Movie rental company Netflix just awarded $1,000,000 to a team with members from Austria, Canada, Israel and America. What did those seven people do to earn them the prize? They developed software that improves the accuracy with which Netflix predicts what movies a subscriber will like based upon the subscriber's past movie ratings.
The Netflix electronic recommendation agent certainly is among the most sophisticated members of a family of software which helps consumers make item and brand decisions. Lots of your prospective customers are using online search engines to see how others rate the products and services those prospective customers are thinking about purchasing. Research at University of South Carolina and University of Texas found using an electronic recommendation agent about doubles the probability a shopper will purchase one of the products recommended.
Since a basic tenet of retailing is to provide shoppers what they want, you can increase your profitability by using search engines and recommendation agents to discover how the brands you carry are being evaluated and then, when indicated, changing your merchandise mix to include brands with better ratings of value for the money. You probably won't be able to get inside the new Netflix tool, but there are many other search engines and electronic recommendation agents you can consult.
Shoppers who use recommendation agents should be among your favorites, since they tend to spend more money than those who don't use recommendation agents. For instance, Yahoo! reports TV and digital camera purchasers who'd first done search engine research spent 10% more in the store than those who didn't do the research. And once shoppers start using recommendation agents, they don't like to turn back. There are so many decisions to be made in life that delegating brand recommendations to the computer gets awfully attractive for shoppers.
No comments:
Post a Comment