Rethinking the online recommendation engine describes several new firms that are hiring out their Amazon-esque up-selling tools:
ChoiceStream is one of the largest newcomers, with more than $10 million in revenue. But scrappy startups like Aggregate Knowledge and CleverSet are also gaining customers. All three are focused on “discovery” — selling people goods they didn’t know they wanted. And all three work on the premise that you need more than a customer’s old shopping list to get him to buy new stuff.Take CleverSet, currently being tested by big-name retailers like Drugstore.com, Sephora, and WineEnthusiast.com.
CleverSet’s engine analyzes consumer purchases by product descriptions, prices, ratings, and dozens of other attributes. The software organizes the information into a relational database and then offers products with similar attributes, even if they’re not big sellers. Buy a book about camping in Alaska, for instance, and it might suggest a subzero sleeping bag.
CleverSet also tracks how visitors click through a site and makes educated guesses about whether they’re browsing, researching, or buying — knowledge it uses to close the sale. So far, the techniques seem to be paying off: CleverSet CEO Todd Humphrey claims that the 75 online retailers using his engine are averaging a 22 percent increase in revenue per visitor.
ChoiceStream uses a similar approach, especially for movies, music, and the like. The company has painstakingly categorized 40,000 films by more than 50 attributes; these allow its system to match movies by genre, actors, plot type, and more.
For instance, if you like the movie Babel, it might suggest that you check out Do the Right Thing. At first glance, the Brad Pitt vehicle set in Morocco and the Spike Lee movie set in Brooklyn might not seem to have much in common. But ChoiceStream’s engine knows that both are complex, unpredictable, suspenseful, and based on sociopolitical themes; each plot is heavy on character transformation and delivers a twist.
That matchmaking logic can help lead viewers to niche titles they otherwise wouldn’t have considered, something that’s helped Blockbuster compete with Netflix in online DVD rentals. Since Blockbuster adopted ChoiceStream, cancellation rates have fallen and subscribers have nearly doubled the number of movies on their order lists.