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How effective are personalized product recommendations for Ecommerce? [#DigitalInsights]

By Dave Chaffey 23 Mar, 2015
Essential

New research from 300 online retailers shows the impact of different types of personalized product recommendations on conversion rates and other Ecommerce KPIs

We're all familiar with the Amazon personalized product recommendations after many years of seeing and responding to them, but since this well-known whitepaper from the Amazon team explaining the thinking behind the 'collaborative filtering' aka Product recommendations on Amazon [PDF], it's rare for Amazon to share the impact of product recommendations on their results.

Recent research on Personalized Product recommendations from Barilliance sheds light on the impact of personalized recommendations based on an analysis of results from their clients. Barilliance analyzed revenue source data from over 300 eCommerce sites worldwide which use the Barilliance product recommendation engine.

Here are some of the main learnings from the research which highlight the potential gains from implementing personalized product recommendations. Hopefully some of these results are useful for benchmarking the relative importance of personalized recommendations with your site:

  1. Percentage of transaction revenue from recommendations. The worldwide average of website revenues generated from product recommendations was 12%.
  2. Impact on conversion rate. The conversion rate of visitors who clicked on product recommendations was found to be 5.5 times higher than the conversion rate of non clicking customers.
  3. Placement of recommendations. Above the fold recommendations were found to be 1.7 times more effective than below the fold recommendations.
  4. Type of recommendations. Out of the 20+ product recommendations types that were reviewed in this study, the most engaging recommendation type was ‘what customers ultimately buy’.
  5. The impact of personal merchandising. The Click-through rate (CTR) of personalized ‘Top Sellers’ recommendations was found to be 2 times more effective than the CTR of global (non personalized) ‘Top Sellers’ recommendations.

A summary of the research findings from Barilliance is shown in the infographic .

Product Recommendations Effectiveness

By Dave Chaffey

Digital strategist Dr Dave Chaffey is co-founder and Content Director of marketing publisher and learning platform Smart Insights. Dave is editor of the 100+ templates, ebooks and courses in the digital marketing resource library created by our team of 25+ digital marketing experts. Our resources are used by our Premium members in more than 100 countries to Plan, Manage and Optimize their digital marketing. Free members can access our free sample templates here. Dave is a keynote speaker, trainer and consultant who is author of 5 bestselling books on digital marketing including Digital Marketing Excellence and Digital Marketing: Strategy, Implementation and Practice. To learn about my books, see my personal site Digital marketing books by Dr. Dave Chaffey. In 2004 he was recognised by the Chartered Institute of Marketing as one of 50 marketing ‘gurus’ worldwide who have helped shape the future of marketing. Please connect on LinkedIn to receive updates or ask me a question.

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