Aberdeen Group Retail Ecommerce Search PDF

Retail E-Commerce Search
Accuracy, Relevancy and Profitability in the Age of Consumer Choice

October 2010
Greg Belkin

Retail E-Commerce Search: Accuracy, Relevancy and Profitability in the Age of
Consumer Choice
Page 2

2010 Aberdeen Group. Telephone: 617 854 5200
Executive Summary
Research Benchmark
Aberdeens Research
Benchmarks provide an
in-depth and comprehensive
look into process, procedure,
methodologies, and
technologies with best practice
identification and actionable
recommendations
Aberdeen surveyed over 100 retailers (94 responses were used in the final
analysis) between September and October 2010 to better understand how
these organizations are using site search to increase customer relevancy,
marketing and merchandising accuracy. Our results indicate that slightly
over half of all Best-in-Class retailers - the top 20% of respondent
performers - are personalizing search results based on unique customer or
customer segment purchase history. The impetus for a more personalized
search experience comes directly from the desire to rapidly respond to
customer affinities (60%). The purpose of this benchmark is to examine how
top retailers are dynamically improving site search to not only provide
relevant and organized product results, but to do so in a manner that
increases marketing campaign effectiveness and converts additional sales
opportunities.
Best-in-Class Performance
Aberdeen used the following three key performance criteria to distinguish
Best-in-Class companies:
Increased year-over-year average order value: 20% (compared to
8% of Industry Average, and -5% for Laggard retailers)
Current net profit margin: 15% (compared to 5% of Industry
Average, and 3% for Laggard retailers)
Current average online conversion rate: 6% (compared to 4% of
Industry Average, and 1% for Laggard retailers)
Competitive Maturity Assessment
Survey results show that the firms enjoying Best-in-Class performance
shared several common characteristics, including:
Seventy-three percent (73%) of Best-in-Class retailers have
dedicated internal resources focused on search display accuracy
Forty-seven percent (47%) of Best-in-Class retailers have dedicated
analytics resources to leveraging search merchandising campaign
results
Required Actions
Coordinate search and merchandising strategy to increase cross-sell
and up-sell revenue drivers
Address consumer-facing ease-of-use challenges to make search
easier and more successful
Define search result performance metrics for measuring result
effectiveness
www.aberdeen.com Fax: 617 723 7897
Consumer Choice
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Table of Contents
Executive Summary....................................................................................................... 2
Best-in-Class Performance..................................................................................... 2
Competitive Maturity Assessment....................................................................... 2
Required Actions...................................................................................................... 2
Chapter One: Benchmarking the Best-in-Class.................................................... 4
Business Context ..................................................................................................... 4
Retailers and Consumers Alike Have High Expectations for Site Search .. 4
The Maturity Class Framework............................................................................ 6
The Best-in-Class PACE Model ............................................................................ 7
Top Actions: Online Retailers Connect the Dots between Search and
Merchandising ........................................................................................................... 8
Chapter Two: Benchmarking Requirements for Success.................................11
Competitive Assessment......................................................................................12
Capabilities and Enablers......................................................................................13
Chapter Three: Required Actions .........................................................................20
Laggard Steps to Success......................................................................................20
Industry Average Steps to Success ....................................................................20
Best-in-Class Steps to Success............................................................................21
Appendix A: Research Methodology.....................................................................23
Appendix B: Related Aberdeen Research............................................................25
Figures
Figure 1: Top Pressures Driving Site Search Optimization................................. 4
Figure 2: Top Actions Driving Site Search Optimization..................................... 8
Figure 3: Best-in-Class Process Capabilities .........................................................14
Figure 4: Organizational Time Dedicated to Search Management ..................15
Figure 5: Best-in-Class Knowledge Management Capabilities ..........................16
Figure 6: Top Search Management Enablers.........................................................17
Figure 7: Best-in-Class Performance Management Capabilities .......................18
Figure 8: SaaS Utilization for E-Commerce...........................................................19
Tables
Table 1: Top Performers Earn Best-in-Class Status.............................................. 7
Table 2: The Best-in-Class PACE Framework ....................................................... 7
Table 3: Top Search Management Key Performance Indicators......................10
Table 4: The Competitive Framework...................................................................12
Table 5: The PACE Framework Key ......................................................................24
Table 6: The Competitive Framework Key ..........................................................24
Table 7: The Relationship Between PACE and the Competitive Framework
.........................................................................................................................................24
Consumer Choice
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Chapter One:
Benchmarking the Best-in-Class
Business Context
Fast Facts
53% of Best-in-Class
retailers are personalizing
search results based on
unique customer or
customer segment purchase
history (compared to 44% of
Industry Average retailers,
and 15% of Laggard retailers)
retailers are providing
increased search result
variability control to
consumers (compared to
28% of Industry Average
retailers, and 25% of Laggard
retailers)

