Personalization, Rules-Based Promotion Set to Grow

Josh GordonOnline retailers looking to differentiate from the competition and gain market share must understand the latest report from Retail Systems Research (RSR), due out August 23, 2010. Despite a host of statistical evidence that personalization is an effective online marketing technique for retailers, the tactic is still, surprisingly, seldom used.
Marketers have historically pointed to a general lack of data as a reason programs and campaigns are not reaching their pinnacle. A dearth of data, however, is no longer marketing’s kink in the hose. According to the forthcoming report from RSR, few retailers believe they are taking the necessary steps – or implementing the right programs – but they are not blaming a lack of data. Now the issue is how to organize the data and put it to good use.

It is very safe to indicate that substantial growth of for personalization software is on the horizon. The software that does the best job of organizing data, segmenting it, and attaching it to content will likely see the most growth.

A few of other interesting statistics from this upcoming report jumped out at me as well.

First, 40 percent of online retail marketers indicated that their number one challenge is keeping existing customers. It appears as though the recent increase in focus on customer retention is not going away any time soon. Though the report will indicate that acquisition is still a primary goal for online retailers (37 percent claim acquisition as the number one challenge), it appears as though a thawing economy is not dramatically shifting focus away from retention. Tools for onsite targeting are extremely valuable for retention because they are cost effective and easy to deploy. It is likely that online retailers will begin to explore onsite targeting and other ways to bring retention marketing into the Web site experience without re-platforming a Web site.

A second interesting stat to jump out of this report’s preview is that only 12 percent of online retailers believe the economy is a major challenge. It is interesting that marketers are removing “the economy” as an excuse. The good news is that the steady but slow increase in consumer confidence and purchases will likely speed up in the coming months and retailers deploy more online tools designed to increase sales.

Most interestingly, aside from the specifics on personalization, is that 66 percent of the retailers surveyed believe that a rules-based promotion engine is “very important.” This statistic reinforces another factor I have seen developing in the last 12-18 months in the direct digital marketing industry. Some retailers appear to be abandoning the ultra-sophisticated learning systems necessary for predictive modeling in favor of a more straight-forward – and easily controlled – rules based approach.

Direct digital marketing plays a large role in the present and future of online retailing. Stay tuned to RSR for more revealing statistics and insights about what online retailers are doing, and to The Lunch Pail for information on the crucial role of direct digital marketing.

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  2. […] for the first time in several years the balance between customer retention and acquisition is tipped in favor of retention. As a result, marketers must shift strategy - and budget - to new tactics better aligned […]

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