Forrester and Shop.orgForrester and recently released the second and final component of their two-part annual State of Retailing Online (SORO) report, an industry temperature check on all things e-commerce. Widely regarded as the “bible” of Internet and multi-channel retail research, the SORO uses extensive data collected directly from retailers to develop tangible metrics and performance benchmarks for new and existing e-commerce strategies. Simply put, the report is the place for online retailers to learn what’s working and what isn’t in e-commerce.

The study focuses on merchandising, headcount growth, and global strategies. We’re particularly excited about some of the report’s findings around personalization.

Some of the discoveries that caught our attention include:

  • Personalization is Driving Higher Average Order Values (AOVs): The report names recommendation engines as the key driver of the overall boost in customer purchases; 54% of retailers reported a rise in AOV over the last year.  Through personalization, retailers are recognizing and capitalizing on the opportunity to connect shoppers at the time of purchase with other relevant products and content attuned to their interests.While we already knew how big an impact personalized recommendations can have, Baynote’s pleased to see Forrester acknowledge it publicly as the leading driver of the jump in AOVs. Read more about how our customers are benefiting from personalization.
  • Conversion Rates Have Also Increased: While retailers have struggled with notoriously low conversion rates since the advent of e-commerce (hovering around 2-3% on average), 65% of e-merchants reported an increase in conversion rates in 2011 alone.  Forrester attributes this exciting development to improvements in usability testing and checkout enhancements.One way to approach improving usability testing and checkout experiences is having cross-sell/up-sell recommendations or offers onsite and in the shopping cart, and experimenting to see what configurations drive the most conversions. This ensures sales keep moving, while continuously improving the overall customer experience.  One emerging best practice is to provide consumers with content recommendations such as shopping guides when they begin to browse, then progress to product recommendations as they compare products, and finally show special offers when they’re almost ready to buy. This requires a very advanced level of personalization technology, however. Sites need the ability to recognize what stage consumers are at and in turn automatically show them the appropriate content, recommendations and offers.
  • Repeat Shoppers Proving Valuable: Retailers agree email continues to be one of the greatest weapons in their arsenal, with advanced email tactics recapturing shoppers and driving repeat business. By targeting past customers with newly specialized email tactics, such as personalized emails or emails triggered by abandoned shopping carts and wish lists, merchants are able to re-engage customers and stimulate new sales opportunities. In fact, 53% of retailers surveyed reported their revenue from repeat shoppers increased in 2011.As retailers start to think more about repeat shoppers, they must consider how to support customers not only through the purchase process but afterward. The best brands not only use personalization to increase revenue, but use content personalization to improve customer support experiences. This increases overall customer satisfaction and drives repeat business.
  • Site Merchandising Getting Smarter With a Little Help from Recommendations: Retailers are reporting increased site conversion gains as a result of spending more money in several key areas of site merchandising, including personalized recommendations on both product detail pages and at checkout. In fact, Forrester reports that recommendations are becoming increasingly commonplace as retailers take note of the booming market penetration by several vendors (such as Baynote!). According to the report, 22% and 20% of retailers this year are prioritizing recommendations on product pages and checkout pages, respectively.As product recommendations become commonplace, retailers will need to look toward more innovative approaches to continue to generate lift and rise above the noise. Traditional approaches such as collaborative filtering and rules-based techniques, which make conclusions that “people who liked this will also like that,” miss an important component: customers’ real-time intent.  By focusing on what people are actually looking for in the moment, retailers can serve up recommendations that are more timely and likely to get attention. This intent-based approach is the one we take here at Baynote. members can get their free copy and read about the latest happenings in the e-marketplace here: Forrester clients can also gain access here.