Search for:
Customer Behavior

A Look into the Future: The Next Wave of Commerce is Need-Based

Time cover 2006Do you remember that 2006 Time cover? It was the cover in which the magazine named “You” as the Person of the Year.

The decision was made in recognition of the millions of Internet users who, around that time, started contributing user-generated content and by doing so, “changed not only the world, but also how the world changes“.

The cover also reflects the emergence of the information-savvy, well-connected consumer who has a major impact on the commercial world of today.


The First Wave: Commodity Commerce – Help me find!

Offering functionalities to help people find the right products online

These new shoppers were the first to grow up with computers in the mid-to-late 90s and pretty much knew how to use them. With the Internet’s explosive growth in the early 2000’s, they had a wealth of information at their fingertips. The only real support they needed was help finding what they were looking for and the information whether the products and offers were reliable.

It forced companies to transform from being traditional (stationary) liaisons between products and consumers to being (online) providers of functions that brought products and consumers together. Companies that failed to adapt to the demands of these new online shoppers either ran into serious troubles or folded.

The changes in customer behavior and customer expectations become most apparent when looking at the process of booking a holiday then and now. In the 90ies, it was common for people to book their holiday through their local travel agent. Now, most people simply cut out the middle-man, check SkyScanner to compare flights, read reviews on TripAdvisor, and book their hotel via (or comparable providers).

We saw a rise in businesses going online focusing on offering effective and sophisticated search functions, extensive category listings, and filters to help shoppers navigate, manage, and evaluate the vast amount of information – and, to help them find the products or information they were looking for.

Using the Wayback Machine, you can see how different website looked like in these early days of e-commerce:

Wal-Mart's ecommerce store in 2000
Wal-Mart’s ecommerce store in 2000


The Second Wave: Discovery Commerce – Help me discover!

Competition drives innovation and the need to personalize the experience

The rapidly growing sea of companies that started offering their products online provided consumers with a multitude of options to choose from. This growing competition was the catalyst for future innovations geared towards helping businesses create a personal connection with consumers to foster loyalty. While the question consumers had to deal with was “Which retailer should I buy from?”, the most pressing question retailers had to answer was “How can we engage and retain shoppers?”.

Amazon was one of the first to understand how to use data to create more engaging user experiences. The company started delivering recommendations based on shopping patterns of similar customers (collaborative filtering) and suggesting products related to whatever a customer was viewing at the moment (contextual recommendation).

Using personalization allowed Amazon to create a discovery-like shopping experience that not only supported shoppers find what they were looking for, but allowed them to serendipitously discover products they never knew had existed. Personalization was and is central to Amazon’s success and directly impacted their bottom-line.

Amazon's ecommerce store in 2007
Amazon’s ecommerce store in 2007

Today, there’s hardly any site that does not serve personalized content. Netflix or Hulu do it with movie recommendations, and social platforms like Facebook, LinkedIn or Pinterest do the same by delivering personalized feeds that match the user’s preferences and behavior.

And again, companies that failed to innovate and use technology to deliver more personalized and engaging experiences either lost significant market share or folded.


The Next Wave: Need-based Commerce – Help me choose!

Using need-based personalization to understand consumer needs

With the rise of mobile shopping, shorter attention spans, novice shoppers, and choice overload that provokes decision fatigue, businesses have to pay closer attention to understanding what their shoppers really need to drive conversion and improve sales. It’s about differentiating the store experience in such a way that customers do not feel overwhelmed and can run through the customer journey as easy as possible. Businesses have to get a clear image of who their individual customer is, to be able to help him or her make faster but at the same time well-informed and confident purchase decisions.

Standard personalization methods still serve their purpose, but modern customers demand more individualized experiences that take their needs into account. Forrester’s report Advance to Next Generation Personalization suggests that “organizations have to go further […] by delivering relevant, tailored experiences that meet individual user needs by combining historical, behavioral, and profile data with real-time situational feedback.” Today’s consumers want you to make the experience all about them and this requires gaining a deeper understanding of their needs and putting them at the center.

To accomplish this, businesses have to involve both implicit and explicit data. While implicit data includes different data points such as demographic, purchase history, interactions, social media engagement, or browsing behavior, Guided Selling, a form of need-based personalization, is the most effective way how businesses can capture valuable explicit data.

DJ Patil, the Chief Data Scientist at White House Office of Science and Technology Policy, advises retailers to

“find a way to replicate how a store owner or shop keeper would engage you in a conversation when walking into a store and looking for something open-ended, such as a birthday gift […] Asking for users to fill out surveys of what they love or like perhaps isn’t the ticket to drawing explicit data, such as brands you love, colors, styles and more. […] retailers who ask for this information need to present this as more of a conversation as opposed to replicating the feel of a doctor’s appointment where you are filling out your life history via forms.”


Example: West Marine Uses Guided Selling to Understand Consumer Needs And Advise Shoppers

West Marine uses need-based personalization strategies to help buyers choose the best kayak. The Kayak Finder on their site simulates a conversation with a salesperson in the store, asks six easy-to-answer questions to understand user needs, and uses info texts to educate shoppers in the process by explaining the benefits of different features. It’s a good example how Guided Selling solutions can help businesses gain a better understanding of their shoppers (without overwhelming them) and use the information to accelerate the product decision process.


The coming years, if not months, will see more retailers and brands tap into need-based personalization approaches across different channels.

And this time again, we dare to predict that companies who aren’t already thinking about how to integrate more need-based and customer-centric approaches will fall behind.

Join our community of 70,000+ marketing professionals, sales reps, business leaders, and executives.

We are a collective of e-commerce aficionados, marketers, CX experts, UX designers and developers with a huge interest in decision-making, consumer psychology and everything that makes choosing easy.