your business need something a little more tangible if you want people to actually buy your goods. A lot of people don’t know what they want when they land at your site, so a product recommendation system will not only motivate your visitor by showing them what they want to see, but will most likely convince them that they should open an account and purchase your product.
In this way, when you recommend products to your visitors, you’re bound to have a higher success rate since your audience has some type of psychological motivation to buy from you.
Recommendations and personalization – enablers for better KPI scores
Hundreds of ecommerce websites have discovered trends that have led to better product recommendations and higher conversions, simply by combining the data that they’ve gathered from customers and products alike.
A recent report by Emarsys revealed that The Animal Planet Pet Food store had and a 9% increase in upselling and 56% increase in revenue, just by using well-sorted product recommendation systems like Softcube.
The more recent product recommendation systems allow you to seamlessly integrate them into your existing website frame work, without having to deal with any expenses or extra coding. This enables you to:
- Create recommendation lists like that can include site recommendations or similar products that were bought by other customers.
- Take into consideration the physical geographic location of your existing or potential customers because a number of customers spread over a wide geographic region would have different product requirements or specifications.
Online software like Google Analytics already allows you to view the geographic location of your customers, via Geo reports. So, let’s take a look at how product recommendations can help you increase conversions, order value, CTR, and overall customer satisfaction.
- Quicker Conversions
Converting casual shoppers into your loyal customers is not an easy task, especially on the internet as it does not provide any kind of personalization. But a product recommendation engine will show your potential customer that you value him/her as an individual. This will help you to quickly convert them into customers.
- Increase Average Order Value (AOV)
Studies have also revealed that the average order value of a website will typically go up because when a recommendation engine displays personalized options, you tend to get more accurate data through advanced metrics and reporting.
- Increase in CTR
After adding product recommendations, many sites witness an increase in email click-through-rate (CTR), and even experience 30-60% increase in conversion rates, as seen in the Kigili case study.
- Increase Customer Retention and Satisfaction
Product recommendations have the unique added benefit that makes it possible for you to gather, compile and interpret data as to why potential customers abandon their carts. This also gives you a default system that allows you to gauge your customers and employ effective methods re-establish your relationship with them. Customer retention should be any businesses prime directive, both online and off. Anything else should be a secondary concern.
Other Benefits of a Product Recommendation System
We’ve already reviewed the main benefits of product recommendations or employing a dedicated product recommendation system, but here are some more benefits that will answer your questions as to whether you should invest in one or not:
- Relevant Content
When you have access to your customer’s site usage and previous browsing history, you can employ your own product recommendation system or use one of the many commercially available ones to provide them with relevant product recommendations, as and when they’re shopping.
When a customer sees items that are of interest to them, their shopping experience becomes more engaging as it takes on the role of a salesman offering a customer an alternative to what he is looking at. It also spoon feeds the customer with suggestions, as opposed to him having to look it up themselves.
- Manage Inventory
A recommendation engine allows you to decide and execute your own marketing and inventory controls, so that you can streamline it to be in tune with your customer’s profile. So, now you can feature products that are either of high interest to your customer, or are available at a discounted price.
- Reduce Manual Workload
Anyone who has tried creating a bespoke system to streamline a customer’s shopping experience will know that the volume of data required to create such a system is usually way too big to be managed and sorted manually. But, an automated recommendation engine will effectively cut such a workload in half.
- Provide Reports
Apart from increasing sales and improving customer shopping experience, a recommendation system will also provide you with invaluable reports that will help you make businesses decisions in real-time.
The bottom line is that product recommendation systems and engines are already being used on a wide scale by e-commerce websites. However, most site owners fail to see and reap their benefits because:
- They tend to obsess over the amount of traffic that is being directed to their websites.
- Take most of the other KPIs for granted, but expect to see better returns anyway.
The fact of the matter is that, the last thing you need to focus on is the amount incoming traffic your marketing efforts are generating because a majority of visitors are either window shopping or will abandon their carts. So, the whole point to product recommendations should be to increase sales via a recommendation system that shows customers what other customers have bought or a currently looking viewing.