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Next Generation Recommendations

The Four Keys To Successful Merchandising Automation

Ryan Hoppe Director, Marketing ATG Optimization Services

Tom Davis Director of Ecommerce Tommy Hilfiger

Agenda

ATG Background

Why Recommendations?

Recommendations or Merchandising Automation?

The Four Keys To Successful Automation

Case Study: Tommy Hilfiger

Next Steps

Q&A

2

ATG Background

The leader in e-Commerce solutions

Over 900 customers worldwide

Headquarters in Cambridge, MA, with offices throughout North America and Europe

Approximately 500 employees

2008 revenue: $164.6 million, with profitability

1991 1999 2004 2006 2008 Founding IPO Acquired Acquired Acquired
1991 1999
2004
2006
2008
Founding
IPO
Acquired
Acquired
Acquired
$164.6 million, with profitability 1991 1999 2004 2006 2008 Founding IPO Acquired Acquired Acquired (ARTG) 3
$164.6 million, with profitability 1991 1999 2004 2006 2008 Founding IPO Acquired Acquired Acquired (ARTG) 3

(ARTG)

$164.6 million, with profitability 1991 1999 2004 2006 2008 Founding IPO Acquired Acquired Acquired (ARTG) 3

3

$164.6 million, with profitability 1991 1999 2004 2006 2008 Founding IPO Acquired Acquired Acquired (ARTG) 3
$164.6 million, with profitability 1991 1999 2004 2006 2008 Founding IPO Acquired Acquired Acquired (ARTG) 3

ATG Product Suite At-a-Glance

Commerce Suite e-Commerce Optimization Services Licensed or OnDemand Platform-Neutral Services  Shopping Cart
Commerce Suite
e-Commerce
Optimization Services
Licensed or OnDemand
Platform-Neutral Services
 Shopping Cart & Product Catalog
 Automated Recommendations
 Merchandising & Searchandising
 Click to Call
 Commerce Search
 Click to Chat
 Multivariate Testing
 Call Tracking
 Marketing Campaign Manager
 Save & Send
 Business & Customer Analytics
 Form to Phone
 Integrated Customer Service
 Video Connect
 Knowledge/Incident Management
 On Demand Commerce Platform

4

ATG Powers the World’s Top Brands Online

ATG Powers the World’s Top Brands Online 5

5

What Are Automated Recommendations?

►

6

Utilize data from the catalog, historical shopping information, click-stream data,

Web site, and more to

predict each shopper’s intent in each session

What Are Automated Recommendations?

►

Deliver

personalized recommendations & merchandise on your Web site and in other online

channels

►

7

Utilize data from the

catalog, historical shopping information, click-stream data,

Web site, and more to

predict each shopper’s intent in each session

What Are Automated Recommendations?

►

“Learn” from from

customers as they navigate your site and refine products based on changing intent

Deliveryour site and refine products based on changing intent personalized recommendations & merchandise on your Web

personalized recommendations & merchandise on your Web site and in other online

channels

8

Utilize data from the

catalog, historical shopping information, click-stream data,

Web site, and more to

predict each shopper’s intent in each session

Why Recommendations?

Customers Like Them

Why Recommendations? Customers Like Them Customers Who Like Online Recommendations 100% 76% Customers Who Like
Why Recommendations? Customers Like Them Customers Who Like Online Recommendations 100% 76% Customers Who Like

Customers Who Like Online Recommendations

100% 76%
100%
76%

Customers Who Like Personalized Emails

100%

100%

63%
63%

Online Retailers With Personalized Recommendations

100%

100%

27%
27%

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Why Recommendations?

It’s a Quick Win

Why Recommendations? It’s a Quick Win November 2008 “The Impact Of The Economic Crisis On eCommerce
Why Recommendations? It’s a Quick Win November 2008 “The Impact Of The Economic Crisis On eCommerce

November 2008 “The Impact Of The Economic Crisis On eCommerce Technology Investment”

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Why Recommendations?