Aberdeen surveyed over 100 retailers (94 responses were used in the final
analysis) between September and October 2010 to better understand how
these organizations are using site search to increase customer relevancy,
marketing and merchandising accuracy. Our results indicate that slightly over
half of all Best-in-Class retailers - the top 20% of respondent performers - are
personalizing search results based on unique customer or customer segment
purchase history. Additionally, 40% of Best-in-Class retailers are providing
increased search result variability control to consumers. The impetus for a
more personalized and consumer-controlled search experience comes
directly from the desire to rapidly respond to customer affinities (60%), and
establish a seamless consumer shopping experience (47%). This benchmark
report will examine how top retailers are dynamically improving site search
to not only provide relevant and organized product results, but to do so in a
manner that increases marketing campaign effectiveness and converts
additional sales opportunities.
Retailers and Consumers Alike Have High Expectations
for Site Search
The push toward a more user-friendly, accurate, and profitable site search
experience could not be timelier. Slow growth in online consumer spend,
along with the rise of cross-channel shopping alternatives, has put added
pressure on retailers to streamline their e-commerce sites both in terms of
navigational ease of use and relevancy of products offered. One of the key
areas this organizational imperative is being taken to is the consumer-driven
product research process. In fact, 60% of top retailers are revamping their
site search tools to address rapidly shifting customer affinities (Figure 1).
Figure 1: Top Pressures Driving Site Search Optimization
Retail E-Commerce Search
Defined
Aberdeen defines advanced
online search as the means to
1) deliver highly personalized,
effective, and accurate
product promotions to
customers, 2) provide relevant
cross-sell and up-sell
opportunities for
complimentary products, and
3) make search easy to use for
both the retailer and
consumer.

20%
20%
36%
41%
47%
60%
0% 10% 20% 30% 40% 50% 60% 70%
Customer
expectations:
seamless shopping
experience
Rapidly shifting
customer affinities
Laggard Average Best-in-Class
20%
20%
36%
41%
47%
60%
0% 10% 20% 30% 40% 50% 60% 70%
Customer
expectations:
seamless shopping
experience
Rapidly shifting
customer affinities

