It is common sense that humans react differently according to their situation or the circumstances. They are also more or less susceptible for shopping different products or listening to marketing messages depending on their current situation. We all know this from ourselves. It is, for example, more likely that someone buys beach clothing on a sunny day in June close to his summer vacations. On hot days customers may want to shop beach wear, on cold days in contrast they might need gloves to keep their hands warm. Displaying the newest gloves on the first page in the accessories category wouldn’t make too much sense on a hot day in June, would it?
In this article, you’ll read how to harness the power of situations when sorting online products or media content to gain a huge competitive advantage in today’s information economy. This approach, i.e., optimizing digital content plays according to situational factors for each individual user, is called situationalization or in more technical terms session-based profiling.
What exactly is a situation?
We all use the word situation numerous times every day, but just to make sure we are on the same page here let’s define what a situation is.
A situation is defined as a “set of circumstances in which one finds oneself” or a state of affairs. In the context of e-commerce, this essentially means that an online shopping situation is differentiated by factors such as the following:
- location (country and region),
- used device,
- current hour or season as well as
- the weather.
There are many more factors that have a statistically significant influence. But why should your company consider to think about situationalization?
Challenges in the information economy
Get your users’ attention
A study by Microsoft shows that the average attention span has decreased by a quarter in just 13 years. In 2000, the average human attention span was 12 seconds. In 2013, it was just 8 seconds. By comparison, the attention span of a goldfish is 9 seconds! The quote from Nobel Prize-winning economist Herbert Simon aptly sums up the status quo of our information economy: “A wealth of information creates a poverty of attention.”
Therefore, it is extremely important to be relevant.
Relevancy for any user
Today, it is common practice to collect a variety of data about users when they visit a website and retarget them elsewhere to encourage them to buy from an online store. However, targeting and retargeting have become more difficult due to higher privacy standards and customers’ increasing sensitivity about their data. This has become even more important for professional marketing in the European Union since the General Data Protection Regulation (GDPR) came into full effect in May 2018.
The great public debate in Europe about data privacy in the weeks leading up to the GDPR has significantly raised users’ awareness of data privacy and the features companies are implementing. Investing in integrating personalization solutions in a GDPR-compliant way became even more important. Collecting data in one’s own store without the user’s consent in order to have a regular personalization tool calculate product suggestions is therefore highly problematic or not permitted in the EU.
But there is a solution: companies can use available anonymous situational data to tailor their offers to each individual user. This makes offerings such as product lists, category pages, and product recommendations more meaningful and relevant – event to anonymous users. In today’s information economy, customer attention is a scarce resource that must be captured by displaying relevant information.
Consumers rarely browse through the thousands of products in a single category. Most people will change their search or move on if they don’t find something they like on the first page. This is a behaviour that we have partly learned through our use of search engines. Only a few percent of visitors make it to the second or even third page of a shop. You can probably relate to this from your own use of online shops.
This is especially true if you are using a smartphone to access a shop. Mobile devices have less space to display fewer products, so relevance is key. According to an Accenture survey, 64% of online consumers expect the site to be optimised by device. Don’t let your customers down.
To satisfy your customers’ need for relevant information, you can “situationalize” the information you display, whether it is products, services or news articles. The information used to make this possible is included in session data (→ session-based profiling): IP address, location, device, time, date, etc. This information can be enriched with weather data. All these situational factors can be used without any privacy concerns. You can further combine this data with CRM, ERP or PIM data, among others.
Incorporating situational factors into your communication and product presentation efforts has a huge impact on the perceived relevance or irrelevance to the customer. Companies can turn this blind spot to their strategic advantage. Read on to find out how companies are already using this approach to situate their e-commerce business and increase revenue.
Examples for the situationalization of online-shops
After reading about the challenges, you may be wondering: how can I overcome them in my e-commerce business? Let’s take a look at some of our customers’ project successes. They use our solution for automated situation analysis to increase their business success and individualize the customer experience in their stores.
Urban fashion for every situation
The first example comes from Defshop, one of Europe’s largest online shops for urban fashion. DefShop was looking for a solution to optimize the customer experience in order to meet the constantly growing needs of shop visitors. A great opportunity for this is offered by the product lists, which have primarily been sorted according to the current status of the products (e.g. new or topseller).
From the very beginning DefShop has continously generated above-average conversion uplifts using our approach and technology. Through the situationalization solution combined with their historic tracking and CRM data, DefShop is now able to use an infinite number of situational and customer specific attribute combinations such as geolocation, time, device, age of the product, stock, buying history etc. to determine the individual product relevance. In coordination with DefShop, shop-specific business needs were also taken into account by individual fine adjustments.
The fully automated processes of our platfom (→ Customer Engagement Platform/products) not only offer a better, individually tailored customer experience for each user, but also relieve the team of manual settings for product lists (→ AI-powered merchandising). This saves the team time and resources, so they can use their capacities more efficiently.
Situationalizing sporting goods
Tennis-Point.de is one of the leading online suppliers of tennis products. Tennis-Point offers over 12,000 sports and tennis articles in 19 online shops to users from 25 European countries. The strong international orientation of the company required a deeper individualization of the shop, which adapts to regional preferences as well as to the current shopping situation of each individual user.
The ODOSCOPE CEP was quickly and easily implemented by Tennis-Point on server side. Its technology can realize its full potential and also reorder Elasticsearch search result lists according to individual relevance. In addition to a lower bounce rate, the sporting goods retailer saw a significant increase in page views per visit and conversion rate. The result was double-digit revenue growth.
Mobile device users can enjoy a convenient shopping experience with enhanced customer experience, as ODOSCOPE immediately shows them the most relevant products. This advantage is reflected in an impressive increase in mobile sales of up to 65% on a monthly basis.
This post was written by Sven Verborg in 2018, reviewed by ODOSCOPE in 2023.