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Survey reveals retailers are missing the mark with product recommendations

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ChoiceStream, which serves product recommendations for Tesco plus a number of top US retailers, has found that the quality of product recommendations on retailers’ sites declined significantly year over year with many more shoppers reporting that they received poorer quality recommendations in 2009 versus 2008.

The US survey found that the number of online shoppers who thought they received poor quality recommendations in 2009 was 59%, a 31% increase over the 45% reported in 2008. When asked for a reason why the recommendations were considered poor, the majority of shoppers responded that the recommendations were for products that were unrelated to what they were looking for.

Separately, shoppers were asked to rate the quality of product recommendations across 10 retail categories. On average, only 17% of shoppers rate retailers’ recommendations as ‘excellent.’ There is also a wide discrepancy in recommendation quality between the categories. For example, music and entertainment stores are 48% more likely to receive excellent ratings than toy or office supply stores.

The survey also found that while m-commerce is a hot spot for recommendations in 2010, social networking is not. Of the respondents who belong to a social networking site, only 8.5% report that they have ever made a purchase while on the site. Additionally, only 27% indicate any interest in product recommendations from trusted retailers.

Based on these results and other market research, says ChoiceStream, retailers are advised to promote their brand experience and offers using social networks but defer significant investment in product recommendations until the market for commerce on those networks matures.

Levels of interest in product recommendations also vary not only by channel but also by the placement or location of recommendations within retail sites. The survey found that 85% of shoppers would find it useful to receive product recommendations on product detail, brand and category pages, while less than half of respondents are interested in receiving product recommendations on an order confirmation page.

The placement of recommendations also has a significant impact on sales. The majority of active online shoppers (those who spent more than US$500 online in the past six months) indicated that they have bought something based on a retailer’s online product recommendation, but only 16% claim to have purchased based on a recommendation in a shopping-related email (for example a shipping confirmation). The majority of purchases were based on recommendations that appeared on product detail pages (58%) or category/brand pages (40%).

“It’s unfortunate, but not surprising, that so many consumers report receiving poor quality product recommendations,” says ChoiceStream’s Lori Trahan. “Consumers expect more from recommendations than they did even a year ago. They expect them to be accurate and on target, so when they’re not, shoppers are disappointed.”

“The categories that fared the best in this ranking are those that have the most experience in using product recommendations as part of their merchandising,” added Steve Johnson, ChoiceStream’s founder and CEO. “Considering the complexities involved in delivering good quality recommendations, it makes sense that those with the most experience rise to the top.

“This ranking also shines a light on the upside potential for product recommendations. Retail categories with less experience with this type of merchandising have a great opportunity to lift revenue and, at the same time, improve their brand image as consumers increasingly come to expect good quality recommendations as part of the retail experience.”

Readers can access the key findings from the survey on ChoiceStream’s website.

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