Source: Aberdeen Group, October 2010
Consumer Choice
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Aberdeen Insights -- Laggard
Pressures
According to Aberdeen data,
Laggard retailers have identified
three top pressures:
Increased competitive
promotional outreach (35%
of Laggards)
Shorter attention span from
customers (30% of Laggards)
Potential cross-sells and up-
sells not associated with
primary products (25% of
Laggards)
This finding is consistent with Aberdeen's September 2009 E-Commerce
Merchandising benchmark report, which indicated that one of the top
business pressures driving retailers to address and improve their e-
commerce functionality is the advent and growth of increased customer
research prior to purchase. The challenge for retailers is to take search
beyond its traditional use as a tool for product location, and leverage it as a
key customer touch point from which the consumer and the retailer can
benefit. These benefits can include a fast and easy research process for the
consumer, and a profitable, market-responsive process for the retailer. To
get there, however, site search must achieve certain benchmarks. From the
consumer's perspective, it must offer:
1. Flexibility. Sixty-nine percent (69%) of Best-in-Class retailers are
organizing site navigation and search taxonomy to include product
details and related keywords in URLs, titles, headings and other
locations to make searches easier to adjust. Indeed, products must be
easy to locate, not only from an initial search, but from a result
aggregation process as well. A search result for cell phone accessories,
for example, might return holsters, skins, chargers, and other relevant
items. Consumers must be able to further narrow these results not only
by direct categories such as type of accessory, but by indirect options,
such as color, size, price, etc.
2. Product suggestions. From the retail perspective, cross-selling and
up-selling can easily be viewed as a function of additional revenue.
Indeed, 80% of Best-in-Class retailers are documenting and quantifying
their cross-sell and up-sell success rates in order to ensure accuracy.
From the consumer's perspective, however, product suggestions are
often an absolute necessity to achieve full satisfaction with the original
purchase product. Batteries, for example, may be a necessity for an
electronic item. Similarly, paper and ink may be required consumer up-
sells for printers and fax machines. Whatever the situation, cross-sells
and up-sells are an important consumer tool that is often required for
an overall satisfactory experience.
"We see successful site search
as the fulfillment of two goals:
help the consumer find
products quicker, and help us
move inventory as new
affinities present themselves in
the market."
~ VP of IT,
US-based Consumer
Electronics retailer
3. Relevancy. Forty-seven percent (47%) of top retailers are pressured
by customer demands for a seamless shopping experience. Part of that
seamless experience comes from the immediate identification of
relevant product search suggestions. Search results must offer products
that directly match customer affinities. Affinity data can be collected
from multiple sources, including loyalty programs, consumer site
behavior, and stated interests. Whatever the source may be, however,
this information should be utilized to provide results that directly match
interests, and also to screen out irrelevant product suggestions.
Effective search management must also satisfy a retailer's particular needs.
From this perspective, it must provide:
1. Revenue and margin. Site search needs to be profitable. Profitability
can be achieved in a number of ways, including accurate product
Consumer Choice
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discovery for consumers, as well as additional product cross-selling and
up-selling opportunities.
2. Marketing aid. Consumer search data can be used not only to provide
product and service results, but can also be used as a forum to promote
key marketing initiatives. Thirty-eight percent (38%) of Best-in-Class
retailers, for example, are coordinating marketing campaigns with site
search results. A search for MP3 players, for example, can provide
consumers with the opportunity to join music clubs or inform them of
upcoming related campaigns.
3. Flexibility. Similar to consumers, retailers need the ability to make
search results flexible. Product over-or under-stock limitations, for
example, require retailers the flexibility to increase or decrease search
result rankings. In fact, almost a third (27%) of the Best-in-Class
indicated that they are utilizing search to decrease excess inventory. As
long as the rankings do not interfere with the natural flow of a
consumer's affinity-based search, this flexibility can help retailers move
products in a fast and efficient manner, while also making sure
consumers are able to ultimately receive the product they intend to
purchase.
One retailer who has been mindful of the consumer / retailer balance that
exists within site search is Coldwater Creek. This retailer, a provider of
woman's apparel, jewelry, gifts, and other merchandise, has recognized that
search needs to be intuitive for both their end-users, and their internal
organization. On the consumer side, natural language processing allows for
multi-variable search inputs, such as "red sweaters under $100." Conversely,
internal Coldwater Creek staff have the ability to adjust rankings based on
product availability. Overall benefits for Coldwater Creek include increased
web conversions, and decreased customer service costs resulting from
consumer's adopting a "self-service" approach to the retailer's site search.
The Maturity Class Framework
"When it comes to truck parts
and accessories, consumers do
a lot of research before they
complete a transaction. Its
important to recognize this as a
reality, and make the process
as easy, straightforward and
relevant as possible. Its better
for the consumer and it leads
to increased profitability and
customer loyalty for us as the
retailer."
~ Chris Casarez,
Head of SEO,
TransAmerican Autoparts
Aberdeen used three key performance criteria to distinguish the Best-in-
Class from Industry Average and Laggard organizations:
Year-over-year average order value is defined as the average
value in dollars of a consumer's completed order
Current average online conversion rate is defined as the
percentage of website visitors that complete a checkout /
transaction online
Current net profit margin is defined as the average percent
profit on a consumer's transaction
The maturity class has been developed via the weighted average of retail
performance within these key metrics. Table 1 provides a framework with
which companies can benchmark the effectiveness of their retail site search
optimization initiative.
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Table 1: Top Performers Earn Best-in-Class Status
