800.416.4959/CODE: 693666

Today’s Speakers

Housekeeping…

• How to get “The Executive Guide to Captivating Customers” White Paper

All attendees will receive via emailAvailable to download on the MyBuys website

• This Webinar will be recorded and available for viewing on the MyBuys website

MyBuys – The Personalization Experts

Why MyBuys Commissioned This Research

To uncover the gap between consumer demand for

personalization and current merchant execution

About the e-tailing group

14 years e-commerce consulting

Author, It’s Just Shopping

50+ years traditional retail and catalog experience

Fortune 500 client projects ranging from strategic planning, merchandising, marketing, to technology development and messaging

Proprietary research studies on mystery shopping and merchandising,

marketing and EMC (Evolving Multi-Channel Consumer), In-Store Pickup and Gift Registry

e-Commerce expert and frequent speaker at industry events, trade associations

Today’s Agenda

I. The Consumer Point-of-View

II. The Merchant Perspective

III. The e-tailing group Personalized Product Recommendations Checklist

I. The Consumer Point-of-View

Consumer Survey Objectives

• To understand how consumers value personalized shopping across channels

• To learn how purchases are impacted when there is a personalized shopping experience

• To see how email can be effective as both customer service and promotional when personalized based on past purchases and/or preferences

Gender63% Female37% Male

Age range12% 25-3428% 35-4430% 45-5430% 54+

HH with or w/o Children62% None38% Presence of

Children

HH Income• 4% Under $25,000• 4% $25,000 - $35,000• 10% $35,001 - $50,000• 23% $50,001 - $75,000• 21% $75,001 - $100,000• 5% More than $100,000• 5% Prefer not to respond

Education• 8% High school graduate• 23% Some college; no degree• 35% College graduate• 9% Some graduate school• 25% Post-graduate degree

Online survey of 1,345 adults who shop online 4+ time annually,spending $500 or more via the Internet

Methodology – Demographics

Overview of Consumer Feedback

• Shoppers want - and expect - more personalized online shopping experiences based on past purchases and behavior

• Personalized product recommendations are convenient, save time and help shoppers make better choices

• Shoppers perceive that the Internet is the channel where they are best known and receive personalized recommendations yet merchants do not know shoppers as well as they should

• Shoppers are “significantly to somewhat” more loyal to a retailer that provides them with a personalized online experience

• Personalized product recommendations are valued throughout the online shopping experience

• By improving the personal relevance of related products shown, merchants have an opportunity to gain incremental sales

For greater convenience and time savings, shoppers want - and expect - more personalized online shopping experiences based on past purchases and behavior

I expect that my shopping cart would be saved for future visits so that I don’t have to go to all the trouble to find the products I had previously selected.

66%

I expect that my shopping experience online would be personalized based on past purchases.

39%

Greeting me by name is nice, but I would like to see more of a personalized shopping experience based on past purchases and behavior when I visit a website.

30%

I want my shopping experience online to be more personalized so it saves me time when making purchase decisions.

30%

I would be willing to provide personal information in exchange for a more personalized shopping experience.

19%

Which of the following best describes your feelings about personalization online? Check all that apply.

I expect that my shopping cart would be saved for future visits so that I don’t have to go to all the trouble to find the products I had previously selected.

66%

I expect that my shopping experience online would be personalized based on past purchases.

39%

Greeting me by name is nice, but I would like to see more of a personalized shopping experience based on past purchases and behavior when I visit a website.

30%

I want my shopping experience online to be more personalized so it saves me time when making purchase decisions.

30%

I would be willing to provide personal information in exchange for a more personalized shopping experience.

19%

Which of the following best describes your feelings about personalization online? Check all that apply.

The Consumer Point-of-View

75% will trade privacy for personalization. 40% of shoppers have no privacy concerns; 35% enjoy receiving personalized recommendations although they consider them somewhat invasive but still enjoy PPR

I have no privacy concerns. 40%

It feels somewhat invasive but still enjoy seeing the personalized recommendations.

35%

It feels invasive and would prefer not to see such recommendations. 14%

I am somewhat turned off from shopping at that retailer. 7%

I am completely turned off from shopping at that retailer. 3%

How would you rate your feelings regarding any potential privacy concerns when receiving personalized product recommendations?

I have no privacy concerns. 40%

It feels somewhat invasive but still enjoy seeing the personalized recommendations.

