Personalisation, when done right, can provide customers with delightful experiences that introduce them to product discovery—essentially replicating the in-store experience like that of a helpful sales person. It’s no coincidence that customer-centric retailers like John Lewis, Marks & Spencer and Dixons (all customers of RichRelevance) have adopted personalisation as a way to extend their superior in-store customer service across multiple channels. House of Fraser (another customer) has gone that one step further by leveraging a loyalty program and recognising their customers across all channels.

Leading retailers like these, that choose to put the customer at the center of their business strategies, are having deeper and more relevant conversations with their consumers. And the ones that are able to connect, and realise the lifetime value of their customers, will be the ones that continue to succeed.

-Darren Hitchcock, VP of the UK/European Region

For every month, we offer insights and best practices on ways to maximize your efforts in a variety of fields, including:

• Cross-Channel Marketing
• Mobile
• Search
• Social Media
• Email Marketing

You’re invited to get ahead of the curve, and start utilizing all of the opportunities you have at your fingertips right now to make your next holiday shopping season your best ever!

Happy (early) Holidays!

RichRelevance Chief Evangelist Jake Bailey, With the advent of shopping related media in the ad market today, it’s no surprise that many people have a hard time defining the right expectations for performance from their retail publishing partners.

Not long ago, it was unheard of for a brand or agency to be purchasing digital media on a retailer’s website. However, with the amount of cross-channel shopping that consumers are doing, and with the amount of influence that websites have on in-store purchases, it’s no longer something brand advertisers can ignore.

In fact, for many of the world’s largest CPG advertisers, it’s imperative to include retail websites in a standard up-front buy and/or digital media campaign.

Read Econsultancy Blog Post by Jake Bailey

As importantly, the team members who’ve joined the RichRelevance family from Searchandise share so many of the {rr} values. Creating long-lasting value in the online retail world is just simply hard, so it’s paramount that our values are reflected across our core—by every one of our employees.

The Searchandise product will be a key addition to our personalization platform. In these challenging economic times, Brand advertisers are being asked to do more with less, and Shopping Media provides them the most powerful tools to get more “bang for their buck.” Brands will now be able to have a true one-stop shop for their digital budgets within online retail, and retailers will also be able to add more content that accelerates the conversion cycle with their consumers. By combining search capabilities with our core personalization offerings, we’ve got a 1-2 combo which will be unbeatable!

As you might guess, there’s a lot of innovation and integration to do, so we’ll have a lot more to share with our retail and brand partners, in the coming months. We’ve barely scratched the surface for what’s to come in 2012 and beyond—so stay posted. Innovation will be the name of the game for us in 2012.

In the meantime, the Searchandise team, now officially part of Team RichRelevance, have made some great contributions to our Holiday Memories Blog – we invite you to partake in their stories and remember what’s most important at this time of the year, and frankly any time of the year: friends and family.  We’re thrilled that Searchandise is now part of our family.

Jan 2011 after the 2010 holiday season….

Still in the glow of 100% uptime, response rates around 80ms, 5.5K requests per second served at peak.

We’re all sitting around in IT Ops excited, pumped and ecstatic for our performance. We’re beating our chests and basking in the glow of success. 5500 Requests per Second (RPS) peak—our measurement of capacity reached and slayed. Hey guys, I have the year-over-year page-view graphs. Look at that, over 147M page views in one day—wow.

Then someone chimes in, “but, guys, we are bringing on more than five of the top 20 retailers this year, and we’ll double that traffic. In Europe we will easily double what we did in 2010. What if online shopping takes off even more, and we TRIPLE that?”

All of a sudden the smiles drop and the glow is gone—but not the spirit. Ideas start popping. “We need to get load off the Database”—“grow Hadoop, get hBase expanded”—“build another Datacenter in EU”—“the VPNs, we have to get better throughputs”—”the logs are HUGE, get more into Avro”—“upgrade the SSD’s”—“New CPUs”—“more systems, more POWER!” (Manly grunts ensue.) The glow returns as we start building for something 11 months away and also barely behind us. We take all these ideas and head to the developers; why should they still be glowing about “last year?”

From that we built our 2011 capacity plan and assigned a project to it. We evaluated our vendors and created partners from our suppliers, investing in each other’s success. We shared planning, built schedules and worked tightly together. All the data from the holiday was evaluated for points of weakness. We took on the hardware first: upgraded the firewalls, proxies, and front-end servers. We cancelled 12 months contracts with some vendors and created 3 month “Peak Season” datacenters with newer systems and tighter SLAs, while reducing our costs. We expanded Hadoop, implemented hBase, and took massive amounts of data off the Relational Database moving it to Hadoop. We upgraded to HAProxy, new Java libraries, and implemented tighter controls. Then the Devs kicked in and did a phenomenal job refactoring how our catalogs are processed and models built: faster, more efficient, and smaller. We tweaked, poked, and tested with our expanded QA department. And boy, did we test!

