How email recommendations can improve conversion rates by 111%

Recommendations revving up your revenue

Recommendation services can be the engine that allows marketers to dramatically increase their revenue. They analyze customer behavior and generate product or service recommendations that have a greater likelihood of converting.

 

Opportunity

According to Certona, less than 40% of retailers make use of recommendations in their emails.

When you consider that they have conversion rates that are dramatically better than those of standard sales emails, you’d have to say that that’s not much.

Emails that leverage recommendation engines can see a 111% higher conversion rate than existing sales alerts or emails – MarketingSherpa.

This presents a considerable opportunity for marketers to make substantial revenue gains by implementing or improving their recommendation services in their marketing programs.

Not only can they improve conversions, they can also improve your customer retention, extend the lifetime value of your subscribers and increase the ROI of your marketing efforts.

Solution

Recommendation services track and analyze customer behavior across various channels such as web and email, so that you can automatically suggest content that is relevant to your customer’s context.

This content can be any of the following:

  • products
  • articles
  • white papers
  • other educational materials

They store product data that’s pertinent to your customer and allow you to display the recommendations when you feel it’s most appropriate. That can be on your payment page, in a transactional email or other place.

 

How our implementation works?

Our recommendation engine is powered by the Smart Adaptive Recommendations (SAR) Algorithm that uses Latent Dirichlet Allocation to group related products. Our recommendation model accounts for a customer’s:

  • viewed products
  • products added to their shopping cart
  • previously purchased products

Recommendations are based on collaborative filtering and generated from two matrices;

  1.  an Item-to-Item similarity matrix (Customers who liked this product also liked)
    e.g. products 1 & 2 were present in shopping carts > 3 times
  2.  a User-to-Item affinity matrix (Personalized recommendations)
    each customer interaction with a product (click, purchase) is weighted based on frequency, recency and the type of transaction

In each of these matrices, we’re also able to account for a product’s characteristics such as its color, size, and price to ensure customers receive the most appropriate and relevant recommendations.

 

Email recommendations

Recommendations can be displayed in virtually every email that you can think of, be that in newsletters, welcome emails, or transactional messages. Dynamic code in your HTML allows you to configure where and how many of those recommendations are displayed in your emails.

Recommendation services newsletter 4f Recommendations

Recommended products displayed in a 4F production email.

 

4F, a fashion retailer, saw a conversion rate of over 9% for clickers in their automated email recommendation campaigns over a three-month period.

 

Web recommendations

According to Sucharita Mulpuru, a Forrester analyst, Amazon’s conversion to sales of on-site recommendations could be as high as 60% in some cases based off the performance of other e-commerce sites.

Our solution for Web-based recommendations generates recommendations in real-time. These are displayed on your website by invoking a script that displays product recommendations that match the customer’s profile and behavior.

Just as is the case with email, these recommendations can be configured to be displayed on different web pages such as homepages, category, product & checkout pages, and others.

These recommendations can include:

  • personalized recommendations
  • products frequently occurring together
  • products frequently bought together
  • similar products

Product recommendations that are relevant to your customer’s context can contribute heavily to the success of your website, increasing the quantity and size of your customer’s orders.

Recommendation services are your revenue engine

Combining email and web recommendation services gives your customers a more complete representation of your service and offering. They suggest products that they might find useful, in addition to the ones they are or have already purchased.

By leveraging them in your marketing program, you are not only providing a better service for your customers that’s contextually relevant, but also potentially seeing a 111% better conversion rate over other sales communications.