Business Process Services White Paper Personalizing E-Commerce: Improving Interactivity to Increase Revenues
About the Author Subramaniam MV Subramaniam is a Delivery Manager at Tata Consultancy Services (TCS) and has 12 years of experience in business process services (BPS). He has worked for Fortune 100 companies, predominantly in retail and manufacturing. He has five years of dedicated retail experience in areas such as solution development and operations.
Abstract E-commerce is changing the dynamics of the retail industry. Customers are increasingly making purchases online at their convenience rather than visiting brick-and-mortar stores. Thus, retailers do not have many physical interactions with their online customers. While this brings welcome reductions to the cost of maintaining physical stores and in-store inventories, it also introduces new aspects in customer experience. Retailers are still trying to fully comprehend the buying behavior of online customers and understand how to influence their purchases as compared to customers in a brick-and-mortar store. This white paper discusses the various methods that can be implemented by retailers to understand the purchase behavior of online customers and how retailers can influence this behavior in real-time. The information collected through this process can be used to understand customers and identify buying behavior, influencers, decision-making patterns, etc., enabling retailers to provide targeted products and campaigns. Effective implementation of the methods discussed in the paper can increase revenues by helping retailers increase the conversion of website visitors to buyers through real-time interactions and personalization.
Contents Introduction 5 The Missing Piece in E-commerce Personal Customer Interaction 5 The Use of Web Analytics to Understand Online Buying Behavior 6 Cookies for Customer Engagement and Analytics 6 Effective Online Interaction for an Improved Customer Experience 7 Using Live Chat to Influence the Customer 7 Illustrative Scenario: Improving Online Conversion by Using Cookies and Live Chat 7 Using Discussion Forums and Social Media to Influence the Customer 8 Offline Analytics for a Holistic Image of the Consumer 9 Conclusion 9
Introduction E-commerce has become a significant marketing and sales channel for a large number of product categories today. Customers are increasingly using mobile devices to browse through products and for shopping, indicating a steady shift of customers to online channels. E-commerce has provided customers the convenience of purchasing the product of their choice at their own pace and in the comfort of their own space. Even brick-and-mortar retailers are fast adapting to the e-commerce environment by increasing their online presence. They aim to lure retail customers and offer them an enhanced shopping experience online. These retailers are building their capabilities to provide multiple customer touch points online and improve delivery technology and processes. Retailers are also finding the use of online promotional tools more effective in providing the right promotions to the right target audience, thus resulting in higher conversion to sales and hence, better returns. The Missing Piece in E-commerce Personal Customer Interaction In a brick-and-mortar store, a store employee interacts with the customer to provide valuable inputs and influence a purchase. The store employee is able to enhance the customer's purchasing journey and gain the trust of the customer. While e-commerce offers customers the advantages of price and convenience, it eliminates such personal interaction with store personnel. Therefore, the opportunities of influencing a customer that are available in a brick-and-mortar store are not available in online channels. As the number of customers shopping online rises, retailers need a solution to address this issue. Online retail is an increasingly tough competitive landscape. Retailers need to devise radical new ways to ensure that website visits are converted to sales, which are then converted to repeat visits and recommendations to others. Deploying web analytics can help retailers understand their customers. However, retailers need to find ways of leveraging this understanding to increase customer engagement in ways that can replace personal interaction within brick-andmortar stores. The amount of data generated about a customer is the highest in e-commerce among all forms of retailing. All decisions regarding merchandising, pricing, or marketing should be based on customers and their purchase behavior. When it comes to evaluating options before making the final purchase, the behavior of customers follows certain patterns, whether in a brick-and-mortar environment or online. However, the decision influencers and initiators vary. Hence, the retailer's approach to initiating the purchase process, and supporting and influencing an online customer in making faster decisions, is key to a successful sale. Let us discuss some of the solutions that retailers have adopted in order to influence the behavior of online customers. 5
