Product Recommendation: Benefits, Tactics And Strategies With Examples
Did you know that product recommendations represent around 31% of eCommerce revenues and that 56% of customers are more likely to return to an eCommerce store that offers product recommendations? (Brilliance, 2023)
Also, did you know that product recommendations increase the time people spend on your eCommerce website? Research shows that customers who click on a product recommendation spend around 12.9 minutes on your website compared to only 2.9 minutes for customers who do not click on any recommendations (Wiser, 2021).
These product recommendation statistics are not to be ignored. They are highly crucial for any eCommerce business that wants to succeed in today’s digital age.
But what do we mean exactly when we say “Product Recommendation”?
Product recommendations are exactly what they sound like. They are products that are recommended to a brand’s customers.
In this article, we are going to start by discussing the benefits of product recommendations for eCommerce. Then, we will walk you through some of the best product recommendation tactics for eCommerce while presenting insightful examples.
Table of content:
- Benefits of product recommendation for eCommerce.
- Top 10 product recommendation tactics for eCommerce with examples:
- Use a product recommendation engine.
- Understand the different types of product recommendations.
- Invest in understanding your customers.
- Decide on the placement of product recommendations.
- Leverage email marketing.
- Use popups across your website.
- Use social proof.
- Cross-Selling and Up-Selling.
- Combine product recommendations with different marketing strategies.
- Test and Optimize.
Benefits Of Product Recommendation For E-Commerce
Before working on product recommendation strategies for your eCommerce store, you must be fully committed to the idea. For this to happen, you must read about the benefits of product recommendation and how it can revolutionize the customer experience offered by your eCommerce store. The benefits include the following:
- A higher level of customer engagement: Customers sometimes can get overwhelmed by the many products displayed on an eCommerce website. There is always the possibility of them taking their money elsewhere if they do not find what they are looking for within a short period. Therefore, offering them product recommendations will keep them engaged, which will make them stay longer on your website. This will eventually decrease your bounce rate, and help your eCommerce website rank higher on Google.
- A higher Average Order Amount: The Average Order Value refers to the average amount of money that a customer spends every time they purchase something from your eCommerce website. Presenting customers with product recommendations increases the chances of them spending more.
- Reduce cart abandonment rates: Cart abandonment is one of the biggest challenges to eCommerce stores. Luckily, there are many ways you can reduce your cart abandonment rates. One way is through product recommendations. Recommending products to customers just when they are about to abandon their carts and leave the website is a great way to attract them back and persuade them to complete the purchase.
- Optimized conversion rates: Product recommendations have the superpower of being able to turn website visitors into actual customers. They can also reach potential customers through email marketing campaigns. In other words, there are many places in which you can employ targeted product recommendations to turn prospects into customers, which will lead to conversion rate optimization.
- Optimize inventory: When working with product recommendations, you have to perfectly understand your customers and be highly aware of what they want. This will help you gain a better perspective of what products are worth being stored in your inventory. It will help you avoid wasting inventory space on products that no one wants to buy.
- Customer loyalty and customer retention: Using product recommendations will show your customers that you care about them. It will show that you are investing in ways that help you better understand them. All this will lead to your customers trusting you and perceiving your eCommerce brand as credible, which will eventually increase customer loyalty and customer retention.
- Increased revenues: Growth in revenues is a normal result of all the previously discussed benefits.
Top 10 Product Recommendation Tactics For E-Commerce With Examples
Now that you know all the benefits of product recommendations in eCommerce, you must be eager to know how you can effectively implement them. That’s why we will now walk you through some of the most effective product recommendation tactics for eCommerce.
1- Use A Product Recommendation Engine
Artificial intelligence (AI) and machine learning are revolutionizing every aspect of eCommerce. That’s why it shouldn’t come as a surprise to you that such technology can be utilized in product recommendations.
Today, we have something called: “A Product Recommendation Engine”. It is an AI-powered system that uses machine learning to offer tailored product recommendations and suggestions to customers. This technology utilizes algorithms that take into account huge amounts of customer data, such as interests, preferences, buying behavior, browsing history, most-viewed products, shopping carts, feedback, and others.
There are three different approaches that product recommendation engines can use to generate product recommendations:
- The Content-Based Filtering Approach: This approach analyzes the data of each customer separately to gain a better understanding of what products this customer might be interested in and then make a suitable recommendation. It uses data compiled from a customer’s previous buying behavior and browsing history to identify his or her likes, dislikes, interests, and preferences.
