Personalization Said To Be Ineffective On Online Retail Sites

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October 14, 2003 (12:05 PM EDT)

Personalization Said To Be Ineffective On Online Retail Sites

Personalization software that customizes a web page based on an online shopper's previous buying patterns and preferences is expensive technology that fails to get consumers to purchase more, a market research firm said Tuesday.

The majority of shoppers visiting a retail site already know what they're looking for, so they want to be able to find the product and make the purchase quickly, Jupiter Research concluded in a recent report on the ineffectiveness of personalization on consumer web sites.

"People go to web sites to accomplish specific tasks, and the best investment you can make in a web site is to help people accomplish those tasks," Jupiter analyst Matthew Berk said. "If the report has one goal, it's to ring a warning bell to companies who thought that simply having personalization was to have a better web site."

In surveying consumers, Jupiter found that only 14 percent said personalized offers or recommendations led them to buy more often from an online store. Even fewer -- 8 percent -- said personalization prompted repeat visits to content, news or entertainment sites.

Far more effective in getting consumers back were basic site improvements. The survey found that faster-loading pages prompted 54 percent of the respondents to buy from a site or visit it more often.

Easier navigation also proved to be far more effective than expensive personalization software with 52 percent of the respondents. Letting visitors, for example, identify whether they are a patient visiting a hospital site, or a laptop shopper on a retail site, and getting them into the areas they want quickly, are the best ways to ensure consumers will return.

"Effective navigation allows visitors to be their own personalization engines," Berk said.

A heavy user of personalization is online retailer Amazon.com Inc., which is an exception because of its size. The giant retailer has an IT budget of hundreds of millions of dollars that allows it to experiment with technologies that don't have to show an immediate return, Berk said. Most smaller retailers, however, don't have that luxury.

While personalization doesn't work on consumer sites, it's proven to be very effective in emails. "The more personalized you get in an email, the more effective it can be in getting people to purchase a product," Berk said.

For companies that believe personalization can be helpful, Jupiter recommends buying small and testing the application's effectiveness carefully. This way, companies can build slowly, if the application shows a solid return.

Where personalization has proven effective is in corporate portals. An employee, customer or partner needs to be shown pages that relate to specific business activities. Companies that have gotten this message and are focusing personalization in portals include Art Technology Group Inc., BEA Systems Inc., BroadVision Inc. and IBM, Berk said.

"What's going to happen to personalization technology is it's going to show up in the portal," Berk said. "That's where it's going to find its home."