Increase Revenue & Loyalty

Why Recommendations? Increase Revenue & Loyalty Convert browsers into buyers by predicting intent and presenting the

Convert browsers into buyers by predicting intent and presenting the most relevant products

predicting intent and presenting the most relevant products Increase order values by automating and personalizing

Increase order values by automating and personalizing cross-sells & up-sells

by automating and personalizing cross-sells & up-sells Retain customers by personalizing the cross-channel

Retain customers by personalizing the cross-channel shopping experience

Lift Online Revenue Quickly, Easily & Measurably by

Personalizing Product Discovery

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First Gen Recommenders

Real Value, But Limited Applications

You Might Also Like… Recommendations Engine Others Who Looked At This Bought That
You Might
Also Like…
Recommendations
Engine
Others Who
Looked At This
Bought That

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Fear of Automating More Than Cross-Sells & Recommendations?

13

Next Gen Recommenders

Automated Merchandising With Merchants At The Controls

On Sale Cross-Sells & Up-Sells What’s New Automated Merchandising Engine Personalized Gift Guides
On Sale
Cross-Sells &
Up-Sells
What’s New
Automated
Merchandising
Engine
Personalized
Gift Guides
Recommendations
Top Sellers
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Value of Automated Merchandising

More Than Double The Impact Of Automating Cross-Sells

Customer

Use Case

Conversion Rate Increase Over Site Average

AOV Increase Over Site Average

Retailer 1

Cross-Sells on Product Detail Pages

76%

8%

Retailer 2

Automated Cross-Sells, Up-Sells, Top Sellers, Null Search Results Pages, Shopping Cart Cross- Sells, etc.

160%

20%

*Data from two ATG Recommendations customers over a three month period

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Four Keys To Success For Next Gen

Recommendations

Relevancy Refinement How relevant are the Can I refine or “filter” products to each products
Relevancy
Refinement
How relevant are the
Can I refine or
“filter”
products to each
products before they
visitor?
are shown?
1
2
4
3
Relationship
Reach
Does the provider offer
Can the solution reach
relationship focused
on my needs as a
a
across my catalog, site,
and channels?

retailer?

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First Gen Recommenders

Fail To Utilize All Data

Visitor Behavior
Visitor
Behavior
Historical Data
Historical
Data
Product Details
Product
Details
Session Stats
Session
Stats

17

1 Relevancy
1
Relevancy

First Gen Recommenders

Fail To Utilize All Data

Visitor

Behavior

Historical Data
Historical
Data
Product Details
Product
Details
Session Stats
Session
Stats

18

1 Relevancy
1
Relevancy

First Gen Recommenders

Fail To Utilize All Data

Visitor Behavior
Visitor
Behavior

Historical

Data

Product Details
Product
Details
Session Stats
Session
Stats

19

1 Relevancy
1
Relevancy

Second Gen Recommenders

Utilize All Data To Make Predictive Choices

Visitor

Behavior

Historical

Data

Product

Details

Session

Stats

20

1 Relevancy
1
Relevancy

Second Gen Recommenders

Understand Your Catalog & Shoppers

1 Relevancy
1
Relevancy
Visitor Product Behavior Details Duration of Page Views Products Viewed Ratings Order of Page Views
Visitor
Product
Behavior
Details
Duration of Page Views
Products Viewed
Ratings
Order of Page Views
Brand & Manufacturer
Clickstream
Descriptions
Searches
Product in Catalog Location
Aggregated Past Behavior
Type of URL Page
Visitor’s Past Searches
Refer URL
Past Shopping Behavior
Broadband Speed
Geography
IP Address
Historical
Session
Data
Stats

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Second Gen Recommenders

Get Smarter Over Time

1 Relevancy
1
Relevancy
Visitor Product Behavior Details Duration of Page Views Products Viewed Ratings Order of Page Views
Visitor
Product
Behavior
Details
Duration of Page Views
Products Viewed
Ratings
Order of Page Views
Brand & Manufacturer
Clickstream
Descriptions
Searches
Product in Catalog Location
Aggregated Past Behavior
Type of URL Page
Visitor’s Past Searches
Refer URL
Past Shopping Behavior
Broadband Speed
Geography
IP Address
Historical
Session
Data
Stats

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First Gen Recommenders

“Black Box” With Limited or No Control

Refinement

2
2
Can’t Control The Science or Execute Merchandising Strategy
Can’t Control
The Science
or Execute
Merchandising
Strategy

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Second Gen Recommenders

Rich Merchant Control & Refinement

Catalog

Refinements

Category

Brand

Price

Collection

Top Seller

New

Fixed

1
1
Control & Refinement Catalog Refinements Category Brand Price Collection Top Seller New Fixed 1 Refinement 2