In week 44, we took just one of our datacenters to 8K RPS second—160% of the worldwide peak of the previous year. We took a breath and looked at the monitors—no packet drops, response times well below SLA at 80ms! We cranked it up to 100K simultaneous connections at ONE datacenter. It stretched, it moaned, but it didn’t break. SLA was too high for me, but OMG, how cool is that at 20K/s and 400ms response—but it held—excellent. We were now confident we could take 64K requests per second (12x the previous year peak) worldwide and remain in SLA delivering blazing fast recommendations and ads. All that was left was our fall 3^rd Party security review. Did we remember everything? YES—passed with flying colors. We’re ready. BRING IT!

Fast forward to Thanksgiving Day, 2011…

Ops has stocked up on Mountain Dew and Rush tape mixes (mixed in with some opera for me). We watch all day. Okay, 4K per second, that’s fine. Come on people SHOP already! Okay, turkey dinners are done in Philly. THERE IT IS—look at the East Coast go—YEAH! Here comes Chicago, Dallas, (8K!) San Francisco, Seattle—BOOM, our peak, 9.1K RPS.

We didn’t double the previous year peak and didn’t beat Twitter’s record of 10K tweets per second, but we were at 230% of last year’s aggregate traffic—not a blip, 100% up, and response rates FASTER than last year.

Okay, we missed Twitter’s record. We still have Black Friday and Cyber Monday. Overnight we had a sustained rate of more than 3K per second non-stop: more than a momentary peak on almost any other day of the year.

Black Friday was huge. Started out at 3am with a steep climb from 3.5K to 7.8K—excellent—no red on the monitors, everything humming—BEAUTIFUL. As the day progressed our models continued to build on time, merchant feeds processed, and Dews were consumed along with some turkey sandwiches. We stare, we watch, we wait… aww, we peaked at just under 8K—but hey wow, it looks like Bob Hope’s nose. I start humming “Thanks for the Memories”—it’s the weekend, let’s do it.

Saturday, college football, exhausted from Friday—we’re all resting, and so are most shoppers. We run at 4K RPS all day, a big flat plateau, but we’re still up 100%. We are still serving below 80ms—excellent. Sunday, we jump fast to 5.7K RPS and hold steady most of the day, a higher and wider plateau than Saturday.

Monday, back to the offices and back to shopping. Cyber Monday, NBC news sounds like they expect the internet to melt, CNN talks about fantastic expectations. We’re ready, no worries (gulp). It’s 5am PST, and it’s shopping time. We climb steeply to 7.8K RPS, hold there until about 1pm, and then start the slow trickle down. Ok folks, are you done shopping already, you sure? NO way—a second shopping session starts at 4pm PST peaking again at 7.5k—very cool. Finally, we’re done; Cyber Monday trails off at 10pm PST. *WHEW* We did it: 100% uptime and sub-70ms average response rates. BOOYAH!

While we didn’t beat the quick spurt of 10K tweets per second of Steve Jobs’ death, we beat Twitter’s records in other ways. For background, the tweet-per-second records are: Steve Jobs’ death at 10K, Beyonce’s pregnancy announcement at 8.8K, 2011 Woman’s World Cup Final USA versus Japan at 7.2K, and oh yea, 2011 Superbowl was only 4K (that’s soo last year—we did 5.5K last season). It’s also important to note these tweet spikes quickly dropped within less than an hour to well below half that, not sustained rates. By the way, Twitter’s sustained rate is held by Osama bin Laden’s death announcement at 3.5K tweets per second for two hours.

We spiked at 9.1K RPS (later, Beyonce!), had a sustained rate above 7.5K RPS for more than 2 hours (GOAAAAAAL Hope Solo!) and stayed above 5.5K for 7 hours straight. A final Twitter figure I saw today: they average 300M tweets a day. We served 340M requests that day—with that was 295M recommendation sets, with 2 recommendations per set on average we surpassed nearly 600M recs for the day.

I’m glowing again, but already thinking of what to do next year—scale up, build out, new pricing models, more power! Wash, rinse, repeat… here we go, 2012. We’re ready, bring it.

We invite you to take a moment to peruse these stories and re-acquaint yourself with the meaning of sharing, giving and relishing in all we for which we have to be thankful. We would even love to hear your stories, so if you want to join us in the holiday spirit please email your memories to us.

Read {rr} Favorite Holiday Memories

I recently joined the advisory board of these companies—teams of folks with a big vision, unwaveringly commitment to tackling huge problems and these visions are seeing success.