Definition of Maturity
Class
Mean Class Performance
Best-in-Class:
Top 20%
of aggregate
performance scorers
Increased year-over-year average order value:
20%
Current average online conversion rate: 6%
Current net profit margin: 15%
Industry Average:
Middle 50%
of aggregate
performance scorers
Increased year-over-year average order value:
8%
Laggard:
Bottom 30%
of aggregate
performance scorers
Decreased year-over-year average order value:
(5%)
The Best-in-Class PACE Model
Table 2 shows the current retail business Pressures, Actions, Capabilities,
and Enablers (PACE) prioritized by Best-in-Class companies for the use and
application of commerce search marketing tools in various market
conditions. The PACE model, when applied, can enable companies of the
Industry Average and Laggard maturity class to identify the best practices
and fill gaps in the use of critical processes, knowledge, organizational, and
performance management capabilities and enablers that are being
considered part of the Best-in-Class repertoire for the use of rightly
relevant e-commerce search strategies.
Table 2: The Best-in-Class PACE Framework
Pressures Actions Capabilities Enablers
Rapidly shifting
customer
affinities
Expose customer
to high-margin
products in search
result
Provide increased
search result
variability control
to consumers
(segmentation by
category, brand,
gender, etc.)
Process for quantifying successful
cross-sells and up-sells resulting
from search merchandising
Training requirements for all
relevant marketing staff regarding
best-practice site search
management
Defined performance metrics for
measuring search result
effectiveness
Analytics resources dedicated to
leveraging search merchandising
campaign results
Social Media/User Generated
Content Search
Web Analytics Tools
Search as You Type
Mixed media search
Relevance ranking and override
Faceted Navigation (segmentation)
Natural Language Processing
Consumer Choice
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Top Actions: Online Retailers Connect the Dots
between Search and Merchandising
According to Aberdeen data, 53% of Best-in-Class retailers are personalizing
search results based on unique customer or customer segment purchase
history (compared to 44% of Industry Average retailers, and 15% of Laggard
retailers). Personalization allows specific marketing, merchandising, and
product up-sell efforts to be presented to consumers based directly on their
changing affinities. Additionally, 40% of Best-in-Class retailers are providing
increased search result variability control to consumers (segmentation by
category, brand, gender, etc.).
Figure 2: Top Actions Driving Site Search Optimization
13%
20%
27%
40%
53%
0% 10% 20% 30% 40% 50% 60%
Allocate additional internal staff dedicated to
search management
Outsource search management
Coordinate search strategy with marketing
campaigns
Provide increased search result variability
control to consumers
Personalize search results
13%
20%
27%
40%
53%
0% 10% 20% 30% 40% 50% 60%
Allocate additional internal staff dedicated to
search management
Outsource search management
Coordinate search strategy with marketing
campaigns
Provide increased search result variability
control to consumers
Personalize search results
Personalizing search results with customer search behavior gives retailers an
advantage when it comes to the merchandising and marketing/sales process.
Retailers can use both consumer history and on-site behavior to offer very
specific products and services, creating a unified "searchandising" strategy.
Searchandising is composed of two crucial steps:
Organize search results. To a great extent, searchandising begins
with the way that search results are organized and displayed to
consumers after an initial search query. Historic challenges are that
search tools provide too many responses, forcing users to wade
through lines of products and/or data to find relevant information
or not enough responses leaving them wanting more. To combat
these challenges, a faceted search taxonomy is available that
segregates query matches by attributes. These attributes can include
categories such as price, brand, gender, color, style, or any number
of combinations depending on the product. The benefit is that
consumers can refine their search based on information specific to
their needs without sifting through a multitude of results.
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Apply consumer data. The next step in the searchandising
process is to apply the collective knowledge gained from multiple
search inquiries and resulting click-through activity to merchandise
based on existing behavior. This behavior includes not only keyword
search information, but personalized data relevant to the consumer
based on demographics, and, if available, purchase history. In order
to make this a possibility, a layer of web intelligence is necessary to
translate this type of data into actionable cross-sell and up-sell
information. In fact, according to Aberdeens July, 2010 E-Commerce
Analytics, report, 83% of Best-in-Class e-commerce retailers are
using business intelligence / web intelligence tools to improve their
customers online experience. Indeed, the more actionable
information a retailer collects and analyzes regarding its site search
data, the more success they will have in improving the relevancy of
product or service offerings, which is the key goal of the
searchandising process.
One retailer that has focused very heavily on the searchandising process is
dabs.com. Dabs.com is a UK-based online retailer of IT and technology
products (as of 2006, they became a wholly owned subsidiary of British
Telecom). Dabs challenge was to re-create their entire e-commerce
storefront to be more user friendly, and cater to a consumer that tends to
do a lot of product specification research before completing a purchase.
Part of the answer to this challenge was increased consumer-facing guided
navigation flexibility that analyzed search patterns, and offered specific
product solutions based specifically on how this search challenge was
conducted. As a result of integrating this merchandising strategy with
existing search, Dabs saw a 60% increase in their conversion rates, and a
33% increase in revenue.
Aberdeen Insights Customer Retention Top KPIs for Search
Management
Best-in-Class retailers are taking a multi-pronged approach to measuring
search result effectiveness. Sixty-nine percent (69%) of these top retailers
consider customer retention to be the top KPI in terms of search
initiative success, followed by a number of users using a site search tool
(64%), speed of results (57%), and first page positive cross-sell/up-sell
results (54%). Less than a 7% delta exists between those four top results,
This demonstrates that speed, utilization, and the ability to retain
customers with successful cross-selling are important hallmarks for
search tool success.
continued

