PERSONALIZATION

Personalization enables more intimate relationships between companies and their customers and is an effective tool for building brand loyalty. In it simplest form, personalization can involve Web site visitors creating personal profiles that outline the kinds of features or information they want to see. This usually requires the visitor to fill out an online questionnaire or survey. By providing a host of details during the initial visit, successive visits to the site become more meaningful and valuable, at least in theory. Yahoo!'s My Yahoo!, which it introduced in 1996, is an example of this approach. By registering on Yahoo!'s site, visitors were able to customize the content (including information about weather, TV program lineups, news, sports, and stocks) and advertising displayed.

Lands' End was another company that successfully used personalization during the early 2000s. The company's My Personal Shopper asked visitors a series of questions in order to understand their clothing preferences, after which the site was able to better recommend possible selections. This involved looking at a series of ensembles and choosing the degree to which one was preferred over the other. By filling out a simple questionnaire, consumers also could take advantage of My Virtual Model, which used information like hair style and color, face and eye shapes, skin tones, weight, height, and silhouette to create virtual models which could display clothing selections prior to purchase.

In addition to retail applications, personalization technology also was valuable to corporate users within companies. As information technology plays an increasingly dominant role in the business world and the amount of information workers rely on to do their jobs grows, manageability can become a problem. In late 2000 Goodyear Tire & Rubber Co. turned to personalization as a solution to the demand for information, which employees often needed in specific formats. Portal technology from Computer Associates International Inc. allowed users to access and arrange many different kinds of corporate information from a single interface based on their needs and requirements.

Personalization goes beyond users willingly customizing the content and features they'd like to see or use at a given Web site. It also involves e-tailers using sophisticated predictive techniques to profile visitors based on factors like the Web sites they just came from, the kinds of products they put into their online "shopping carts," information about past purchases, and more. These profiles are then used to present highly targeted special offers to customers.

In the early 2000s, Edina, Minnesota-based Net Perceptions was one company offering solutions to companies like Kmart and J.C. Penney in this area. In 2000, it helped Guitar Center, a leading national retailer of music products, and subsidiary Musician's Friend to increase catalog and e-commerce sales by 60 percent. The company's technology enabled targeted recommendations based on "insight into the individual's personal product and music tastes combined with established business rules that leverage knowledge about product relationships, profit margins, overstock conditions and more."

Companies often rely on special software programs to personalize their Web sites. These applications normally correspond to a site's content, the manner in which ads are generated, and product offerings. Artificial intelligence, mathematical algorithms, and elements like business rules serve as the basis of many such programs. However, by the early 2000s personalization had become a sophisticated endeavor for many retailers, and off-the-shelf software alone wasn't enough to meet the needs of all users. Some required custom applications and strategies. This was due to the fact that companies, their customers, and product or service offerings varied considerably—even within the same industry. What represented meaningful personalization for one company often was not meaningful for another.

Although the technology exists to recommend purchases based on a customer's past history or items placed into a shopping cart, such methods by themselves do little to deliver the kinds of meaningful experiences that are possible when data from other sources is added to the equation. The most effective techniques rely on predictive analysis techniques that draw information from many different sources as a basis for recommendations. In InternetWeek, Robert Preston criticized companies for a lack of sophistication in the area of personalization, explaining that "sophisticated personalization isn't a single, simple product. It's a process—a complex combination of software, networking and best practices that revolves around data gathering, sharing, and mining. It requires multiple departments to swap data and link systems. It entails analyzing information from multiple outside sources."

Successful companies were using personalization more and more in the early 2000s. eMarketer found that the number of online retailers in the United States offering interactive tools or personalization increased from 36 percent at the end of 2000 to 56 percent in mid-2001. At that time, almost all companies were offering an online newsletter to their customers at the time of checkout that could be customized in respect to frequency or content. Customers were very receptive to personalization features. In mid-2001, research from Cyber Dialogue revealed that customers were more likely to shop at and register with sites offering the technology. The research also indicated that consumers who take advantage of personalization are likely to spend more than those who don't. Therefore, because of its value to companies and consumers alike, its likely that personalization will continue to play an important role in e-commerce.