Product Recommendations are fast becoming a must-have feature across ecommerce sites worldwide. Recommendations enable easier product discovery and convert browsers into buyers.
Recommendations give a personalised on site shopping experience to a customer. For merchandisers, it is an extremely important tool to increase the average order value and conversion rates.In this post, I’ve highlighted the impact of product recommendations on an ecommerce site and how it can help you lift your online sales.
1. Streamlines Product Discovery
The primary benefit of product recommendations is to aid customers in discovering products that they’ll like. Most automated product recommendation tools understand a visitor’s preferences based on a variety of factors including past behavior and preferences of similar customers (also known as wisdom of the crowds). This information can be used in providing highly relevant recommendations and also help a customer discover new products that would match his taste and interest.For new visitors, showing recommendations for top selling and trending products works well as it relies on the power of social proof. This can evoke a customer’s interest and make him/her browse more. For repeat users, showing them personalised product recommendations, based on past behaviour, purchases and learned affinities works best. For example, from his past browsing history you can deduce information like brand preferences, the price range he is comfortable with and more. This will lend a personal touch to the customer’s shopping experience.
Although recommending new products is a great way to help customers discover products, but too many choices can distract a customer- often resulting in no purchase being made at all. Therefore it’s best to stick to one or two recommendations widgets per page.2. Improves Cross-sells and Upsells
Every interaction with a visitor is an opportunity to cross-sell and up-sell.Cross-Selling refers to recommending products from other categories, which are complementary to the product that is being viewed or purchased. With up-selling, you can recommend a more expensive model of the same type of product that might have advanced features or a better warranty period than the product in consideration. Use recommendation widgets to improve cross-sell and up-sell by suggesting additional products relevant to the item searched for or by showing finer model of the searched product . This scenario is implemented particularly well by the Indian ecommerce giant, Flipkart. I searched for ‘Apple MacBook Air’ on their site. On landing to the product page, I could see a recommendation section which had up-selling and cross-selling options divided into two parts-
A ‘Customers who viewed this also viewed’ widget which had various other laptop models with better features and advanced configuration, and
- A ‘Frequently bought with this computer’ widget which offered laptop bags.
Manually specifying up-sell and cross-sell information for each product/category is time-consuming and frankly, not a scalable technique. With automated product recommendations, merchandisers can effortlessly specify up-sell and cross-sell rules per category/product.
3. Raises Average Order Value (AOV)
Average Order Value is the Sum of Revenue Generated / Number of Orders Taken. In simpler terms, it is the average amount each customer pays per order on your site.
For a healthy AOV you should aim at a higher number of products added to cart than number of customers. Product recommendation is one of the keys to increase your AOV. By showing more relevant products, customers tend to purchase more which leads to more number of products in the cart and hence a higher AOV.
Cross-selling is a great way to improve Average Order Value. For instance, someone buying a camera can be prompted to buy batteries or a camera case, thus improving the AOV.
4. Fosters Customer Loyalty & Enhances Engagement
Personalised product recommendations make customers feel welcome on the site. Shoppers respond positively to accurate product suggestions which helps build trust in the brand and encourages them to visit your site time and again.
It also enhances customer engagement on the site as customer tend to interact with these recommendation widgets and spend more time on the site.
You can acknowledge a loyal customer, who shops more than thrice in a month from your store, by offering discount coupons or any such similar offers towards their next purchase.
5. Increases Conversion Rates
With personalised recommendations, customers discover the items that fit their preferences. They discover the product easily and almost instantly, leading them to convert faster. Sometimes customers make unplanned purchases driven by accurate recommendations. This feature greatly increases the conversion rate and hence the overall revenue.
Such websites convert browsers into buyers by showing them relevant recommendations. Therefore, even if a customer doesn’t possess an intent to buy at that moment, product recommendations can produce that intent.
‘According to Forrester research analyst Sucharita Mulpuru, product recommendations are responsible for an average of 10-30% of eCommerce site revenues.’
6. Avoids IT Cost
Third party recommendation tools have also made a merchandiser’s life easier. With ready-to-integrate widgets, they require negligible developer intervention to integrate and begin using.
Also, with many of automated product recommendations tools being cloud-based, they come without the hassles of on-premise software – i.e. frequent updates, zero maintenance and quick support.
The usefulness of product recommendation tool in increasing sales is unquestionable, as it provides an efficient way of enticing customers and leading them to products they’re more likely to buy.
So, here you have 6 excellent ways by which product recommendations can increase your conversions and hence overall revenue.
We’ll soon be launching our own Personalised Product Recommendations with advanced merchandising controls and in-depth insights. Stay tuned for more information on how you can try out Unbxd’s Personalised Recommendations!
I’d love to hear how product recommendations have helped your ecommerce site – so do comment and let me know!