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Retail Best Practices for Targeted Merchandising and Personalization

August 23, 2012
chinese takeout

Blue Ribbon Chinese by Charles Plaisted

Targeted Merchandising Benefits

Merchandising is the practice of maximizing sales by leveraging product design, packaging, pricing, display, and most importantly, selection. Targeted merchandising selects content (including products and offers) for consumers based on traits such as consumer context or behavior, or based on rules set by merchandisers. Targeted merchandising improves the customer experience and merchant results.

Targeted merchandising has four big benefits:

  • It improves the customer experience by optimizing the customer’s time, and engaging the customer with the most relevant and interesting content.
  • It maximizes retailers’ scarcest resource: customer attention.
  • It increases retailers’ chief goal: revenue.
  • It improves margin by automating the promotion of all items in the catalog, not just the most popular.

When content is automatically selected based on customer behavior, targeted merchandising can triple the conversion rate and drive significant revenue (as much as 20 percent).

Introducing Best Practices and Principles

Targeted merchandising is a relatively new discipline, and not well understood or consistently practiced by merchants. People are hungry for best practices guidance. But just knowing what the best practices are is not enough. If it were, none of us would be out of shape: we’d eat less, and exercise more. When it comes to shaping up your ecommerce site, you need to know not just the best practices but how to achieve the best practices. You need a set of principles that enable you to adapt the practices to your business, your goals, your customers, your changing situation.

Best practices range from small scale decisions to large. A relatively small scale decision is how many recommendations to show on a page. A large scale decision is what strategy should guide the recommendation efforts.

I see three large scale best practices for targeted merchandising:

  1. Establish merchandising strategy and tactics to meet business and customers’ goals.
  2. Establish a management structure to oversee the use of the tactics to achieve business goals.
  3. Establish practices to continuously optimize to improve results, merchandiser skills, and customer experience.

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One Comment
  1. I never thought about it like that, I like #2 the best.

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