This approach predicts what an individual customer may like based on similarity to what that customer is already buying or using. It does not go beyond that. It often comes in the form of: “If you liked this, then you will also like this …”
For example, let’s say customer (A) is buying a dress from your online store, and you know from her buying history that the last time she bought a dress, she also bought matching shoes. A product recommendation engine using the content-based filtering approach would recommend shoes that match the new dress she’s buying after analyzing the patterns in the buying behavior of the customer (A).
- The Collaborative Filtering Approach: This approach analyzes data aggregated from multiple customers to predict which products will be interesting to which customers.
This approach predicts what an individual customer may like based on their similarity to other customers. It often comes in the form of: “Other customers were interested in …”
For example, customer (A) is buying a dress from your online store; however, this time, you have a product recommendation engine that uses the collaborative filtering approach. In this case, the engine will analyze the data of customers (B) and (C) who bought the same dress. Let’s say customers (B) and (C) also bought sunglasses; then your engine would recommend sunglasses to customer (A).
- The Hybrid Approach: A hybrid recommendation engine combines both content-based data and collaborative data. Hence, it is considered to offer the most accurate product recommendations.
Additionally, product recommendation engines are not the only AI technology that can be leveraged to recommend products to customers. Other available options include AI-powered chatbots, such as ChatGPT.
While it is possible to manually implement product recommendation strategies, we suggest you use a product recommendation engine or another AI tool because it will make the process much easier for you.
Check out this article to learn about the top 10 AI tools you can use for your eCommerce store.
Amazon is one of the most popular online retailers that use a product recommendation engine. It uses the hybrid approach and offers the following types of recommendations:
- User-specific product listings: “Top picks for you”.
- Recommendations based on purchases by other users: “Customers who bought this item also bought…”
- Cross-selling recommendations: “Buy it with…”.
- Upselling recommendations: “There is a newer version of this item”
- Recommendations based on browsing history: “Keep shopping for…” or “Pick up where you left off…”
- Personalized emails.
2- Understand The Different Types Of Product Recommendations
There are different types of product recommendations and many ways you can display them.
- “Recently Viewed”: This type of product recommendation includes items that visitors have checked or clicked on recently, making it easier for them to pick what they looked at before.
- “Similar Products”: This type of product recommendation offers customers suggestions about products similar to the ones they are looking for. It helps customers easily compare products before making a final decision.
- “Recommended For You”: This type of product recommendation involves a high level of personalization. Here comes the role of the AI tool you are using, whether you are using a product recommendation engine or you have a chatbot integrated. The software uses machine learning and algorithms to infer patterns from the customer’s browsing and buying history.
- “Frequently Bought Together”: This type of product recommendation is usually used after a customer puts an item in their cart. It can be considered a form of “Cross-Selling” because you recommend products that are complementary to the one the customer just added to their cart.
- “What People Like You Bought” and “People Also Viewed”: These types of product recommendations help guide customers around your website by showing them the path followed by other similar customers.
- “Best-Sellers”: In addition to suggesting products to customers, this type of product recommendation highlights your best products, your unique selling points, and your competitive advantage.
- “Trending Products”: Using this type of product recommendation shows that you are up-to-date and that you’re using real-time data imported from different sources, such as your social media platforms.
- “New Arrivals”: This is where you showcase your new collection of products or your latest releases. This type of product recommendation is very interesting to customers who like to own things before anyone else.
3- Invest In Understanding Your Customers
Understanding customers is essential for any eCommerce business that wishes to implement product recommendations. It is very crucial to the point that we can imagine “product recommendation” and “understanding customers” as two faces to the same coin.
Therefore, you should not hesitate to invest in understanding your customers. This encompasses the following:
- Customer Segmentation: Dividing your customers into distinct groups or segments based on common characteristics is indispensable for your product recommendation strategies to work out. There are several types of customer segmentation: behavioral, geographic, demographic, psychographic, technographic, and generational.
The more you invest in customer segmentation, the more thorough and detailed it will be, which will yield more accurate product recommendations.
- Customer Journey: In eCommerce, the customer journey is a process that customers go through and a series of steps that they take when interacting with your business, and it includes several touchpoints along the way.
Speaking of customer segmentation and customer data, Converted.in offers you a great marketing automation tool that will segment your customers and gather all your data in one place, like a hub, with a 360-degree customer view.
4- Decide On the Placement Of Product Recommendations
The placement of your product recommendations is crucial. You have to make sure that your recommendations are highly visible. There are many places in which you can place your product recommendations:
- Home Page: Your home page is usually the first place prospects or customers go to when they visit your eCommerce website. Therefore, you have to make sure that the product recommendations you place there will catch their attention and persuade them to stay longer on the website. The home page is suitable for placing recommendations, such as “Best Sellers”, “Trending Products”, and “New Arrivals”.
