Monday, January 23, 2006

The value of recommendations

Laurie Flynn at the New York Times reports on the value of recommendations for e-commerce companies. Some excerpts:
Web technology capable of compiling vast amounts of customer data now makes it possible for online stores to recommend items tailored to a specific shopper's interests. Companies are finding that getting those personalized recommendations right - or even close - can mean significantly higher sales.

At NetFlix ... roughly two-thirds of the films rented were recommended to subscribers by the site - movies the customers might never have thought to consider otherwise. The company credits the system's ability to make automated yet accurate recommendations as a major factor in its growth from 600,000 subscribers in 2002 to nearly 4 million today.

Similarly, Apple's iTunes online music store features a system of recommending new music as a way of increasing customers' attachment to the site and, presumably, their purchases.
The article mentions too but offers few details. I am surprised that the article doesn't explore Amazon in more depth given that, as with Netflix, the recommendations lead to a substantial percentage of Amazon's sales.

See also my previous post, "Zen and the art of Amazon recommendations".

[Found on Findory]

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