Report slams Web personalization
Companies trying to get personal with their Web site visitors in hopes of increasing sales are wasting more money than they're earning, warns a new report.
The Jupiter Research report, "Beyond the Personalization Myth," assails as expensive and unproductive the practice of Web site personalization, which tailors pages according to information gathered about particular visitors.
Instead of implementing personalization strategies, the report suggests, companies should concentrate on the basics, such as making their sites easy to search and navigate.
"Given flexible, usable navigation and search, Web site visitors will be more satisfied with their experiences and will find fewer barriers to the profitable behavior sought by site operators," according to the report published Tuesday. "In fact, good navigation can replace personalization in most cases."
The report criticized personalization as not only ineffective, but surprisingly costly.
Personalizing a site was more than twice as likely to result in finding visitors who would never pay for anything, as it was to attract paying customers, Jupiter's study found.
Operating the personalized Web site cost more than four times what operating a "comparable dynamic site," Jupiter found. The report said costs came primarily from the human effort needed to measure results, manage rules and optimize the system, on top of the licensing costs for personalization software from vendors such as Broadvision, Epiphany, Teradata, IBM and ATG.
Stymieing personalization campaigns is consumers' deep-seated suspicion of Web sites that try to extract information from them, the report found.
More than 25 percent of consumers surveyed by Jupiter said they avoided Web site customization because of concerns that marketers would misuse the information. A similar proportion avoided registering with a Web site, for the same reasons.
The report is peppered with anecdotes of unnamed companies whose personalization plans backfired.
"One health care site spent five months weaving scenario management through its entire site, only to realize too late that maintaining the staff required to manage campaigns, scenarios and rules was prohibitively expensive," the report said. "In another case, a travel provider spent upwards of one year rebuilding its site on a new, personalization-driven architecture, only to quickly--and painfully--conclude that matching profiles to content or offers had no impact on visitors who only want to check miles, compare flights, and book passage."
Jupiter cited "several key" unnamed vendors of personalization software that said they trained salespeople to focus on clients' desire to have personalized Web sites. That marketing push is paying off for the vendors, according to the report. Thirty-five percent of surveyed companies plan personalization initiatives, the report said, while 38 percent already have them. Twenty-seven percent have no personalization plans.
Even as Jupiter warns companies against the personalization pitch, corporate site builders continue to express support for the practice, while offering some cautions of their own.
"People need to rethink personalization," said Richard Hughes, senior director of product strategy for Broadvision, located in Redwood City, Calif. "The personalization message has been simplified down to something very superficial, promising to increase sales by offering the right thing at the right time. That is a valid mechanism, but you have to be clear about objectives. A lot of people thought a lot of upsell offers would mean people would buy from them, without thinking about what people really wanted."
Still, Hughes asserts that his clients are seeing significant returns on their personalization investments and cited, among other examples, a 64 percent jump in online sales by Rand McNally since it implemented a personalization-driven site by Broadvision.
As for the expense of personalization, Hughes shrugged off the report's dire outlook.
"Anything can be done badly and expensively," he said. "Just because there are some examples that people have invested time and money in the wrong area, that shouldn't discredit personalization as a whole. People should do a sensible evaluation of what's going to work best for them and their customers."