35%

It feels invasive and would prefer not to see such recommendations. 14%

I am somewhat turned off from shopping at that retailer. 7%

I am completely turned off from shopping at that retailer. 3%

How would you rate your feelings regarding any potential privacy concerns when receiving personalized product recommendations?

The Consumer Point-of-View

Merchants do not know shoppers as well as they should as 39% scored favorite merchants 5 or less on a “ten-scale”

On a scale of one-to-ten how well do your favorite merchants know you as a customer where ten implies they know you extremely well?

3% 3%

5%

8%

20%

14%

19%18%

5%4%

one two three four five six seven eight nine ten

On a scale of one-to-ten how well do your favorite merchants know you as a customer where ten implies they know you extremely well?

3% 3%

5%

8%

20%

14%

19%18%

5%4%

one two three four five six seven eight nine ten

The Consumer Point-of-View

Shoppers perceive that the Internet is the channel where they are best known and receive personalized recommendations

Knows you best

Knows you least

4 3 2 1

Internet 45% 17% 13% 25%Store 18% 37% 30% 16%Catalog 6% 37% 48% 9%TV Shopping Network 31% 9% 10% 50%

Comparing online to store-based selling, which of the channels where you shop typically knows you best? Rank 1-4 where 4 is the channel that knows you best and makes recommendations tailored for you.

CHANNELS

Knows you best

Knows you least

4 3 2 1

Internet 45% 17% 13% 25%Store 18% 37% 30% 16%Catalog 6% 37% 48% 9%TV Shopping Network 31% 9% 10% 50%

Comparing online to store-based selling, which of the channels where you shop typically knows you best? Rank 1-4 where 4 is the channel that knows you best and makes recommendations tailored for you.

CHANNELS

The Consumer Point-of-View

81% of these shoppers find value in truly personalized products on a site because they are convenient,save time and help them make better choices

Personalized product recommendations are convenient and save me time.

24%

Personalized product recommendations allow me to make better choices.

21%

I never notice products that are personalized during my web shopping experience.

19%

I find them helpful and often make a purchase. 13%

I find them valuable and make a purchase once in a while. 37%

I find them valuable but don’t typically make a purchase. 34%

How do you typically react when you see products that are truly personalized for you on a website? Check all that apply.

Personalized product recommendations are convenient and save me time.

24%

Personalized product recommendations allow me to make better choices.

21%

I never notice products that are personalized during my web shopping experience.

19%

I find them helpful and often make a purchase. 13%

I find them valuable and make a purchase once in a while. 37%

I find them valuable but don’t typically make a purchase. 34%

How do you typically react when you see products that are truly personalized for you on a website? Check all that apply.

The Consumer Point-of-View

77% of the time a merchant’s personalized recommendations result in additional product purchases

Beyond the product you bought, how often do youpurchase an additional product based on a

merchant's personalized recommendations?

2%

19% 18%

6%

56%

All the time Some of the time Once in a while Never Never noticed

Beyond the product you bought, how often do youpurchase an additional product based on a

merchant's personalized recommendations?

2%

19% 18%

6%

56%

All the time Some of the time Once in a while Never Never noticed

The Consumer Point-of-View

Over 1/3 (36%) of shoppers are “significantly to somewhat” more loyal to a retailer that provides them with a personalized online experience

When receiving a personalized experience from an online retailer how much impact does that have

on your loyalty to that particular retailer?

9%

27%

40%

24%

Significantly more loyal Somewhat more loyal Mixed bag dependingon current needs

Not necessarily moreloyal

When receiving a personalized experience from an online retailer how much impact does that have

on your loyalty to that particular retailer?

9%

27%

40%

24%

Significantly more loyal Somewhat more loyal Mixed bag dependingon current needs

Not necessarily moreloyal

The Consumer Point-of-View

89% of these shoppers feel that products suggestedon a site are specifically tailored for them only some of the time or once in while

How often do you feel that the products suggested on a websiteare tailored specifically for you?

2%

38%

49%

5% 5%

All the time Some of the time Once in a while Never Never noticed

How often do you feel that the products suggested on a websiteare tailored specifically for you?