The Use of Web Analytics to Understand Online Buying Behavior Web analytics is the collection, measurement, analysis, and reporting of internet data for optimizing website performance and influencing sales. Typically, online retailers monitor web metrics such as the number of visitors, how they arrived at the site, the time spent on the website, the location of the visitor, the web pages visited, and the products purchased. These metrics help the retailer tailor its website to provide more information where required, improve navigation, and engage customers better. The information is also used to run customized online campaigns. Though this data is critical for such analysis and improvements, it does not provide enough information to understand all the requirements of a visitor and the motives for a purchase. The oldest and most basic way of addressing this issue is by using 'cookies'. Cookies for Customer Engagement and Analytics A cookie is a small piece of data sent from a website and stored in a user's web browser to collect specific details regarding the user's session. When the user browses the same website in the future, the website retrieves data stored in the cookie to analyze the user's previous activity. Usually, the cookie is activated when the user clicks on a particular link, button, or tab. Cookies are also used to store user login details and preferences. This way a site 'remembers' how a user likes to view the website, the user's movement across various pages within the site, products browsed most frequently or recently, etc. Cookies also enable some of the most widely used features of online shopping such as wish lists, 1 shopping carts, product comparisons, and product recommendations. Such data can be used to build a profile of an individual's preferences, and the retailer can use this to offer a unique experience to each customer browsing the website. Typically, cookies cannot transmit malware (like viruses) and, due to legal obligations, many of them ask for the user's permission before collecting and sharing particular data. However, some of them can be misused for spyware and adware. Placing filters on a cookie ensures that information extracted is relevant and not private. It is also advisable to incorporate a definite time of expiry for cookies. Retailers also need to inform users and give them the choice of removing existing cookies or not allowing cookies at all. [1] Armando Roggio, Practical Ecommerce, 'Cookies Make Shoppers Feel Welcome', March 2011, accessed 2014, http://www.practicalecommerce.com/articles/2676-cookies- Make-Shoppers-Feel-Welcome 6
Effective Online Interaction for an Improved Customer Experience Online retailers can proactively interact with their customers to build trust and resolve the customers questions or concerns. Retailers can facilitate interaction not only with their employees but also with other consumers. The employees can help customers by resolving technical difficulties on site, highlighting product features that might appeal to the customer, clarifying the store s policies, and so on. Interaction with other consumers can help the 2 customer form cognitive resonance. We discuss two such methods of interaction: 1. Live chat within the retail site 2. Social media and discussion forums Using Live Chat to Influence the Customer Retail websites can support live chat sessions with website visitors, offering an experience that is close to real-time interactions at brick-and-mortar outlets. Visitors who spend more time on a particular product page can be first identified by the website. The historical behavior of earlier website visitors with similar browsing patterns can then be applied to identify high-potential visitors. An invite to chat can now be sent out to these customers and, on their acceptance, they can be connected to the chat support team. This identification needs to be done in real time to ensure that the retailer personally reaches out to all high-potential visitors while they are on the site and possibly, making purchase decisions. The web chat support team fulfills a role similar to that of the sales personnel in retail stores understanding what the visitor may be looking to purchase, influencing the purchasing decision, and providing advice and relevant information on the product. The team can also provide information on offers and discounts, bundled products, insurance, add-ons, shipping, and gift wrapping. With analytics and structured questioning tools at their disposal, online sales personnel (compared to sales personnel in a brick-and-mortar store) can more effectively influence customers in order to not just make a sale, but also to up-sell or cross-sell. The following example demonstrates how the combined use of cookies and live chat can help a retailer to better understand the buying behavior of a customer and successfully close a sale. Illustrative Scenario: Improving Online Conversion by Using Cookies and Live Chat Scenario: A consumer, Andy, searches for offers on digital cameras using a search engine. The search engine webpage displays paid advertisements and organic search results. Andy visits various websites to compare different products by price, features, and offers; shortlists some products; and then compares his potential choices across websites. [2] ResearchGate, 'Influencing the online consumer's behavior: the Web experience', Efthymios Constantinides, 2004, October 2013, http://www.researchgate.net/publication/220146932_influencing_the_online_consumer's_behavior_the_web_experience 7