The first is blissmo, founded and led by Sundeep Ahuja (one of my Stanford classmates and a co-founder here at {rr}). blissmo creates consumer products which bring sustainability to a broad audience. They are leveraging social media and new sales methodologies being pioneered by Groupon, Woot! and BirchBox to reduce the complexity of choosing products that are good for you, your family and your world. Already blissmo’s revenue model is working and they are clearly hitting a sweet spot in terms of emerging demand: the right products, the right discovery and the right price. We’re even a customer at {rr}—as soon as we started testing in one of our offices it was such a hit that the other offices immediately asked to participate. Check them out at blissmo.com.

GoodChime, founded by the highly acclaimed physician and MBA, Sreedhar Potarazu, brings together the worlds of Twitter and Facebook with celebrities and healthy lifestyles. By enabling consumers to connect 1:1 with celebrities on the topics of health, fitness and nutrition, they are opening up a new way of motivating and supporting people who want to make themselves better—and that’s basically everybody. It’s the Shape! Magazine for the socially-connected, real-time personalized world. Celebrities struggle to find the right forum for connecting with their fans on topics that are meaningful, and this channel will be unparalleled in its transparency, personalization and engagement. They just launched yesterday at the TV Guide Hot List Event, featuring support from some little-known participants such as Matthew McConaughey, Bret Michaels, Isiah Thomas, Cal Ripken, Billie Jean King, Dara Torres, Gary Player, Alonzo Mourning, Kevin Love, Paul Pierce and Andrea Jaeger—and 100 other celebs! Check them out at GoodChime.com

I’m so excited because while there certainly are serious ills of the world to be addressed, Sundeep and Sreedhar are not letting their optimism be dampened—they see a wonderful future. I am humbled and proud to offer them whatever support I can provide. Like Steve Jobs, their vision drives their actions—their vision of a world filled with healthy people living happy, sustainable lives.

“Nearly half of shoppers who begin their search on retail sites make a purchase in the physical store, while 40% transact online. Pew Research found that 87% of college grads and 88% of those earning $75,000 or more each year head online to research products or services.

These numbers are a wake-up call. We[manufacturers] are used to thinking of retailers as fellow marketers who spend billions on Facebook, Google, and agencies. The truth is that they’re also premium publishers who are looking to partner with us to build distinctive brand experiences to influence shoppers and maximize sales conversion.” – Raj Rao, 3M Global Director for Digital Marketing & eCommerce

RichRelevance has been able to partner with 3M over the past year to develop some really innovative media programs which exemplify the ultimate win-win-win:
- The consumer: Gets great, thoughtful manufacturer content tailored and targeted just for them (see some great demos here).
- The retailer: Gets additional revenue which aligns with their interest of being in service to the shopper, and amplifies conversion.
- The brand/manufacturer: Reaches the right consumer at just the right time—when they want to engage with the message.

It goes without saying that the brands investing their media dollars in this opportunity are seeing great success. They’re also exposed to new ways to measure the success of these campaigns not previously available through standard display media. It’s been phenomenal partnering with some of the world’s largest brands to develop these solutions over the past year or so. These partnerships result in new observations such as Raj’s. We look forward to bringing more of these new learnings to you in the months ahead as more and more brands embrace the power of Shopping Media.

When done right, relevant product recommendations can deliver up to a 30 percent lift in conversion and sustain or even increase these levels over the long term.  Therefore, the multi-million dollar question for merchants (literally) is “What recommendations do I want to show? How do I do this?”  The most successful recommendation emulates the logic of a good salesperson by delivering the right product to a specific person for a specific situation.

Once upon a time recommendations were a manually slotted smorgasbord of products for any given item page. The typical presentation of accessories for a laptop computer was dozens of SKUs, with the thought that this shotgun blast of the “best” recommendations would eventually find its mark on the cart page. Obviously, this is a poor practice and online retailers were hungry for a more intelligent approach.

Fast forward a few years to the birth of the black box.  Simply plug in the box and watch the algorithms shape the recommendations. By using the “wisdom of the crowds,” these recommendations seemed more organic than the previous approach and resulted in recommendations that were more rich, relevant, and—from a user’s perspective—more reasonable.  Recommendations grew more specific, so that although the number of recommendations decreased, their stickiness increased.

However, human ingenuity persists and websites soon caught onto the idea of monetization, that is, contracting with Company XYZ to insert their products as recommendations for a fee. How does a pure behavioral recommendation account for this? It can’t.  A pure behavioral engine doesn’t care that you have an agreement with X. If the “wisdom of the crowds” says the best mouse is from Z – so be it.

Enter the introduction of rules. Advanced recommendation engines are able to filter recommendations by targeting attributes.  A rules-based engine can filter recommendations based on price, size, category or anything that identifies the SKU and is communicated to the engine. You want all mice to be from company X? Done. Filter products based on price? Done.

But all that is gold does not glitter. Rules have nuances as well. They can become too stringent or too loose, potentially filtering out compelling products or including everything but the kitchen sink. Often too, rules are based on the consistency of data and catalog format—two requirements that can be hard to come by in the IT world.

