Here’s Just How Powerful the Right Product Recommendations Are…

August 24, 2018

Product recommendations that don’t generate any engagement from a site visitor may as well not exist – as they don’t have any real impact. But the right recommendations? Well they result in significant boosts to purchase rates, average order values and even return session purchase rates, according to Monetate’s latest Ecommerce Quarterly report [download page].

To arrive at its conclusions, Monetate analyzed more than 700 million e-commerce sessions, analyzing the impact that the right product recommendation can have on the customer experience and short-term conversions. (What’s the “right” product recommendation? It’s one that inspires some form of engagement, whether that’s a click, an add-to-cart or something further.)

Even merely a click on a recommended product is associated with higher performance. Here are some of the uplifts tied to a click on a recommended product, as opposed to just an impression:

  • A 70% higher purchase rate within the session;
  • A 20% higher likelihood of returning for a follow-up session; and
  • A 55% higher purchase rate in a return session.

As such, the right product recommendation doesn’t only boost conversion rates, it also generates further on-site engagement in follow-up sessions.

There are other associated benefits with a recommendation when considering engagement that goes beyond a click. When customers add a recommended product to their cart or purchase it their average order value (AOV) jumps by a third (33%) compared to those customers who simply saw but didn’t engage with a recommended product. Additionally, the number of items on average purchased during the session increases by 50%. (This seems a logical benefit in the event that the recommended product is purchased, though it does suggest that a recommended product purchase doesn’t replace another item’s purchase.)

Here’s the rub, though: many product recommendations are missing the mark, perhaps just there to satisfy a standard as opposed to being part of a holistic strategy.

As part of the analysis, Monetate discovered that customers only engage with recommended products 11% of the time.

Given the benefits of generating even just a click on a recommended product, the relatively low levels of engagement indicate that marketers may not be focusing enough on product recommendations vis-à-vis other personalization efforts. As Monetate notes, “marketers need to treat their recommendations solution as an integral component of their personalization programs.”

Need more evidence about the power of recommendations? A new report [download page] from Salesforce and Publicis.Sapient, based on data from 500 million shoppers worldwide on the Commerce Cloud platform in Q1 2018, reveals that 6% of visits that included engagement with AI-powered recommendations drove an incredible 37% of revenue.

No wonder retailers are using artificial intelligence (AI) for recommendations

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