- Product Pages: These pages are suitable for presenting customers with different choices. Here you can use types of product recommendations, such as “Similar Products”, “What people like you bought…”, or “People who viewed this also viewed that…”.
- Checkout Page: Checkout pages are perfect for cross-selling and up-selling. Hence, you can use the “Frequently bought together” type of product recommendation to direct the customer’s attention toward complementary products.
Moreover, checkout pages are a great place to remind customers of products that they viewed and forgot about by using the “Recently viewed” type of product recommendation.
You can also use the “Recommended for you” type of product recommendation here to present personalized recommendations of products that you believe your customer might be tempted to add to the cart.
- Emails: Product recommendations can be integrated with your email marketing campaigns. This will be discussed in further detail in the following point.
5- Leverage Email Marketing
Email marketing never gets old, and it is a marketing channel that can help you implement effective product recommendations. Moreover, research shows that personalized product recommendations in email can increase the click-through rate by 300%.
You can integrate product recommendations into different types of emails within your email marketing campaigns, such as welcome emails, order confirmation emails, and cart abandonment emails.
Tarte is a cosmetics brand with an eCommerce store that sells makeup, skincare, and beauty products. In this example, we are showing an email sent to one of Tarte’s customers. We can see from this example that Tarte used two types of product recommendations in this email:
- The “Recently Viewed” type by reminding the customer of a product that they recently checked.
- The “Recommended For You” or the “Similar Products” types by showing the customer other products that they might like based on their preferences and browsing history.
Speaking of email marketing, the marketing automation tool offered by Converted.in can help you create, customize, personalize, launch, and automate email marketing campaigns.
6- Use Pop-ups Across Your Website
We’ve already covered how you can incorporate product recommendations across your website pages and how you can integrate them into your email marketing campaigns. However, unfortunately, these options are often not dynamic enough; therefore, you need something additional that keeps your customers engaged.
For this, we are suggesting you use pop-ups. Popups will allow your customers to see your recommendations without having to navigate across pages.
7- Use Social Proof
One way to make your product recommendations more effective is to combine them with social proof. There are many ways you can mix social proof with product recommendations. For example, whenever you are recommending a certain product, make sure you display customer testimonials, such as reviews.
As you can see in this example, Avon, the cosmetics brand, offers product recommendations with customers’ reviews displayed below each product.
8- Cross-Selling And Up-Selling
We’ve mentioned cross-selling and up-selling in previous parts of this article; however, we wanted to discuss these two strategies in a separate point to highlight their importance when it comes to product recommendation.
First, upselling is the technique of recommending a higher-end, more expensive version of the same product or service that the customer is already interested in buying. The goal is to encourage the customer to spend more money and increase the Average Order Value (AOV).
Second, cross-selling refers to recommending complementary or related products or services to the customer. The goal is to encourage the customer to purchase additional items that complement or enhance the product or service they are already interested in buying.
Tip: The best place to use these types of product recommendations is the “Checkout Page”, and the best customers to use it with are those at the “Acquisition Stage” of their customer journey.
Wayfair is an online retailer that hosts a wide range of products on its website. In this example, we can see how a product recommendation can come in the form of cross-selling.
Notice the phrase: “You might also need” being used as a title for the recommended products.
9- Combine Product Recommendations With Different Marketing Strategies
There are many marketing strategies that, if used, can make your product recommendations 100x more attractive, such as:
- FOMO Marketing and Scarcity Marketing: These two strategies capitalize on customers’ fear of missing out, and they add a sense of urgency to your product recommendation.
- Discounts and Promotions: Most people love a good deal and are likely to seize such opportunities, even if it does not align with their original intentions.
- Seasonal Sales: Use product recommendations to remind the shopper about upcoming holidays or other special events.
In this example, Timberland recommends its popular safety boots while implementing FOMO marketing strategies. It appears in the phrase: “Don’t Miss Out On…” and “It may not be here when you come back!”.
All this creates a sense of urgency and a feeling that this product is scarce, which automatically makes this product recommendation more attractive to customers.
10- Test And Optimize
Now that we’ve discussed so many types of product recommendations and even more tactics to implement them, you might feel a bit overwhelmed. You might be asking yourself now:
What is the best thing for my eCommerce store?
Well, the only way you’re gonna get an accurate answer to this question is through regular testing. For example, A/B testing can help you test different versions of product recommendations and see which ones work best for you.
To sum up, product recommendations are a valuable tool for eCommerce businesses. They provide customers with personalized suggestions that are relevant to their interests and needs, which creates an overall better shopping experience for them. However, it is important to strike a balance between leveraging product recommendations and overwhelming customers with too many options.