Consumer Choice
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Aberdeen Insights Customer Retention Top KPIs for Search
Management
Table 3: Top Search Management Key Performance Indicators
Best-in-Class Industry
Average
Laggard
Customer retention 69% 65% 43%
Number of visitors using
site search tool
64% 29% 7%
Speed of results 57% 35% 21%
First page positive cross-
sell/up-sell results
54% 29% 17%
Average order value 40% 37% 11%
Percent sales lift 40% 37% 19%
Site volume 29% 33% 15%

Consumer Choice
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Chapter Two:
Benchmarking Requirements for Success
Best-in-Class e-commerce retailers are turning to advanced online search
for increased marketing and merchandising accuracy so that customers are
able to locate the right product at the right place and time. Take, for
example, TransAmerican Autoparts. TransAmerican Autoparts embraced
internal site search optimization to 1) make products more visible to
customers; 2) make the process of managing search easier for employees;
and 3) increase the utilization of analytical consumer data to establish high
degrees of search-based flexibility and relevancy.
Case Study Transamerican Auto Parts
Transamerican Auto Parts (http://www.4wheelparts.com) is a multi-
channel truck accessories retailer based in Los Angeles, California. The
organization is the parent company of Transamerican Auto Parts
Wholesale, Pro Comp USA, Jeep Top Depot, 4Wheel Drive Hardware,
and other online and brick-and-mortar auto accessory sources. The
organization sells primarily to consumers, although they also sell to
dealers and manufacturers.
Between 2007 and 2010, Transamerican Auto Parts recognized the need
to overhaul their online e-commerce presence. The retailer sought to
improve navigation, ease of use, and the ability to quickly and easily
search for relevant products on each e-commerce site. After initially
addressing the navigational challenges, Transamerican Auto Parts turned
their attention to site search. Project requirements included support for:
Advanced search parameter customization
The ability to merchandise products based on search behavior
Easy integration with different sources of consumer data
"Our project goal was to drive customers to products based on what we
know about their interests and affinities," commented Chris Casarez,
Lead SEO Specialist for Transamerican Auto Parts. "Given that we have
multiple sales channels, this process needed to be easy to use internally
and centralized from a single location for increased manageability."
After a short implementation period, Transamerican Auto Parts noted a
facilitated site search process that provided the organization with several
benefits, including:
A 28% year-to-date increase in search-related conversions
A 35% year-to-date increase in internal search-related revenue
continued
Fast Facts
retailers have established a
process for quantifying
successful cross-sells and up-
sells resulting from search
merchandising (compared to
retailers, and 5% of Laggard
retailers)
retailers have dedicated
analytics resources to
leveraging search
merchandising campaign
results (compared to 44% of
Industry Average retailers,
and 17% of Laggard retailers)

Consumer Choice
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Case Study Transamerican Auto Parts
"When it comes to truck parts and accessories, consumers do a lot of
research before they complete a transaction. It's important to recognize
this as a reality and make the process as easy, straightforward, and
relevant as possible," commented Casarez. "It's better for the consumer
and it leads to increased profitability and customer loyalty for us as the
retailer."
Competitive Assessment
Aberdeen Group analyzed the aggregated metrics of surveyed companies to
determine whether their performance ranked as Best-in-Class, Industry
Average, or Laggard. In addition to having common performance levels, each
class also shared characteristics in five key categories: (1) process (the
approaches they take to execute daily operations); (2) organization
(corporate focus and collaboration among stakeholders); (3) knowledge
management (contextualizing data and exposing it to key stakeholders);
(4) technology (the selection of the appropriate tools and the effective
deployment of those tools); and (5) performance management (the
ability of the organization to measure its results to improve its business).
These characteristics (identified in Table 4) serve as a guideline for best
practices, and correlate directly with Best-in-Class performance across the
key metrics.
Table 4: The Competitive Framework
Best-in-Class Average Laggards
Process for quantifying successful cross-sells and up-sells
resulting from search merchandising:
80% 35% 5%
Process for disseminating results from search merchandise
campaigns to key decision-makers:
Process
73% 46% 5%
Dedicated internal resources focused on search display
accuracy:
73% 62% 32%
Training requirements for all relevant staff regarding best-
practice site search management:
Organization
71% 41% 6%
Regular monitoring of customer satisfaction rates:
67% 53% 33%
Mechanism in place for capturing customer experience data:
Knowledge
67% 46% 33%
Consumer Choice
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Best-in-Class Average Laggards
Listed below are the technology tools/applications that support
retail e-commerce search:
Technology
Social Media/User
Generated
Content Search
(80%)
Web Analytics
Tools (73%)
Search as You
Type (73%)
Mixed media
search (73%)
Relevance ranking
and override
(71%)
Faceted
Navigation
(segmentation)
(67%)
Natural Language
Processing (67%)
Social Media/User
Generated
Content Search
(32%)
Web Analytics
Tools (55%)
Search as You
Type (26%)
Mixed media
search (30%)
Relevance ranking
and override
(49%)
Faceted
Navigation
(segmentation)
(42%)
Natural Language
Processing (33%)
Social Media/User
Generated
Content Search
(22%)
Web Analytics
Tools (50%)
Search as You
Type (12%)
Mixed media
search (17%)
Relevance ranking
and override
(6%)
Faceted
Navigation
(segmentation)
(17%)
Natural Language
Processing (5%)
Marketing, merchandising, and sales executives meet regularly
to ascertain success of search merchandising campaigns:
60% 53% 17%
Analytics resources dedicated to leveraging search
merchandising campaign results:
Performance
47% 44% 17%
Capabilities and Enablers
"Analytics is a key ingredient of
good site search management.
You really cannot personalize
search results without
consumer or demographic data
to help you. Before we redid
our search processes, we
invested in consumer site
behavior data collection
processes."
~ US-based Electronics retailer
The following sections show the key process, organization, knowledge,
technology, and performance management capabilities that Best-in-Class
companies possess and utilize for cutting-edge enterprise site search
management optimization and associated strategies.
Process
According to Aberdeen data, 73% of Best-in-Class retailers have established
a process for disseminating results from search merchandise campaigns to
key decision-makers (Figure 3). At first glance, merchandising and marketing
executives are likely to be the predominant stakeholders for receiving
search campaign result information, as they are ultimately responsible for
determining such details such as length of a promotion, target end-user,
related campaign products, outreach specifics, and other related variables.
However, many other parts of an organization can benefit from increased
visibility into search merchandising efforts as well. For example:
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Supply chain managers can benefit from exposure to cross-sell
and up-sell success rates, as they can plan for increased product
demand and proactively move inventory to cover need. Similarly,
retailers such as Coldwater Creek can also provide valuable
feedback as to which related products are currently over- or under-
stocked, and would benefit from a change in search result relevancy
rankings.
Store-level executives can benefit by providing consumers with
potential alternatives for out-of-stock products or related items.
Additionally, buying trend insights gleaned from successful cross-sell
and up-sell strategies online may help them provide more accurate
and relevant initial suggestions for consumers inside the physical
store.
Customer service executives can benefit by an increased
understanding into specific consumer affinities and buying pattern
trends. When consumers call for assistance, consumer service
representatives use this information to cross-sell and up-sell over
the phone, as well as provide alternatives for a product return
request.
Figure 3: Best-in-Class Process Capabilities
32%
25%
73%
80%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Process for
disseminating search
merchandise
campaigns to key
decision-makers
Process for
quantifying
successful cross-
sells and up-sells
All Others Best-in-Class
32%
25%
73%
80%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Process for
disseminating search
merchandise
campaigns to key
decision-makers
Process for
quantifying
successful cross-
sells and up-sells
All Others Best-in-Class

