Personalization and Loyalty Programs in E-Commerce Websites

By DoItYourself.com Staff

Imagine you are visiting a particular city for the third time in a year and have booked a deluxe room in a hotel. How do you feel if you find the brand of toothpaste, wine, and snacks of your choice are awaiting you when you check in for the third time? That is personalization - understanding one's taste and offering services in tune with that. Personalized care creates sense of belonging and expresses the e-commerce site's sincere efforts in retaining return customers.

Even though it's the most technically complex sticky tactic, personalization is easily the most effective in enhancing a pleasant customer experience in an e-commerce site. By taking the time to know your customer's interests, needs and preferences, you can have your site customize itself for them. Customers not only appreciate the effort, they also appreciate a shopping experience that typically requires less time and effort on their part to locate and purchase the products and services they want.

Examples of effective personalization include:

• Reordering navigation menus so that a customer's favorite departments appear first.
• Suggesting additional products similar to those that the customer has shown interest in on past visits.
• Featuring products that are similar to those the customer has purchased in the past.
• Selecting content, such as project ideas or site-related news, that targets to the customer's interests.
• Customizing the site behavior based on the customer's preferences, such as allowing customers to create their own home page for the site with "modules" of information such as featured products or content, that the customer selects.

Technology and Hardware Requirements

Recognize that a personalized shopping experience is not only more complex and time-consuming to create; it also places a much heavier demand on your server hardware. For example, if you plan to create a navigation system that personalizes itself to your customer's shopping patterns, then you can't take advantage of statically created navigation pages, which load more quickly. Instead, the navigation elements must be dynamically generated to meet the current customer's needs, meaning more overhead on your web servers and particularly on your database servers. If you will be running a large personalized site, plan to build a significantly more robust back-end data tier involving multiple database clusters that replicate information to each other.

Better Late Than Never

Seriously assess the impact of personalization before you implement it. Personalization is key to the most successful e-commerce sites because customers seek to differentiate between the huge array of online companies offering goods and services. Personalization is not a free advantage, however; it requires a significant investment in design, money, time and personnel to work properly. If you can't afford to implement personalization in the first phase of your site's development, then you should plan for the eventual personalization that you desire. This way, the first phase of your site can be built with that personalization in mind, that reducing the cost of implementing it later.

Loyalty Programs in Internet Stores

Loyalty programs can take many forms. In brick-and-mortar retail stores, for example, such programs often involve frequent shopper cards. Traditional retailers, both of products and services, use some of the following loyalty programs:

• Programs that award dollars-off certificates after a certain dollar amount has been purchased.
• Programs that offer a percentage discount off of every purchase.
• One-time coupons sent out to frequent shoppers for special events, such as birthdays or Christmas.
• Point-accumulation programs that award points for every dollar purchased, and provide awards for which those points can be redeemed.
• Affiliate programs that pay a commission to individuals who advertise your website on their own web sites. The commission is based on sales made by customers who click through to your site from the affiliate's site.

Some programs combine two or more of the above loyalty programs to form their own unique programs. Understanding which programs your company will utilize can drastically affect your site design plans, because every one of them requires additional programming and planning on your part.

The Advantages and Simplicity
What's more, almost all of these programs can be implemented internally, specific to your web site and company, or they can be implemented as a partnership with companies that specialize in loyalty programs. For example, Commission Junction sets up and maintains affiliate programs for several web sites. Every month, CJ provides reports that indicate which affiliates have referred customers to your site and with a list of the order numbers that those customers placed. You are responsible for interfacing those reports with your systems to obtain additional reporting information on those orders.

The Helping Hands
Other loyalty companies help build more traditional loyalty programs for you. ClickMiles allows shoppers to earn points for every dollar that they spend on your site. These points can then be exchanged for merchandise and services, or transferred to shoppers' airline frequent flier accounts as miles. Although programs like this will cost you a percentage of every sale, they provide a reason for shoppers to shop at your site rather than the competition, even if that competition is a brick-and-mortar store.

Other Innovative schemes
You can also take advantage of programs with most major credit banks that create affinity credit cards. These credit cards allow shoppers to accumulate discounts and free merchandise from your site simply by charging purchases on the credit card. Typically, they earn additional bonus credits for charging purchases to the card at your site. These programs often cost little or nothing to start, and the discounts are often paid for by the credit card bank out of their profit on the card's interest fees. Affinity cards also function as free advertising because your site's logo and color schemes are often used in the card's design.

Working with a third party like ClickMiles or Commission Junction is often easier than managing your own private loyalty program. You get more visibility because they are larger programs and you can take advantage of their advertising to drive people to your site.

Small little things make for perfection. But perfection is not a small little thing. Personalization of an e-commerce site or Internet store according to the individual customer's taste is one of the basic things for success online. Analyze, adopt and inbuild some spectacular personalization tips in this article in your site and harvest the results.

© Doityourself.com 2006