Option A Behind the scenes: The device Andy uses (a laptop, tablet, or mobile) captures his browsing history and the pages of the various websites that Andy visited. One or more of these websites may have enabled cookies. So the moment Andy visits that website, a cookie is delivered to Andy s system and performs a series of filtered data gathering activities. Based on pre-defined parameters, the cookie collects information on relevant websites that Andy visited and shares the information with the server, which may then alert chat support. The chat support team receives this information in real time. What happens next: A chat window pops up to ask Andy if he would like help with his selection. Andy agrees and states his shortlisted products and his reasons, and the chat team helps him to narrow down his choice by understanding his requirements in detail. The session concludes with a sale. Even if Andy exits any pages, he can re-open them and the cookies can help him load exactly what he had browsed. Option B Behind the scenes: This information is analyzed in real time and it is combined with analysis of similar purchases made by others. The engine serves better offers on the particular products that Andy is interested in (an extended warranty, for example), or serves similar offers that might suit Andy s purpose and wallet better. What happens next: Andy is enticed by the new offer or product, and he makes the purchase. In both cases, Andy is satisfied that the retailer reached out to offer more information and assistance. He recommends the site to others and decides to return to the site for similar products. Using Discussion Forums and Social Media to Influence the Customer Retailers can combine social media and mobile experiences with the customer s purchasing process. One way could be to provide the customer with opportunities to interact with others who bought the same or similar products. The retailer can provide a URL pointing to a discussion thread in a user forum, chat room, or a social media platform where the product is being discussed. Directing the users to a forum where they can interact with other participants helps reduce their anxiety, and other participants act as peer influencers. Retailers can also incentivize the participants in such discussions to become consumers by issuing loyalty points or online discount coupons or by recognizing their online personas as experts. Social listening also offers the retailer an excellent source for customer data. It can help retailers gather feedback, identify trends, and influence purchasers. Customers use these forums to discuss not just products but also website attractiveness, ad campaigns, and retail policies, so retailers can get a holistic understanding of their customers and proactively address their requirements. Any retailer action that stems from such feedback makes a consumer feel more engaged, building greater loyalty. 8
Offline Analytics for a Holistic Image of the Consumer Offline analysis of buying behavior is executed after the customer has left the website, and is performed over an extended timeframe using a larger and more comprehensive database. This analysis may be quantitative or qualitative, and use text analysis or mathematical data. The outcome of such analysis can help understand customer needs to nurture existing customer relationships and build new ones. It also helps identify and focus on customers who will generate the most sales. Analyzing customer buying behavior and customer profiles helps retailers identify buying patterns and trends. These can be used to decide on product groupings and design offers and promotions for customers displaying similar purchasing behavior, thus improving the conversion rate. Such analysis and social listening can help mitigate detractors on the one hand and identify third-party sites that can act as influencers or initiators on the other. It is also useful in assessing and improving the effectiveness of the retail website in terms of both its appearance and user-friendliness. User data for offline analytics can be collected using a number of solutions. Cookies are just one source of customer data. Retailers can implement a client-side script or server-side code, have specific solutions for mobile devices, or harvest data from social media.³ No matter which solution they choose, retailers need to ensure that the applicable user privacy and data collection regulations are followed. Conclusion E-commerce has eliminated or reduced the need for visiting brick-and-mortar stores, but online retailers struggle to connect with prospective customers. Retailers need to bring the human touch to online shopping. They need tools to understand customer behavior and influencers of purchases. They also need to create opportunities to communicate with customers and use knowledge regarding buyer behavior to better engage with them. They need to devise an articulated strategy with a combination of objectives for both the customer and the influencer. The rapidly evolving nature of technologies makes it difficult to follow a consistent method to meet these objectives. But keeping the basics of customer engagement in focus should help selling the right products to the right people, setting the right price, promoting the right features and offers, and placing them in the right channels. And all of these should ensure that the human touch is not lost. [3] Google Analytics, Google Analytics for Mobile Websites, accessed July 2014, https://developers.google.com/analytics/devguides/collection/other/mobilewebsites 9
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