Next Generation Recommendations

The Four Keys To Successful Merchandising Automation

Ryan Hoppe Tom Davis

Director, Marketing Director of Ecommerce
ATG Optimization Services Tommy Hilfiger
Agenda
 ATG Background
 Why Recommendations?
 Recommendations or Merchandising Automation?
 The Four Keys To Successful Automation
 Case Study: Tommy Hilfiger
 Next Steps
 Q&A

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ATG Background
 The leader in e-Commerce solutions
 Over 900 customers worldwide
 Headquarters in Cambridge, MA, with offices throughout North
America and Europe
 Approximately 500 employees
 2008 revenue: $164.6 million, with profitability

1991 1999 2004 2006 2008

Founding IPO Acquired Acquired Acquired

(ARTG)

3
ATG Product Suite At-a-Glance

e-Commerce
Commerce Suite
Licensed or OnDemand
Optimization Services
Platform-Neutral Services

 Shopping Cart & Product Catalog  Automated Recommendations

 Merchandising & Searchandising  Click to Call
 Commerce Search  Click to Chat
 Multivariate Testing  Call Tracking
 Marketing Campaign Manager  Save & Send
 Business & Customer Analytics  Form to Phone
 Integrated Customer Service  Video Connect
 Knowledge/Incident Management
 On Demand Commerce Platform

4
ATG Powers the World’s Top Brands Online

5
What Are Automated Recommendations?

► Utilize data from the

catalog, historical
shopping information,
click-stream data,
Web site, and more to
predict each
shopper’s intent in
each session

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What Are Automated Recommendations?

► Utilize data from the

► catalog, historical
Deliver
shopping information,
personalized
click-stream data,
recommendations
Web site, and more to
& merchandise on
predict each
your Web site and
shopper’s intent in
in other online
each session
channels

7
What Are Automated Recommendations?

► “Learn” from
customers as they
navigate your site and
refine products based
on changing intent

► Utilize data from the

► catalog, historical
Deliver
shopping information,
personalized
click-stream data,
recommendations
Web site, and more to
& merchandise on
predict each
your Web site and
shopper’s intent in
in other online
each session
channels

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Why Recommendations?
Customers Like Them
Customers Who Like Online Recommendations

100%

76%
Customers Who Like Personalized Emails

100%

63%

Online Retailers With Personalized Recommendations

100%

27%
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Why Recommendations?
It’s a Quick Win

November 2008 “The Impact Of The Economic Crisis On eCommerce Technology Investment”

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 Why Recommendations?
Increase Revenue & Loyalty

Convert browsers into Increase order values Retain customers by

buyers by predicting by automating and personalizing the
intent and presenting the personalizing cross-channel
most relevant products cross-sells & up-sells shopping experience

Lift Online Revenue Quickly, Easily & Measurably by

Personalizing Product Discovery

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First Gen Recommenders
Real Value, But Limited Applications

You Might
Also Like…

Recommendations
Engine

Others Who
Looked At This
Bought That

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Fear of Automating More Than Cross-Sells &
Recommendations?

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Next Gen Recommenders
Automated Merchandising With Merchants At The Controls

On Sale

Cross-Sells &
What’s New
Up-Sells
Automated
Merchandising
Engine
Personalized
Gift Guides
Recommendations

Top Sellers

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Value of Automated Merchandising
More Than Double The Impact Of Automating Cross-Sells

Conversion Rate AOV Increase

Customer Use Case Increase Over Over Site
Site Average Average

Cross-Sells on Product
Retailer 1 76% 8%
Detail Pages

Automated Cross-Sells,
Up-Sells, Top Sellers, Null
Retailer 2 Search Results Pages, 160% 20%
Shopping Cart Cross-
Sells, etc.

*Data from two ATG Recommendations customers over a three month period

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Four Keys To Success For Next Gen
Recommendations

Relevancy Refinement
How relevant are the Can I refine or “filter”
products to each products before they
visitor? are shown?

1 2

4 3
Relationship Reach
Does the provider offer Can the solution reach
a relationship focused across my catalog, site,
on my needs as a and channels?
retailer?

