Ecommerce Profiling and Personalization: From Cookies to Communication

Updated July 18, 2008

The concept of website 'personalization' is not new, though more recently it's become an integral component of many customer relationship management (CRM) systems. CRM is essentially an umbrella term for various 'customer-centric' communicational technologies designed to acquire customers and deadbolt their loyalty. In practical terms, the 'personalization' dimension of CRM equates to tailoring your website to meet very individualized shopper needs and preferences. It strives to emulate one-to-one communication.

On the Internet, one-to-one communication is indeed a worthy goal. However, like the term CRM, 'personalization' has come to mean different things to different people, depending on variables like budget, human resources, and technologic acumen. Even online shoppers are unsure if personalization is a helpful convenience or an invasion of privacy.

In most cases, personalization is defined as a technology that can 'individualize' the online experience by dynamically generating unique, personalized web pages that are assembled based on recorded user preferences. In effect, a central database system 'knows' a website visitor from previous visits and generates web pages with content, advertising, and information created specifically for that individual. Of course, the 'individual' that the database 'knows' is only a theoretical construct based on a profile built from past purchases or marketing cookies.

And what's a marketing cookie? Basically, a cookie is a tiny text file that is transmitted from a website to an Internet user's browser. Cookies are designed to track the actions, proclivities, and habits of Internet users with the end goal of creating a profile for discrete website visitors. When a visitor returns to that website, active, individualized content is served up with targeted, strategically honed marketing messages.

Have you ever had the feeling that Amazon.com is reading your mind? If you've ever bought a book from them or selected an item from their shopping cart, they probably are reading your mind (via a profile in a database) and generating unique advertising based on your past purchases or actions. Privacy issues aside, you now have a very 'personalized' shopping experience - and Amazon.com has saved you time and effort by serving you content you are already interested in. Or so the theory goes.

With a similar goal in mind, entire web pages are dynamically generated by the search terms a user enters into a product or subject search query. When the search data is returned, the web page - from banner ads to content - has been 'customized' based on a given search term. 'Customization' in these cases is really a misnomer, mostly because the visitor has no active participation in defining parameters or personalization variables. It's a database guess about who the visitor is and what they may want.

For small to medium sized businesses, the centralized databases and automated sales processes of sophisticated CRM platforms may appear not only technically daunting, but impossibly expensive. Don't fret. Though real-time personalized communication is crucial, it does not necessarily entail a massive allocation of funds.

That's because cookie-driven forms of personalization are usually off the mark anyway - and sometimes they backfire with utterly laughable results. Instead, effective personalization should pivot first and foremost on understanding your customers and then understanding how your customers interact with your website. Monitoring customer behavior does not mean building unique profiles, but rather involves analyzing the specific needs of your customers and designing solutions, content, and flexible options to meet those needs.

Communication and website architecture are both crucial. Independent of any complex CRM initiative, customers should already be able to quickly establish control over their web environment and information flow. Providing a predictable, unique, option-rich website that gives visitors command is far better than trying to predict and control unique visitors. Analyze your website from where your customer sits - and study how visitors interact using traffic analysis software. Then empower your users to efficiently manage your site.

In this context, your site should cater to all types of shoppers. The person leisurely browsing your virtual shelves may not cast a second glance at a product search engine; the customer zeroed in on a specific item will choose it every time. Your site should be optimized for both - and streamlined for efficient delivery of content across a wide spectrum of learning styles (using text, graphs, visual imagery, etc).

Here, humanizing your site may be infinitely preferable to personalizing it. The human element is what is missing on the Internet, and automating sales and marketing with dynamic processes is not what warm, friendly experiences are composed of. Communication is the key - and humanizing your site means one-to-one interaction based on understanding your customers and giving them the content, style, atmosphere, and navigation to quickly and efficiently problem solve on your website - on their terms.

More than that, humanizing your site involves developing real-time communication via contact forms, e-mail, toll-free customer support numbers and so on. Customers want control over information; they want real time access to information; and they want the option to communicate with support personal if necessary. Personalized auto-responders are nice, but a real human e-mail that quickly answers the nuances and specifics of a customer need is far more effective, in the long run, than a web page that knows more than what's good for it.

Humanizing your website means handing control over to your clientele. Unfortunately, personalization does not free-up customers with options and free access. Rather, it provides pre-determined structures based on rudimentary assumptions derived from insufficient data.

And what of privacy issues? Inappropriate use of cookies is well documented - and when website visitors become profiles in databases, there is a lot of personal data compiled that can be used, abused, bought, and sold down the line. 'Addressable advertising' is the next big thing on the advertising horizon, where individualized marketing messages will be targeted based not only on past consumer choices and preferences, but also on factors like ethnicity, age, gender and income. This level of 'personalization' clearly transgresses the limits of a sound privacy policy - as well as the threshold of basic ethics.

Ultimately, the point is this: don't strive to master you customers. Empower your customer to master your website.