2%

38%

49%

5% 5%

All the time Some of the time Once in a while Never Never noticed

The Consumer Point-of-View

Shoppers indicate it is ”very to somewhat valuable”to receive personalized product recommendationin each of these website locations

Product pages 76%

Personalized home page 75%

Category page 74%

Shopping cart 70%

Order confirmation 67%

Shipping confirmation 65%

Brand page 63%

Email with product recommendations specific to past purchase 62%

Email after purchasing a product asking for a rating and reviews 61%

Thank you page after checkout 55%

Personalized Product Recommendations Ranked Very Valuable, Valuable & Somewhat Valuable (5-3)

Product pages 76%

Personalized home page 75%

Category page 74%

Shopping cart 70%

Order confirmation 67%

Shipping confirmation 65%

Brand page 63%

Email with product recommendations specific to past purchase 62%

Email after purchasing a product asking for a rating and reviews 61%

Thank you page after checkout 55%

Personalized Product Recommendations Ranked Very Valuable, Valuable & Somewhat Valuable (5-3)

The Consumer Point-of-View

By improving the personal relevance of related products shown, merchants have an opportunity to gain incremental sales

I usually peruse those products and once in a while purchase one of them. 53%

I have looked at those products in the past and they don’t seem to be the types of products I would consider buying.

23%

I don’t look at those products because they’ve never been on target in terms of products I would likely buy.

11%

I purchase a lot of gifts online and am not often interested in buying additional items at that time or in the near future.

10%

I usually peruse those products and always purchase. 2%

When you are shopping on a merchant’s product page or in the shopping cart, which one of the following has typically been your experience when you see “Customers who bought this product also bought these products?”

I usually peruse those products and once in a while purchase one of them. 53%

I have looked at those products in the past and they don’t seem to be the types of products I would consider buying.

23%

I don’t look at those products because they’ve never been on target in terms of products I would likely buy.

11%

I purchase a lot of gifts online and am not often interested in buying additional items at that time or in the near future.

10%

I usually peruse those products and always purchase. 2%

When you are shopping on a merchant’s product page or in the shopping cart, which one of the following has typically been your experience when you see “Customers who bought this product also bought these products?”

The Consumer Point-of-View

Placement – Personal Home Page

Amazon Educated Shoppers About

Personalized Product

Recommendations

Placement – Product Detail Page

“More Great Finds” •You may also like• Top sellers• New• Great choice

Placement - Category Page

Captivate customers

immediately in the category

page

Placement - Brand Page

Customized selection of

branded goods

Placement - The Shopping Cart

Fuel last-minute impulse buys

This Season’s Essentials You Might Like/Deal of the Day

Post-order, shipping and order confirmations are where shoppers most value receiving personalized recommendations

COMMUNICATIONSVery

valuableValuable

Somewhat valuable

Not very valuable

Not at all valuable

Shipping confirmation 40% 12% 13% 17% 17%

Order confirmation 39% 14% 14% 17% 16%

Thank you page after checkout 11% 16% 28% 25% 20%

Email after purchasing a product asking for a rating and reviews

10% 16% 35% 21% 17%

Email with product recommendations specific to past purchase

9% 15% 38% 22% 16%

Post-order, how valuable is it for you to receive personalized recommendations within each of the following communications?

COMMUNICATIONSVery

valuableValuable

Somewhat valuable

Not very valuable

Not at all valuable

Shipping confirmation 40% 12% 13% 17% 17%

Order confirmation 39% 14% 14% 17% 16%

Thank you page after checkout 11% 16% 28% 25% 20%

Email after purchasing a product asking for a rating and reviews

10% 16% 35% 21% 17%

Email with product recommendations specific to past purchase

9% 15% 38% 22% 16%

Post-order, how valuable is it for you to receive personalized recommendations within each of the following communications?

The Consumer Point-of-View

Placement - Order Confirmation and Thank You Page

Merchandised for incremental sales

Placement - Shipping Confirmations

Sell and support

opportunity

Placement – Post-Order Merchandising

Specific coordinating product sent

via email

Personalized email alerts are powerful toolsthat can broaden perceptions and increase sales

I believe this kind of communication is much more valuable than a generic promotion likely sent to all customers.

37%

I sometimes respond to these emails purchasing one or more of the products. 34%

I respond the same as general communications. 30%

I always open these kinds of communication. 24%

This retailer is customer-centric and truly provides a service. 17%

I always respond to these emails purchasing one or more of the products. 3%

What is your perception when receiving an email alert to let you know about products/ promotions tailored for you or for backordered products you previously attempted to purchase? Check all that apply.

I believe this kind of communication is much more valuable than a generic promotion likely sent to all customers.

