The problem with Amazon – reactive vs. predictive analytics
July 29th, 2008 by Chris Herrick
When we talk with customers about improving the success rate of cross sell and up sell opportunities on their existing products, many reference Amazon.com as the retailer they believe is doing the best job in the industry. While I agree that Amazon does a fine job with following up on self-generated leads, I don’t agree that they do an especially good job of anticipating or prompting additional purchases.
Let me give you an example. I bought my mother a cookbook three weeks ago for her birthday. I wrote out a gift card, opted for the additional gift wrap, and shipped it to my parents’ home. Additionally, because I’m particularly anal when it comes to data organization, I tagged it within Amazon as a present that was bought for my mother. Now, knowing all of that info, any guesses as to the next product Amazon decided to pitch me on? Cookbooks. I can maybe understand the tendency for someone to purchase the same product again after purchasing it once…maybe…but in this case, really? After doing everything I could to signal to their system that the purchase wasn’t for me (different ship to name, different address, tagged as belonging to a different person), I still get an offer for cookbooks?
Now, don’t get me wrong, Amazon does do many things right. They are one of the best on following up on customer clickstream data. A recent visit to the site to research GPS systems for an upcoming trip resulted in two emails offering deals on GPS systems I actually might be interested in. My problem with Amazon, and more specifically, the perception of their analytics is that their email marketing model is based on being reactive - the customer is responsible for coming to the site and narrowing down the type of product they want to buy - and Amazon reacts to this behavior with an appropriate offer. But for those retailers that aren’t Amazon, who can afford to sit and wait for customers to tell you what they want?
The key to predictive analytics is being just that… predictive. Most retailers don’t have Amazon’s budget and need to have better information about who is going to buy next month or next quarter, and more importantly, what they’re most likely to buy. And for most, the surprising fact is it’s not much of a leap to get there since the majority of companies are already sitting on all the information they need to better target email blasts by matching offers with customers who are willing to buy.
I praise Amazon for their ability to follow up with customers that express interest in certain products, but as far as predictive analytics….there are better solutions out there.
Tags: Amazon, crosssell, Predictive Analytics, upsell
Add Personalized Product Recommendations to Your eCommerce Site
Istobe is a powerful recommendation engine that makes it easy to add recommendations to your eCommerce site. How powerful? Shoppers who click on Istobe recommendations spend 20-50% more than the average visitor.