Refinement

2
2
Control & Refinement Catalog Refinements Category Brand Price Collection Top Seller New Fixed 1 Refinement 2

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Second Gen Recommenders

Rich Merchant Control & Refinement

Catalog

Refinements

Category

Brand

Price

Collection

Top Seller

New

Fixed

1
1
2
2

Refinement

2
2

Session

Refinements

Cross-sell

Up-sell

Page Type

Keyword

Cart Value Product Value

Top Seller New Fixed 1 2 Refinement 2 Session Refinements Cross-sell Up-sell Page Type Keyword Cart

25

Second Gen Recommenders

Rich Merchant Control & Refinement

Blended Refinements

Catalog

Refinements

Category

Brand

Price

Collection

Top Seller

New

Fixed

3 1 2
3
1
2

Refinement

2
2

Session

Refinements

Cross-sell

Up-sell

Page Type

Keyword

Cart Value Product Value

Seller New Fixed 3 1 2 Refinement 2 Session Refinements Cross-sell Up-sell Page Type Keyword Cart

26

First Gen Recommenders

Reach

3
3
Lack of Reach First Gen Solutions  First gen solutions can’t reach into  Or
Lack of Reach
First Gen
Solutions
 First gen solutions can’t reach into
 Or reach customers wherever

the product catalog

they shop

Only learn products through shoppers’ activity

– Can’t recommend new

Biased towards popular items

Across the site

Across formats

Across channels

27

27

Second Gen Recommenders

Reach

3
3
Reach Across The Catalog, Site & Channels New Second Gen Solutions Niche  Reach across
Reach Across The Catalog, Site & Channels
New
Second Gen
Solutions
Niche
 Reach across and understand the
 Reach customers wherever you sell

complete catalog

Form detailed product relationships

Categories, brands, prices, descriptions

Can recommend any product (new, niche, popular)

Across the online store

Into emails

Into rich media

Across channels

28

28

First Gen Recommenders

Lack a Retail-Focused Relationship

First Gen Recommenders Lack a Retail-Focused Relationship Start-ups With Limited Resources Focused On Multiple Industries

Start-ups With Limited

Resources

Retail-Focused Relationship Start-ups With Limited Resources Focused On Multiple Industries 29 R e l a t

Focused On Multiple

Industries

29

Relationship

4
4
Focused On Multiple Industries 29 R e l a t i o n s h i

Can’t Provide a Total eCommerce

Solution

Second Gen Recommenders

The Retail Relationship You Need

Relationship

4
4

Retail-Focused Client Service

l a t i o n s h i p 4 Retail-Focused Client Service  Tune

Tune relevancy

Measure results with A/B testing

Demonstrate

impact with Web-

based reports

Retail-Focused

Statisticians

impact with Web- based reports Retail-Focused Statisticians  Monitor impact to improve performance  Analyze

Monitor impact to improve performance

Analyze trends to inform

merchandising

strategy

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Retail-Focused

Roadmap

to inform merchandising strategy 30 Retail-Focused Roadmap  Focused on needs of online retailers  Family

Focused on needs of online retailers

Family of Web optimization services

Next generation, personalized, cross- channel commerce

ATG Recommendations Shoptommy.com Holiday 2008

ATG Recommendations

Shoptommy.com Holiday 2008

Tommy Hilfiger

Tom Davis

Director of Ecommerce

Went live with ATG in November 2007

OnDemand client

ATG Recommendations Fall 2008

ATG Recommendations Webinar | June 18, 2009

| Confidential

2007 – OnDemand client – ATG Recommendations Fall 2008 ATG Recommendations Webinar | June 18, 2009

Business Case

Shoptommy.com represented several full collections including:

Sportswear Collection (men and women)

Hilfiger Denim Collection (men and women)

Kids Collections (boys and girls)

Various accessories (men, women and kids)

Each new style required recommended products (cross sells, up-sells,

recommendations) associated to it and we didn’t have the manpower to keep up

Wanted to take advantage of the holiday season (2008)

ATG Recommendations Webinar | June 18, 2009

| Confidential

keep up Wanted to take advantage of the holiday season (2008) ATG Recommendations Webinar | June

Challenge

THUSA needed an efficient process to offer recommended products to customers -- (cross sells, up-sells, recommendations)

How could the ecommerce team unlock the hidden value of their entire catalog and create more appropriate recommendations? (Reach)

How could the ecommerce team automate the process for improving and introducing updates to their recommendations? i.e. create value? (Refinement)