Providing search campaign effectiveness information to key executives can
be done in several different ways. An internal dashboard, for example, may
allow immediate access to campaign information. Additionally, many e-
commerce vendors provide role-based accessibility into their platform
management tools, which may allow for dedicated and specific views of
successful promotional search campaigns. (Seventy-seven percent [77%] of
Best-in-Class retailers manage their site search from within their e-
commerce platform).
One retailer that has prioritized sharing of search optimization data
internally is TruServ, a retail conglomerate of 6,100 independent retail
hardware organizations operating under such names as True Value, Grand
Consumer Choice
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Rental Station, and Taylor Rental. To facilitate the sharing of search data,
the organization established an order processing data source on its intranet.
The source coordinates a 65,000 SKU product catalog, which helps feed
data to both consumers in the form of search results, but also to employees
in the form of cross-sell and up-sell campaigns. Additionally, supply chain
availability data is integrated into this source, allowing for increased
customer service and visibility.
Organization
According to Aberdeen data, 73% of Best-in-Class retailers have established
dedicated internal resources focused on search display accuracy, compared
to 62% for Industry Average and 32% for Laggard retailers. This is not
surprising, given that 79% of Best-in-Class retailers are making moderate or
extensive customizations to their search technology on an ongoing basis.
What is surprising, however, is that 53% of Best-in-Class retailers spend just
one to four hours per week managing search result campaigns, compared
with 28% for all others (Figure 4). This result shows that, despite moderate
or extensive changes to their search merchandising campaigns, Best-in-Class
retailers require less time to manage the process from a human resource
perspective. In fact, Best-in-Class retailers spend an average of 5.2 hours per
week managing search, compared to 6.5 hours average for all other
retailers. While there is just a 1.3 average hour gap between these two
numbers, this delta translates to an additional productivity gain of over two
weeks in a given year.
Figure 4: Organizational Time Dedicated to Search Management
10%
17%
28%
7%
33%
53%
0% 10% 20% 30% 40% 50% 60%
11 to 20 hours per
week
5 to 10 hours per
week
1 to 4 hours per
week
Others Best-in-Class
10%
17%
28%
7%
33%
53%
0% 10% 20% 30% 40% 50% 60%
11 to 20 hours per
week
5 to 10 hours per
week
1 to 4 hours per
week