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 1

First Gen Recommenders Relevancy

Fail To Utilize All Data

Visitor Product
Behavior Details

Historical Session
Data Stats

17
 1

First Gen Recommenders Relevancy

Fail To Utilize All Data

Visitor Product
Behavior Details

Historical Session
Data Stats

18
 1

First Gen Recommenders Relevancy

Fail To Utilize All Data

Visitor Product
Behavior Details

Historical Session
Data Stats

19
 1

Second Gen Recommenders Relevancy

Utilize All Data To Make Predictive Choices

Visitor Product
Behavior Details

Historical Session
Data Stats

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 1

Second Gen Recommenders Relevancy

Understand Your Catalog & Shoppers

Visitor Product
Behavior Duration of Page Views Products Viewed Details

Ratings
Order of Page Views
Brand & Manufacturer
Clickstream
Descriptions

Searches Product in Catalog Location

Aggregated Past Behavior Type of URL Page

Visitor’s Past Searches Refer URL

Past Shopping Behavior Broadband Speed

Historical Geography IP Address Session

Data Stats

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 1

Second Gen Recommenders Relevancy

Get Smarter Over Time

Visitor Product
Behavior Duration of Page Views Products Viewed Details

Ratings
Order of Page Views
Brand & Manufacturer
Clickstream
Descriptions

Searches Product in Catalog Location

Aggregated Past Behavior Type of URL Page

Visitor’s Past Searches Refer URL

Past Shopping Behavior Broadband Speed

Historical Geography IP Address Session

Data Stats

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 2

First Gen Recommenders Refinement

“Black Box” With Limited or No Control

Can’t Control
The Science
or Execute
Merchandising
Strategy

23
 2

Second Gen Recommenders Refinement

Rich Merchant Control & Refinement

1
Catalog
Refinements
Category
Brand
Price
Collection
Top Seller
New
Fixed

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 2

Second Gen Recommenders Refinement

Rich Merchant Control & Refinement

1 2
Catalog Session
Refinements Refinements
Category Cross-sell
Brand Up-sell
Price Page Type
Collection Keyword
Top Seller Cart Value
New Product Value
Fixed

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 2

Second Gen Recommenders Refinement

Rich Merchant Control & Refinement
Blended Refinements
1 3 2
Catalog Session
Refinements Refinements
Category Cross-sell
Brand Up-sell
Price Page Type
Collection Keyword
Top Seller Cart Value
New Product Value
Fixed

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First Gen Recommenders Reach 3
Lack of Reach

First Gen
Solutions

 First gen solutions can’t reach into  Or reach customers wherever

the product catalog they shop
– Only learn products through – Across the site
shoppers’ activity – Across formats
– Can’t recommend new – Across channels
– Biased towards popular items
27
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Second Gen Recommenders Reach 3
Reach Across The Catalog, Site & Channels

New

Second Gen
Solutions
Niche

 Reach across and understand the  Reach customers wherever you sell
complete catalog – Across the online store
– Form detailed product relationships – Into emails
– Categories, brands, prices, – Into rich media
descriptions – Across channels
– Can recommend any product (new,
niche, popular)
28
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First Gen Recommenders Relationship 4
Lack a Retail-Focused Relationship

Start-ups Focused On Can’t Provide a

With Limited Multiple Total eCommerce
Resources Industries Solution

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Second Gen Recommenders Relationship 4
The Retail Relationship You Need

Retail-Focused Retail-Focused Retail-Focused

Client Service Statisticians Roadmap

 Tune relevancy  Monitor impact  Focused on needs

 Measure results to improve of online retailers
with A/B testing performance  Family of Web
 Demonstrate  Analyze trends optimization services
impact with Web- to inform  Next generation,
based reports merchandising personalized, cross-
strategy channel commerce

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ATG Recommendations

Shoptommy.com Holiday 2008

Tommy Hilfiger

Tom Davis
 Director of Ecommerce
 tomdavis@tommy-usa.com

 Went live with ATG in November 2007

– OnDemand client
– ATG Recommendations Fall 2008

ATG Recommendations Webinar | June 18, 2009 | Confidential

Business Case

Shoptommy.com represented several full collections including:

