Customer-expressed preferences

A customer might let an ecommerce website she has shopped on know that she is interested in a particular category of items. Figure 5-2 shows the user profile preferences that Amazon.com offers to its users. By letting Amazon know you are interested in a particular topic such as marketing, you are allowing them to create a need for you. When the site receives new books on marketing, it can alert you of the new arrivals.

Customer purchase history

Based on a customer’s purchase history, a website can determine that the customer would be interested in a particular product. If you bought the latest technology item from a particular website, and that website now offers a complementary or similar item at a discount, the website can notify you.

Customer-implicit preferences

A particular website can use business intelligence software or methods to determine what information a customer is interested in. If you visit an ecommerce website multiple times, and on every visit you navigate to the same category and examine the same item, the website can use that information to send you a special offer for that line of products. It can also use the same information to display these items on the website on your next visit. For instance, an apparel store can look at buying trends and decide that a particular segment of its customers is always interested in buying new lines of clothes as they become available from designers.

Figure 5-2 shows email preferences on Amazon.com. When a customer tells Amazon she is interested in a particular topic, she is allowing Amazon to stimulate her needs when a new item arrives or if items go on sale.

Email preferences on Amazon.com
Figure 5-2. Email preferences on Amazon.com
CASE STUDY: Stimulating Customer Needs

The analytics team at a large hotel chain spent an extensive amount of time researching the behavior of customers who buy vacation packages. The team noticed that most customers will start searching for a hotel package six weeks prior to making their final purchase decision. Aware of buying stages customers go through, the team decided to use this data to their advantage. They figured that if they have a way to bring potential customers to their site five to six weeks after their initial search, the customers will be more likely to convert.

Acting on that data, the hotel chain contracted with a large content network to target these customers through banner advertising. To average consumers, there was no relation between the content network and the hotel chain. When customers searched on the hotel website for a vacation package, the chain would use a cookie to flag the customer records. As customers navigated to sites in the content network, these sites checked for hotel chain cookies. If a visitor had one of these cookies, and five weeks had lapsed since the visitor searched for the package, vacation banners for that hotel would appear on the content network website. Customers thought it was coincidental that these ads appeared and were unaware of the amount of behavioral research that went into these banners.

These banners did a great job of stimulating these customers and reminding them of the vacation package they had searched for at a discounted rate. This plan had a great impact on the chain’s bottom line and resulted in a large increase in its conversion rate.

Although this strategy worked well for the hotel chain, a 2008 Harris Interactive poll found that many U.S. consumers “are skeptical about the practice of websites using information about a person’s online activity to customize website content.”[39] For example, “A six in ten majority (59%) are not comfortable when websites like Google, Yahoo! and Microsoft (MSN) use information about a person’s online activity to tailor advertisements or content based on a person’s hobbies or interests.”[40]

Marketers will have many options to reach customers and stimulate their needs as technology continues to evolve. Although this represents a great evolution in marketing, we must be aware of privacy concerns consumers will have.