Marketing

Alexander van Slooten: The risks and rewards of personalization

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Alexander van Slooten, Director of marketing, Wehkamp

Alexander van Slooten,
Director of marketing, Wehkamp

Wehkamp, Holland’s largest online retailer, had great success with a personalized e-mail campaign that encourages customers to return to their abandoned online shopping carts. Now, the company is embarking on a broader effort to personalize the entire Web site in hopes of increasing traffic and sales. It’s a massive undertaking, considering that the site sells nearly 500,000 products to 1.6 million regular customers—10 percent of the tiny country’s population. The company tried unsuccessfully to personalize the site once before, but this time the director of marketing, Alexander van Slooten, believes that the technology and his team are ready.

Before we get to personalization, let’s talk about your career. You’ve gone from developing Web sites for a TV network to working in sales for Dutch Internet service providers. Now you’re running Wehkamp’s marketing department. How does your current role differ from the others?

From a marketing standpoint, it’s very different. The thing that attracted me to online retail was that everything was driven by data. When I was working at the broadcasting company, I was always explaining to my board of directors why it was necessary to have a large online presence. It was quite hard to measure, so I had no real proof that building a large online community would eventually lead to more viewers. With a retail company, however, everything is measured and everything is visible. As soon as I make a buy button twice as big or make it purple and flashing, you’ll see higher conversion rates. Now, we don’t actually do that sort of thing because we have a stylebook and we want to be consistent to our brand, but all the results of your actions are almost directly visible. The biggest mistake a person can make in this industry is to think that he or she knows how the customer will react without evidence. You’re almost always wrong and the data can prove it. So here, assumption is a bad thing. We test what we do and we can prove if it works.

As an online retailer, if your technology is flawed, your store is closed. How does that affect the relationship between marketing and IT?

In fact, the company’s technology department is part of marketing, so I have a lot of experts on my team who know everything about new techniques and innovation. I have about 30 developers who develop the Web site, .NET developers and HTML and Flash designers. We come up with the ideas and the people in my department also build the personalization tools and implement the software. So, the work is quite efficient.

How did the integration of the two departments happen?

Marketing basically adopted the whole Internet team in 2000. I was managing Internet back then. I’m now marketing director, which is also unique because I have a background in Internet and e-commerce and not in marketing. We have about 100 people in our department and I think about 10 of them are focused on mass media and television campaigns. All the rest are working on the Internet channels and online, so we’re really online folks.

With which other departments in the company do you work closely?

With buying and sales. We’re responsible for all traffic and all conversions. They’re responsible for the assortments and pricing. But the two have to work together. I can send a lot of traffic to our site, but if the assortment isn’t right or we’re too expensive, no one will buy. The other way around is also true. They can have fantastic products with a fantastic price, but if I don’t send anyone to the site, we won’t sell anything. So, we have to work very closely together, and we do.

What’s the impetus for Wehkamp’s foray into personalization?

The trigger was our growing assortment of products. If you have 10 jeans, why personalize? Looking at 10 jeans isn’t that hard. But now we’re selling 600 pairs and the customer feedback indicated that it was really difficult to find the right jeans on the site. And within a year our whole assortment will again almost double and our customer base is continually growing, too. We have a lot of knowledge about our customers and we want to use it to personalize the site, our e-mails and our banner ads for each individual customer. It’s our job to help our customers find the right products and personalization is a solution to that problem.

How do you define personalization?

Personalization is about getting the right offers to the right people based on their profiles. Every piece of information you get you add to the profile. It can include a customer’s buying history, his or her age and gender, what somebody looked at two clicks ago or what brands he or she likes most. The important thing is that these profiles continue to grow and can be acted upon in real time. Based on these profiles, we’re already sending out almost two million e-mails every day.

What makes for an effective personalized e-mail campaign?

Relevancy and subtlety. If you put something in your basket, but forget to check out, we send you an e-mail two days later with a reminder that you have something in your basket. We don’t tell you explicitly to buy it, but you’re reminded that there’s something there. So it’s quite relevant for the customer, and the conversions on those e-mails are very high. The highest conversion we see overall is for an e-mail we send every week where we put in products based on what a customer viewed on our site. So if you looked at an LED TV during the week, you’ll get an e-mail on Sunday that includes the TV that you viewed.

You tried personalizing the Web site in the past and weren’t happy with the results. What went wrong?

In our experiment we put products on our homepage based on models that should have been the most relevant for the visitor. The click ratio more than doubled, but it led to only slightly more sales. Based on what we learned, we said that it was too early to invest more, but that was five years ago.

How are you approaching personalization differently this time?

In the past we personalized the home page and what we call category pages. Now we’re personalizing on a deeper level. Basically we’re reorganizing the products, starting with those that are most relevant for a customer. This is quite a technical challenge because we have 120 million visits a year and we’re offering almost 500,000 products. We’re also tailoring pages based on real-time data about what a customer has looked at in the same section. For instance, if you’re an Esprit or G-star buyer, we put those brands on top. If we know that you always spend from $50 to $100, we put that price range on top within the brands you buy the most. That’s the way we’re starting. So far, we’ve seen a promising uplift in sales.

Can you share some lessons you’ve learned about the difficulties of personalization?

The really difficult thing is that as you start to personalize your site, you don’t really know what people are seeing anymore. Everyone eventually could see something different. That’s a big risk. You need to have a clear view of how personalization is going to affect your business because you’re telling a different message to each customer and each customer will have his or her own questions and you’re going to have to answer them. For example, you can give a specific person a specific discount on a specific item and you can even give that discount in a specific timeframe. So everyone who lives in a particular area and is female gets a 10-percent discount on blue socks from 8 to 10 p.m. on Tuesday. Well, that can create difficult situations. If a customer contacts our call center the day after with a question about the discount, the agent has to know that he or she really got that particular discount. You have to log a lot of data and manage it and have it accessible in your call center. It quickly becomes really complicated, so you have to be prepared.

How is your day-to-day work changing?

Speed is definitely becoming more and more important. You have to react really quickly. I see traditional companies work on a plan for about a year or maybe two years. With us, if we talk about a large project, it’s three or four months at most. Everything has to go fast. We’re quite big and that can be an advantage, but it’s also a disadvantage because we have more people and we have more complex systems than some of our smaller competitors. They can act very quickly. To be ahead of them, we have to work almost twice as hard.

Speaking of big companies, we haven’t discussed Amazon.com. There’s some discussion about the company finally entering your market. How concerned are you?

Rumor has it that they will start operating in the Netherlands in the fall. But they’re not that strong in fashion, which is where we’re focused. And then within fashion, we’re especially strong in ladies’ fashion. Three-quarters of our customers are women. We make an effort to show sets and combinations of clothes and we make an effort to follow trends on our site. Amazon isn’t that strong in showing trends and styles. Of course, everyone knows Amazon in the Netherlands and the real Amazon addicts were already ordering from Amazon UK or Amazon Germany and I’m sure they’ll get a bigger part of the market when they start in the Netherlands. But I don’t really think everyone will turn to them.


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