The Benefits of Product Recommendations in Ecommerce

Today’s consumers expect their online shopping experience to be tailored to their needs and wants, without difficulty navigating through multiple pages to find what they’re looking for. Serving up personalized product recommendations is one way you can achieve this, creating a streamlined and positive experience for your customers.

As well as catering to shoppers’ desire for ease and personalization, product recommendations are becoming an increasingly important tool for brands in their mission to stand out from competitors and drive conversions. After all, it’s more important than ever to invest in your ecommerce offering and drive value from your website visitors, as Matt Smith, CEO at Webtrends Optimize, discusses:

“People aren’t going into brick-and-mortar stores and physically buying things like they used to. Therefore, businesses need to invest in their online properties to continue to capture that market and capture every sale.”

In this article, we’ll round up the benefits of effectively deploying product recommendations, exploring their impact on things like customer satisfaction, engagement and conversions.

We’ll also examine a particular use case for displaying relevant product suggestions, and how the Webtrends Optimize product recommendations engine can support this.

But first, let’s go back to basics – what are product recommendations and what are some common examples?

Product recommendations in ecommerce: The basics

Product recommendations can manifest in lots of different ways in ecommerce. Essentially, they are suggestions of relevant products presented to shoppers, based on algorithmic decisions or user-specific data. The aim is to inspire customers to make additional purchases, thereby increasing your sales and average order value (AOV).

These recommendations can come at any time in the online shopping journey. They are used to influence buying behavior at various touchpoints, from your ecommerce store’s search results pages to product pages, follow-up emails and social media ads.

Product recommendations can be generic, based on wider consumer trends and sales data, or personalized, based on a customer’s individual buying behavior, browsing history and unique attributes.

Common examples of how to frame product recommendations include:

  • “You may also like …”
  • “People who bought this also bought …”
  • “Why not add …”

Product recommendations can also come in the form of ordered collection or category pages, with most relevant products appearing first.

Why are product recommendations important?

When executed properly, product recommendations can drive a whole host of benefits for online shoppers and ecommerce retailers alike. We explore seven of these benefits below.

1. They streamline product discovery

By providing customers with personalized and relevant product recommendations, you can make it easier and faster for them to find the products they are looking for. Putting the right product, in front of the right consumer, at the right time, creates a more seamless and enjoyable shopping experience. A curated ecommerce experience ultimately increases customer satisfaction.

2. They help provide a personalized, relevant experience

Personalization has evolved from a ‘nice to have’ to a ‘must have’ for ecommerce retailers. If you are not including some sort of personalization on your online store, visitors are more likely to bounce from your site and find a brand that satisfies their need for a tailored shopping experience.

Personalized product suggestions are an effective way to provide a relevant customer experience that leads to increased engagement. Knowing your customers and clearly demonstrating what your brand offers means you can position your recommendations to appeal to visitors on an individual basis. 

3. They build trust and credibility

Intelligent and tailored product recommendations can help to position you as a credible retailer, by demonstrating to customers that you’re investing in technology to better understand their needs and improve their experience. In turn, this helps to build consumers’ trust in your brand.

4. They increase conversion rate

As outlined, providing targeted recommendations improves the overall customer experience and builds shoppers’ confidence in your business. It figures then that they can be a powerful catalyst for converting browsers into buyers and decreasing abandoned carts.

5. They encourage brand loyalty and retention

Personalized product recommendations demonstrate to your customers that you understand them as individuals. If shoppers feel understood by a brand – like their needs are being recognized and acted upon – they are more likely to be loyal. This can translate into repeat purchases, increased engagement via other channels, and brand advocacy.

6. They increase average order value

By harnessing customer data to serve up personalized cross-sell and upsell suggestions on product pages or at the point of purchase, you can increase how much a shopper spends with you in one transaction. After all, someone is more likely to add additional items to their cart when they are presented with relevant product recommendations that resonate with them as an individual.

What’s more, by the time a shopper reaches the cart, they are highly engaged with their purchase and more likely to increase their spend to buy complementary products.

7. They help to reduce customer acquisition costs

As we’ve covered, product recommendations help to increase key metrics like conversion rate, AOV and repeat purchase rate. They can also boost customer retention. Essentially, they are an effective way to get more out of your current customers, which is a useful strategy to reduce customer acquisition costs.

Product recommendations use case: The benefits in ‘out of stock’ scenarios

Strategically managing ‘out of stock’ scenarios is an important part of the puzzle when it comes to providing a good ecommerce experience – yet it’s something that we often see retailers struggling with when working on optimization campaigns with our clients. Failing to handle these situations correctly could easily frustrate shoppers and result in you losing their trust.

Let’s look at an example of how product recommendations, powered by the Webtrends Optimize product recommendations engine, can enhance the visitor experience when desired products are out of stock.

If a customer comes across an item of clothing that they really like, but it’s out of stock, then you can assume that there are certain elements that made them want to choose it in the first place. Our tool enables ecommerce teams to set rules around the attributes of any recommended alternative products, ensuring that chosen elements are a match with the out-of-stock item.

For example, you can set a rule that any recommended products must be the same color as the originally viewed product. Alternatively, you may want to set the condition that recommended items are the same length.

You can also set negotiable attributes. Let’s take price as an example. You could set up your rules, so every other element of the recommended product must match the out-of-stock item, but the price is negotiable. Retailers can specify by how much the price can vary, in order to protect profit margins but encourage upselling.

This vastly improves the management of out-of-stock situations, driving benefits for shoppers, as well as for businesses:

  • Providing alternative recommendations that clearly match a shopper’s purchase intent is an effective way to counter the disappointment of an item being out of stock and prevent customers feeling frustrated.
  • Pointing consumers in the direction of relevant (and available) alternatives makes it easier for them to find something else. This increases the likelihood of them converting and purchasing something – which is good news for your revenue.
  • Having a positive shopping experience with carefully considered recommendations provided also means that consumers are more likely to return to your ecommerce site.
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