Knowledge Management
According to Aberdeen data, 67% of Best-in-Class retailers are monitoring
customer satisfaction rates (Figure 5). These rates are the ultimate identifier
for how well a customer-facing initiative is performing. The challenge with
determining customer experience, however, is identifying how the search
Consumer Choice
Page 16

process, specifically, affects a customer's satisfaction level. To localize
customer satisfaction to search management, two thirds of Best-in-Class
retailers are putting mechanisms in place during the search process to
capture and analyze customer experience data.
As it related to search, customer experience data can be collected in a
number of different ways:
Initial search behavior. Specific words and related customer
behavior used during the initial search process can yield important
clues as to whether they are likely to be successful with their
experience. Retailers can capture customer experience data that
identifies the main product search phrase, and whether the
consumer is conducting a repeat search.
Result management. Once the consumer receives the results
from their search, follow-up behavioral data continues to qualify and
quantify the overall experience. Retailers can capture the rate at
which specific search results are viewed, and how many of these
products end up in the consumer's online shopping basket.
Purchase completion. After the search process is completed,
retailers can track how many search-related products are actually
purchased.
Figure 5: Best-in-Class Knowledge Management Capabilities
46%
42%
67%
67%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Regular monitoring of
customer satisfaction
rates
Mechanism in place
for capturing
customer experience
data
46%
42%
67%
67%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Regular monitoring of
customer satisfaction
rates
Mechanism in place
for capturing
customer experience
data

Technology
According to Aberdeen data, Best-in-Class retailers are keenly aware that
effective site search goes beyond simple text, product tags, and keywords.
In fact, 80% percent of these retailers are embracing social media/user-
generated content search-based technology tools (Figure 6). Additionally,
73% of Best-in-Class retailers have implemented mixed media search
technologies, which include podcasting, videos, and audio. The primary
advantage of this model is that it exposes consumers to not only specific
products and services, but also to social opinions or a multimedia
demonstration that may further encourage a conversion.
Consumer Choice
Page 17

According to Aberdeen data, 71% of Best-in-Class retailers are also
implementing search relevancy rankings and override functionality. These
tools help retailers to adjust the frequency of a particular result within a
specific search. This can be particularly beneficial for when there are supply
chain related exceptions, such as product over- or under-stocks. Relevancy
rankings allow retailers to increase the condition and number of times a
result is displayed, increasing or decreasing likely sales. Relevancy rankings
can also be helpful during a particular product marketing promotion,
allowing increased consumer face time under a pre-defined set of variables.
The third major area of focus online retailers are making on the technology
side of search is ease of use. Seventy-three percent (73%) of Best-in-Class
retailers are investing in search as you type. Additionally, 67% of these same
top retailers are investing in natural language processing. Both of these
technology enablers focus on making the search process as easy and as
straightforward for consumers as possible. Search as you type brings results
to consumers even before submitting their final results, allowing them to
edit and make changes to their requests as they go. Similarly, natural
language processing addresses the fact that consumers express themselves
in different ways, and looks for the common denominator in these
expressions to make search results meaningful and accurate.
Figure 6: Top Search Management Enablers
24%
28%
35%
22%
25%
54%
29%
67%
67%
71%
73%
73%
73%
80%
0% 10%20%30%40%50%60%70%80%90%
Rules Based Results
Relevance Ranking &
Relevance Ranking Override
Search as You Type
Mixed Media Search (text,
thumbnails, video, wav files)
Web Analytics Tools
Social Media/User
Generated Content Search
24%
28%
35%
22%
25%
54%
29%
67%
67%
71%
73%
73%
73%
80%
0% 10%20%30%40%50%60%70%80%90%
Rules Based Results
Relevance Ranking &
Relevance Ranking Override
Search as You Type
Mixed Media Search (text,
thumbnails, video, wav files)
Web Analytics Tools
Social Media/User
Generated Content Search

Performance Management
According to Aberdeen data, nearly half of all Best-in-Class retailers are
dedicating analytics resources to leveraging search merchandising campaign
results (47%) [Figure 7]. This is a similar finding to Aberdeen's February
2010 Retail E-Commerce Analytics benchmark report, which found that 50% of
Consumer Choice
Page 18

