E-Commerce Players Seeking the Right Personalisation Strategy

By December 03, 2014

Online retailers all agree that web personalisation is important. However some companies may be risking losing customers with the targeting strategies they are pursuing.

Some 52% of marketing consultants polled for a survey carried out earlier this year by Adobe and Econsultancy agreed that “the ability to personalise web content is fundamental to online strategy.” Personalisation is therefore clearly important, but how does an e-tailer go about putting the idea into practice? Web personalisation basically means using data on people’s known browsing habits – among other factors – to tailor/adapt the message or the offer to the individual user.  This may range from simply mentioning the name of a customer in an email to applying advanced algorithms which suggest drawing such and such a product from Netflix or Amazon to the customer’s attention.  More recently, a small team of faculty and students at Northeastern University, Boston, USA, set out to discover how e-commerce sites use the variety of tools at their disposal. The Northeastern team examined sixteen top e-commerce sites ranging from general e-tailers to hotel websites and rental car booking platforms. They recruited a diverse set of users of the Amazon Mechanical Turk platform and tried out different sets of searches. Their research revealed two practices: price discrimination – i.e. customising prices for individual site visitors; and price steering – altering the order in which search results come up in order to highlight specific products. In both cases the e-commerce sites based their personalisation on the online visitor’s browsing habits. The Northeastern team point out that such practices may prove problematic.

Price discrimination: customers often in the dark

Price discrimination is hardly a rare occurrence. Students for example regularly obtain price concessions. Similarly, on some e-commerce sites members can claim rebates not available to ad hoc customers. However, a problem may arise where such pricing practices are more clandestine, leaving the customer in the dark as to the reasons behind the price variations. The Northeastern University team found that in some cases price differentials were quite arbitrary. On the hotel and travel site Travelocity, for example, iOS and Safari users were being quoted prices 5 - 15 % cheaper than those available to Android and Chrome users. The company simply did not explain this variance. In addition, the survey revealed some inconsistency in the way prices and search results were made up. The Home Depot app for instance was displaying more attractive prices for Apple users… but only on certain days. The report points to a distinct lack of transparency in much current web personalisation and underlines that results may vary widely from one website to another.

Excessive personalisation can be ‘creepy’

One consequence of this general opacity is that customers may become wary of using e-commerce sites. The actual data collection process on which customisation is based raises another question: what are the limits on gathering personal information? This very question – and a few eyebrows – were raised a couple of years ago by the testimony of a Target statistician. Target had figured out that a girl was pregnant before her parents did by looking at the products she bought, or even just looked at. The company then sent her coupons for products aimed at pregnant women. Another point is that when absolutely everything is personalised, this no longer attracts the customer’s attention. A survey carried out in 2013 revealed that only 14% of the consumers polled were likely to read an email addressed to them personally. They just found it ‘creepy’. Moreover, the large number of channels being used nowadays for personalised marketing may cause confusion among customers. It seems then that retailers are taking a trial-and-error approach to customer personalisation and there appear to be as many strategies as there are e-commerce sites. And sometimes the strategy is so badly thought-out that it is more off-putting to customers than appealing.

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