 Sportswear Collection (men and women)
 Hilfiger Denim Collection (men and women)
 Kids Collections (boys and girls)
 Various accessories (men, women and kids)

Each new style required recommended products (cross sells, up-sells,

recommendations) associated to it and we didn’t have the manpower to
keep up

Wanted to take advantage of the holiday season (2008)

ATG Recommendations Webinar | June 18, 2009 | Confidential

Challenge

THUSA needed an efficient process to offer recommended products to

customers -- (cross sells, up-sells, recommendations)

 How could the ecommerce team unlock the hidden value of their entire catalog and
create more appropriate recommendations? (Reach)

 How could the ecommerce team automate the process for improving and introducing
updates to their recommendations? i.e. create value? (Refinement)

 The end goal should be to provide relevant results to the customer (Relevancy)

 How could the ecommerce team minimize time and effort inside the BCC by working
with ATG and their recommendation team? (Relationship)

ATG Recommendations Webinar | June 18, 2009 | Confidential

Phase 1: Product Page

 Included ATG
recommendation engine
on every product page

 Optimized the code and

catalog feed for 30 days
(Fall 2008)

 After one month, analyzed

data and engaged in next
steps

ATG Recommendations Webinar | June 18, 2009 | Confidential

Phase 1 Results

Implementation time was less than four weeks

 Two weeks to create and approve data feed between our site catalog and the
recommendation engine
 Two weeks to gather site/customer behavior

Impact was immediate

 13% of revenue “touched” the recommended products
 AOV lift was 12%
 Conversion rate lift was 163%

 Contributed incremental +13.5% top line revenue

ATG Recommendations Webinar | June 18, 2009 | Confidential

Phase 2: Reach

Spent two weeks analyzing data

and developing new campaigns
 Top sales products
 Top Sellers
 Accessories
 Gift Guide
 “Last chance” checkout
 “No Result” Search results page

ATG Recommendations Webinar | June 18, 2009 | Confidential

Phase 2: Reach

Spent two weeks analyzing data

and developing new campaigns
 Top sales products
 Top Sellers
 Accessories
 Gift Guide
 “Last chance”
checkout
 “No Result” Search
results page

ATG Recommendations Webinar | June 18, 2009 | Confidential

Phase 2: Reach

Spent two weeks analyzing data

and developing new campaigns
 Top sales products
 Top Sellers
 Accessories
 Gift Guide
 “Last chance” checkout
 “No Result” Search results
page

ATG Recommendations Webinar | June 18, 2009 | Confidential

Phased 2 Results

Impact was immediate

 35% of revenue “touched” the recommended products
 AOV lift was flat
 Conversion rate lift was 204%

 Contributed incremental +30% top line revenue

ATG Recommendations Webinar | June 18, 2009 | Confidential

Phase 3: Offsite Programs

Integrating recommendation engine into

“off site” programs
 Email
 Confirmation emails
 Newsletter sign ups
 etc

ATG Recommendations Webinar | June 18, 2009 | Confidential

Conclusion

Reach Relevancy
 Ability to unlock entire catalog  Timely and relevant
beyond the product pages recommendations creates value in
 Offering recommendations in email product relationships that are not
and other outreach programs intuitive to merchants

Refinement Relationship
 ATG recommendations “learns”;  Recommendation team works in
constantly refining based on dozens tandem to identify and define future
of variables campaigns (rule sets)

ATG Recommendations Webinar | June 18, 2009 | Confidential

Questions to ask yourself

How are you going to determine Control

success?  How much control do you want?
 AOV
 Contribution margin
 Conversion How far do you want to reach?
 Time on site  Product pages
 Category pages
Investment  Email
 How to measure ROI  Automated campaigns, social
 Man power v technology media, etc

ATG Recommendations Webinar | June 18, 2009 | Confidential

View the ATG Recommendations Demo at:

www.atg.com/recommendations-demo/

Or contact us at sales@atg.com

Thank You.