/ Personalization

How apps should use real-time recommendations to drive conversions

According to a survey performed by Econsultancy and Adobe, half of surveyed marketers see personalization as critical to their digital strategies.

Why?

Because it works.

Let's look at more stats that confirms this:

  • Nearly three-fourths (74%) of online consumers get frustrated with websites when content (e.g. offers, ads, promotions) appears that has nothing to do with their interests (Source: Janrain & Harris Interactive)
  • In-house marketers who are personalizing their web experiences and who are able to quantify the improvement see, on average, a 19% uplift in sales. (Source: Monetate/eConsultancy)
  • In a study of 650 multi-channel marketing campaigns, personalized campaigns consistently and overwhelmingly beat out static campaigns in generating a high response rate from recipients. (Source: MindFire)

Personalization is one of the best investments you can make to grow your ecommerce site, content site, websites or mobile apps.

Why real-time recommendations?

Recommendation engines are a central part to personalization. Recommendation engines tell you which of your content or products customers are most likely to buy or engage with.

On the surface, product recommendations on different websites may look the same - Recommended For You, You May Also Like, People Who Bought This Also Bought.

However, whether or not a recommendation engine is able to adapt real-time makes all the difference.

Most sites only receive 5-10% of visits from registered customers.

Increasing sales conversion rates on registered customers is a customer retention problem and are what most modern recommendation systems can do with ease.

However, the remaining 90-95% of your store's visits are from unregistered customers. To increase the conversion rates on unregistered customers who have no purchase history, recommendation engines need to make use of their browsing behavior (what products she/he views and clicks on) and adapt product recommendations in a real-time manner.

How real-time recommendations lower cost of customer acquisition

Realtime recommendations help you acquire customers at lower cost by converting your visitors into sales with recommendations that adapt on-the-fly as they shop.

Let's walk through the math. If you paid Facebook $1 per click and had a conversion rate of 2%, it would cost you $1/2% = $50 to acquire a customer.

If you increased that conversion rate from 2% to 2.5% with real-time recommendations, it will now cost you $1/2.5% = $40 to acquire a customer.

If you spent $100,000 on Facebook ads, you would have just saved $20,000.

As an aside, for the best results with increasing conversion rates, we recommend that you install at least our Trending Products, Things You May Like and People Who Bought This Also Bought recommendation widgets.

For growing e-commerce businesses that are pumping in marketing dollars and time to acquire customers, real-time recommendations can make all the difference with little effort.

How to make use of real-time recommendations?

I assume you're now excited about real-time recommendations. But how do you incorporate it on your website?

There are two ways that we recommend:

  • Metisa. (full disclosure: we built this technology!) Metisa is a self-service SAAS personalization technology that integrates easily with any ecommerce, website or mobile app that you can try for free. Send data to us with our Javascript SDK or Metisa APIs. Sit and let us collect and crunch data for roughly 30 days, then install recommendation widgets onto your site in minutes.
  • PredictionIO. If you would like to roll your own recommendation engine, PredictionIO is an open-source framework that is powered by Spark and HBase which you can use to develop custom real-time recommendation engines.

After you have installed real-time recommendations on your website or app, monitor how your conversion rates change over the next few weeks. Most of the time, you should expect to see a significant increase in conversions.

Combined with other marketing actions like improving onboarding experience, retargeting, push notications and email marketing, you could drastically improve user engagement and sales conversions.

Justin Yek

Justin Yek

Partner & cofounder at Altitude Labs, creator of Metisa, former investment banker, public speaker, hobbyist musician

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