37%

I sometimes respond to these emails purchasing one or more of the products. 34%

I respond the same as general communications. 30%

I always open these kinds of communication. 24%

This retailer is customer-centric and truly provides a service. 17%

I always respond to these emails purchasing one or more of the products. 3%

What is your perception when receiving an email alert to let you know about products/ promotions tailored for you or for backordered products you previously attempted to purchase? Check all that apply.

The Consumer Point-of-View

Asking Customers What They Want

Favorites by• Category• Sub-category• Brand

Personalized Email Alerts

Taking advantage of profiling by

promoting new products based on preferences

“Beauty Bye-Byes” online-only clearance

Ratings and Reviews Email

Rate This Product

*****

Bring them back to buy more

Shoppers want personalized experiences acrosschannels, yet 78% are only encountering them“some of the time” or “once in a while”

Q14

How often do you encounter retailers who provide personalized experiences in their stores, online and/or from their call centers?

4%

29%

49%

14%

5%

Most of the time Some of the time Once in a while Never Indifferent

How often do you encounter retailers who provide personalized experiences in their stores, online and/or from their call centers?

4%

29%

49%

14%

5%

Most of the time Some of the time Once in a while Never Indifferent

The Consumer Point-of-View

The consumers have clearly set a high bar for the merchant community

To exceed their customer’s expectations merchants must decide how to tackle the

challenge of providing best-of-breed personalization

II. The Merchant Perspective

Over half the merchants still do not know how much up-sells and cross-sells contribute to overall revenue; for the most part known contributions remain under 7%

What percent of revenue are your up-sells and cross-sellscontributing to overall revenue?

8%5%

13%10% 8%

6%

50%

6%9%

13% 14%

5% 4%

49%

6%9%

12% 11%8%

5%

49%

7%11% 12%

9%5% 5%

51%

Less than 1% 1-2% 3-4% 5-7% 8-10% Greater than10%

Don't know

2008 2007 2006 2005

The Merchant Perspective

e-tailing group 7th Annual Merchant Survey

Cross-sell/Up-sell and Personalization Have Not Yet Reached Top Priority Status

Growth areas: 2008 2007

Product enhancement

& Rich media36% 30%

International sites 19% 11%

New Metrics:

Adding customer generated content

54%

New backend system

26%

New Technology platform

26%

What initiatives are you planning to improve website performance?Check all that apply.

71%

67%

65%

65%

58%

55%

54%

43%

41%

36%

36%

32%

28%

28%

26%

26%

26%

22%

19%

76%

66%

70%

68%

55%

62%

47%

42%

35%

30%

38%

32%

30%

34%

21%

11%

More targeted email programs

Site redesign/upgrades

Adding or improving onsite search

Enhanced onsite merchandising features

Cross-sell/up-sell

Content development

Adding customer-generated content*

Overhauling shopping cart

Personalization

Gifting features

Product enhancement tools/Rich media

Enhancing customer service

Interactive tools

Analytics package

New backend systems*

Increased personnel

New technology platform*

Tools that automate functionality

International sites

2008 2007

Q3 * New metric

the e-tailing group 7th Annual Merchant Survey

Merchant Survey & Objectives

Goal• To explore the merchant perspective on personalized

product recommendations:• Implementation • Current methodologies• Outsourced technologies• Retention• Budgets• Techniques• Performance rankings

24 merchants completed a 10-question survey;facilitated through personal interviews

24 Participating Merchants

• ABT Electronics• Barneys• Boston Proper• Coach• Cost Plus – World Market• Danskin• Decorative Product Source• GSI• HP Home & Home Office• Intermix • Lucy

• Massey’s• Orvis• Palm Beach Jewelry• Patagonia• Pendleton• Petco• Rugs Direct• Stacks and Stacks• Staples• Wine Enthusiast• Wirefly

* The e-tailing group 7th Annual Merchant Survey, 1Q ‘08

A cross-section those who scored high in cross-sell/ up-sell contribution* as well as successfully demonstrated personalization efforts online

Overview of Our Merchant Findings

• High awareness levels coupled with resource-strapped merchants make the opportunity one merchants must research and understand thoroughly

• Merchants perceive there has been an evolution and maturity to the software solutions available in today’s competitive marketplace

• Current personalization strategies center on manual efforts where processes accommodate unique merchant requirements

• The most significant benefits from mimicking the in-store experience in the online realm are increased sales, increased customer loyalty and improved overall customer satisfaction

• Merchants are more open to solutions that would be easy to test on a small scale

and then quickly “flip the switch” to full-scale implementation • Merchants want assurances that the personalization technology they adopt goes

beyond merely helping with customer acquisition, but rather ensures long-term retention of the customer

A large, unrecognized potential exists for merchants who captivate customers by employing technology to close this personalization gap

Times are Changing

“We desired a plug and play approach…prior to testing one of these tools we were doing everything manually and it was a huge drain on resources.”