The end goal should be to provide relevant results to the customer (Relevancy)

How could the ecommerce team minimize time and effort inside the BCC by working

with ATG and their recommendation team? (Relationship)

ATG Recommendations Webinar | June 18, 2009

| Confidential

with ATG and their recommendation team? ( R elationship) ATG Recommendations Webinar | June 18, 2009

Phase 1: Product Page

Included ATG recommendation engine on every product page

Optimized the code and catalog feed for 30 days (Fall 2008)

After one month, analyzed

data and engaged in next steps

 After one month, analyzed data and engaged in next steps ATG Recommendations Webinar | June

ATG Recommendations Webinar | June 18, 2009

| Confidential

 After one month, analyzed data and engaged in next steps ATG Recommendations Webinar | June

Phase 1 Results

Implementation time was less than four weeks

Two weeks to create and approve data feed between our site catalog and the

recommendation engine

Two weeks to gather site/customer behavior

Impact was immediate

13% of revenue “touched” the recommended products

AOV lift was 12%

Conversion rate lift was 163%

Contributed incremental +13.5% top line revenue

ATG Recommendations Webinar | June 18, 2009

| Confidential

was 163%  Contributed incremental +13.5% top line revenue ATG Recommendations Webinar | June 18, 2009

Phase 2: Reach

Spent two weeks analyzing data and developing new campaigns

Top sales products

Top Sellers

Accessories

Gift Guide

“Last chance” checkout

“No Result” Search results page

chance” checkout  “No Result” Search results page ATG Recommendations Webinar | June 18, 2009 |

ATG Recommendations Webinar | June 18, 2009

| Confidential

Phase 2: Reach

Spent two weeks analyzing data and developing new campaigns

Top sales products

Top Sellers

Accessories

Gift Guide

“Last chance”

checkout

“No Result” Search results page

chance” checkout  “No Result” Search results page ATG Recommendations Webinar | June 18, 2009 |

ATG Recommendations Webinar | June 18, 2009

| Confidential

chance” checkout  “No Result” Search results page ATG Recommendations Webinar | June 18, 2009 |

Phase 2: Reach

Spent two weeks analyzing data and developing new campaigns

Top sales products

Top Sellers

Accessories

Gift Guide

“Last chance” checkout

“No Result” Search results

page

chance” checkout  “No Result” Search results page ATG Recommendations Webinar | June 18, 2009 |

ATG Recommendations Webinar | June 18, 2009

| Confidential

chance” checkout  “No Result” Search results page ATG Recommendations Webinar | June 18, 2009 |

Phased 2 Results

Impact was immediate

35% of revenue “touched” the recommended products

AOV lift was flat

Conversion rate lift was 204%

Contributed incremental +30% top line revenue

ATG Recommendations Webinar | June 18, 2009

| Confidential

was 204%  Contributed incremental +30% top line revenue ATG Recommendations Webinar | June 18, 2009

Phase 3: Offsite Programs

Integrating recommendation engine into “off site” programs

Email

Confirmation emails

Newsletter sign ups

etc

 Confirmation emails  Newsletter sign ups  etc ATG Recommendations Webinar | June 18, 2009

ATG Recommendations Webinar | June 18, 2009

| Confidential

 Confirmation emails  Newsletter sign ups  etc ATG Recommendations Webinar | June 18, 2009

Conclusion

Reach

Ability to unlock entire catalog beyond the product pages

Offering recommendations in email and other outreach programs

Refinement

ATG recommendations “learns”; constantly refining based on dozens of variables

ATG Recommendations Webinar | June 18, 2009

| Confidential

Relevancy

Timely and relevant recommendations creates value in product relationships that are not intuitive to merchants

Relationship

Recommendation team works in tandem to identify and define future campaigns (rule sets)

to merchants Relationship  Recommendation team works in tandem to identify and define future campaigns (rule

Questions to ask yourself

How are you going to determine success?

AOV

Contribution margin

Conversion

Time on site

Investment

How to measure ROI

Man power v technology

ATG Recommendations Webinar | June 18, 2009

| Confidential

Control

How much control do you want?

How far do you want to reach?

Product pages

Category pages

Email

Automated campaigns, social media, etc

far do you want to reach?  Product pages  Category pages  Email  Automated

View the ATG Recommendations Demo at:

Or contact us at sales@atg.com

Thank You.