In the end, the most impactful recommendation technology is like a sales person who utilizes both qualitative and quantitative information when working with a customer – in this case, employing both behavioral information and rule aspects. The technology gathers behavioral data from the macro-shopping environment, what the person has purchased in the past, and compares that against any promotions. Just as a sales person follows procedures based on the latest retail initiatives, so does the recommendation engine by adhering to intelligent rules. Only then can a recommendation replicate the logic and intuition of a salesperson—a salesperson that never tires, never rests, and is always on its “A” game.

As a startup, or early in a product release, companies are focused on speed to market and getting ahead of the competition.  Costs are managed within reason, but don’t drive the business. As it matures, a company evaluates methods, creates processes and focus turns to the cost of services and efficiencies—of both people and systems.

But how do you move from a simple soft dollar (a $1M budget) to a measurable number that can be optimized—i.e. cost per transaction, cost per datacenter or cost per customer?  The first goal is to create measurements that identify value. For RichRelevance, a core measurement is our recommendation response time.  The core steps to reducing your COS begin with setting goals, identifying success metrics, surfacing all costs granularly and grabbing the low-hanging fruit.

Below are five best practices that we prioritize here at RichRelevance to optimize COS.

Make your vendors your partner. Put some skin in the game and turn suppliers into partners. Take the time to build trust and a strong relationship that will drive flexibility and mutual success. Negotiate your contracts as your needs change.  Your customers do this—why not manage your vendors the same way? Consolidate and reduce the number of similar suppliers. If the contract is small, you have minimal influence and the vendor can become hard to manage. Create an upside for your good supplier, allowing them to move their needle while they help you grow. Bring your vendor into your design meetings; they provide great insight on how to use their products efficiently while providing guidance on how others have conquered related challenges.

Improve your processes. This picture is said to be a roundabout sign at the College of Law in Bristol, England. It’s an example of bad process fomenting bad results. Sure, it addresses the majority of traffic; drivers want to get on the M32 motorway and get out of town. The exceptions are not as well documented and are the crux of the “bad process,” where the other drivers get lost and waste time. I picture the Griswolds circling the roundabout with Clark repeating “hey kids, there’s Big Ben.”  Thank you, Captain Obvious, how about we figure out how to get out of this?

The key is to work collaboratively across your company, not just within your team. Document current processes, especially those that are repeatable. Not only does this provide you an idea of what requirements and time it takes to complete a process, it also helps identify responsibilities and bottlenecks. Some ideas for getting started on this are providing documentation so others can perform faster and better; create a formal escalation document with phone numbers and responsibilities; review billing/purchasing practices to look for reductions in paperwork and human intervention.

Increase monitoring. At RichRelevance the Site Ops team engages closely with our development team and customers. We work with our developers at the design phase to identify the metrics that best demonstrate performance, be it server requests, data moved or sessions opened. Doing this at the beginning allows for a smooth transition as you release new features or patch existing ones.  Adding a metric after release can be onerous and resource-intensive, so do it early!  The devs get a test to use during development and you get better insight into your performance.  Engage your customer and encourage them to measure your service. Whether it’s just a service up/down or more extensive tests that includes transactional testing, you get an extra set of eyes watching your systems and your customer builds trust in the product.  The quality of the product is raised, calls go down and a savings is created. It’s an easy win for both of you.

Innovate. Stay on top of the latest use of technology. Review your technology constantly. Look for new and creative technology to flatten your costs of scaling and building.  RichRelevance has won awards for its use of innovative technology. We use SSDs to deliver lightning fast recommendations and ads; we utilize Hadoop to manage mountains of data (terabytes a day!); and, we review our technology constantly during design and release to make sure we are on top of the latest and best use of technology.

Prioritize capacity planning. This is one of the single highest costs in a growing company. Identifying correct measurements to scale efficiently is critical. This is where new monitors on your systems become critical. Load test and push your systems to know where they stretch, and where they break. Once you know those points, use your partners and your internal team to help solve those challenges.

Implementing these best practices does not deliver instant gratification. Beyond a quick contract renegotiation you may not see immediate savings. Many efficiencies and savings are incremental or create savings that won’t be fully realized for months.  You may see them build over time as you see a service’s costs go down or grow slower.  Or the savings may be intangible—such as an hour you’ve handed back to a team through better process, which is an hour that can now used to build something new, better support a customer or fix something in the bug tracking backlog.

Hopefully we’ve provided you with some ideas on where you can reduce costs, create efficiencies and make the pointy haired boss happy, at least for a couple hours. This process has frustrations but is very rewarding when complete. Sure you save costs, but you will also drive innovation, thoughtful design and collaboration—all things that create a rewarding environment, personal challenge and a great company to work for, like we have here at RichRelevance!