“A great deal of expertise is required to deliver optimal levels of personalization and leveraging the expertise of partners is often a preferred practice.”

“For us it’s like a spy book on the site where we can pick up on customer interests, including past history and current behavior.”

Personalized product recommendations are more feasible with technology serving as an efficiency model

The Technology Has Matured

Optimal Merchant Criteria

Larger SKU counts

Broad assortment

High turn

“While these tools have been around for several years, I feel that they have only started to mature in the past 12-18 months. I strongly believe that they can affect the end user

experience by directing more relevant product.” “At the end of the day, the data is there, those who execute will monetize”

Better Customer Experience & Increased AOV

“I like the idea of technology helping us increase the average order size while simultaneously creating a better customer experience. An accessory may make the difference in our low margin business and we need a service in place.”

The Bottom-Line

Larger basket size

Overall site revenue

Customer loyalty

Higher Open Rates with Personalization

Techniques for alerts

Back-in-stock

On sale

New

“We take a manual approach where recommendations are hand-selected by the merchant team for each product; applying our own business rules to these merchandising efforts based on internal know-how. Despite such a manual approach, we have good success with average orders containing 3-4 units.”

“Our process is to load product until the next season, which is typically six to eight weeks. We don’t really go in and make adjustments because for us there’s a point of no return.”

79% of Personalization is Done Manually

Current Personalization Strategies

79%

12%

62%

21%

0%

20%

40%

60%

80%

100%

Manual hardcoded

Internal, TopSellers

Other InternalStrategy

TechnologyProvider

% M

erc

ha

nts

Obstacles and Challenges

In-house mindset

Significant technology investment

Belief that such efforts can be accomplished with existing technology

“It is difficult to manage our assortment manually; we have tested automated versus manual and automated wins out and could even get better if we weren’t constrained by our vendor and category rules. “

Top Retention Tactics

Email Catalog and direct mail Customer service as a differentiator Assortment Promotions Loyalty programs Paid search Affiliate programs

IV. Personalized Product Recommendations Checklist

Personalized Product Recommendations Checklist

Prioritize personalized product recommendations as one of your key 2008 initiatives

Determine the level of automation and number of touch-points to address

Do your homework in advance, setting clear expectations with potential vendor partner

Define PPR’s potential from an acquisition as well as a retention point of view

Identify onsite and email requirements

Understand how these technologies will integrate with and impact current systems, and determine if the vendor offers ongoing support and optimization services

Know your business and the unique requirements of your brand, your category and your customers

Test a series of recommendation placements on your site to understand contribution to the bottom line

Evaluate email alerts and the role they can play in returning shoppers to buy

Put the tools in place to ensure accurate attribution 

III. And Now, a Word from Our Sponsor

79% of Cross-selling is Done Manually

This is where MyBuys can help you!

Select MyBuys Clients and Retail Categories

Apparel Hobby & Electronics

Footwear Home & Garden

Cosmetics & Jewelry

Sporting Goods

The Benefits Our Clients Enjoy

• All recommendations were static

• 85% of emails went unopened

• 50% of carts were abandoned

• Wanted to replicate in-store ambiance of personal service

Massey’s – Challenges

The Solution – Get to Know Each Customer

Massey’s Results

Austad’s Challenges

• 12+ hours a week of extra programming for manual cross-sells

• E-mail open rate 15%

• Market demands customer retention since universe finite

The Solution – Promote Sale Items

Austad’s Results

Lauren FreedmanPresident

the e-tailing group, inc.1444 W Altgeld Street

Chicago, IL 60614Phone: 773-975-7280

Fax: 773-871-3528Email: LF@E-TAILING.COM

Web: www.e-tailing.com

Lisa Joy RosnerVice President, Marketing

MyBuysOne Lagoon Drive, S.120

Redwood Shores, CA 94065Phone: 650-591-0210

Fax: 650-591-0173Email: lrosner@mybuys.com

Web: www.mybuys.com

Q&A