Best-in-Class retailers are aligning site data analysis with overall business
objectives. Search merchandising campaign results provide valuable
consumer and business insight, including:
Which products can be successfully cross-sold or up-sold with
other products
How customer affinities are changing within a particular time
period, population segment, or location
How site real estate adjustments effect sales rates
With the help of BI applications, this data can be translated into actionable
data for executives throughout the enterprise.
Analytical data derived from site search can also be used to improve future
search campaigns. Fifty-six percent (56%) of Best-in-Class retailers indicated
they are utilizing customer search analytics to re-adjust search results
automatically. An additional 44% of these top retailers are adjusting search
results manually based on automated analytics reporting. Conversely, 37% of
Laggard organizations indicated manipulating site search results on "gut feel."
Figure 7: Best-in-Class Performance Management Capabilities
Search results adjusted automatically
Search results adjusted
manually based on automated analytics
manually based on gut feel
37%
32%
32%
17%
44%
39%
0%
44%
56%
0% 10% 20% 30% 40% 50% 60%
Search results adjusted automatically
manually based on automated analytics
manually based on gut feel
37%
32%
32%
17%
44%
39%
0%
44%
56%
0% 10% 20% 30% 40% 50% 60%

Aberdeen Insights SaaS Remains Pervasive
Within E-Commerce
According to Aberdeen data, 50% of retailers currently use a SaaS-based
solution for some or all of their online commerce initiatives, and are open
to additional SaaS purchases (Figure 8). This finding represents a significant
uptick from the August 2009 E-Commerce Merchandising benchmark report,
which found that 20% of Best-in-Class respondents were using SaaS within
their e-commerce operations. Indeed, SaaS can be an effective tool to
combat rising costs and ongoing maintenance of on-premise solutions.
continued

Consumer Choice
Page 19

Aberdeen Insights SaaS Remains Pervasive
Within E-Commerce
Given the high frequency of search campaign adjustments (79% of Best-in-
Class retailers are making moderate or extensive customizations to their
search technology on an ongoing basis), SaaS may be a particular benefit
for e-commerce search managers. SaaS solutions can provide these
executives with an on-demand (usually web-based) interface, accessible
from multiple locations. SaaS solutions also remove the data processing
requirements associated with rapid and frequent customizations that may
exist in an on-premise solution.
Despite the upward trend in SaaS adoptions, however, challenges remain
when it comes to industry-wide adoption. Thirty-one percent (31%) of
Best-in-Class respondents currently use an on-premise model for their
online commerce initiatives, and are not interested in SaaS at this time.
These finding shows that while those who use SaaS are open to additional
investment; those who do not are having trouble finding the justification to
embrace on-demand commerce solutions. One concern that may exist
from a search perspective is SaaS' potential inability to rapidly adjust
software settings to rapidly changing result rules based on consumer
interaction. Supporters of SaaS-based e-commerce must therefore help
these retailers address these issues and look beyond their own
organization for justification, and increase the number of market-facing
success stories in terms of successful SaaS adoption.
Figure 8: SaaS Utilization for E-Commerce
25%
30%
15%
16%
32%
39%
13%
31%
50%
0% 10% 20% 30% 40% 50% 60%
Currently use SaaS,
not open to additional
SaaS purchases
Currently use on-
premise model, not
interested in SaaS at
this time
Currently use a SaaS,
open to additional
SaaS purchases.
25%
30%
15%
16%
32%
39%
13%
31%
50%
0% 10% 20% 30% 40% 50% 60%
Currently use SaaS,
not open to additional
SaaS purchases
Currently use on-
premise model, not
interested in SaaS at
this time
Currently use a SaaS,
open to additional
SaaS purchases.
Best-in-Class Best-in-Class Average Average Laggard Laggard


Consumer Choice
Page 20

Chapter Three:
Required Actions
Fast Facts
retailers have yet to establish
training requirements for
best-practice site search
management
retailers measure the
success of their search
management program on an
ad hoc basis

Whether a company is trying to move its performance in site search
optimization from Laggard to Industry Average, or Industry Average to
Best-in-Class, the following actions will help spur the necessary performance
improvements:
Laggard Steps to Success
Coordinate search and merchandising strategy to increase
cross-sell and up-sell revenue drivers. According to Aberdeen
data, 63% of Laggard retailers have yet to coordinate internal search
and merchandising resources. Given the increased reliance on
product research, Laggard retailers can benefit from this trend by
not only focusing on search accuracy, but by cross-selling and up-
selling related products that both drive revenue and increase
customer satisfaction. To accomplish this task, however, resources
need to be coordinated internally for effective execution. The
coordination may include regular meetings of e-commerce, and
marketing and merchandising staff as well as the sharing of a single
product database to coordinate search merchandising efforts.
Embrace consumer analytics for a more accurate, relevant,
and consumer-oriented search result. According to Aberdeen
data, just 17% of Laggard respondents are dedicating analytics
resources to strengthen search merchandising efforts. Analytical
data can provide a retailer with valuable insight into a consumer's
buying patterns. Additionally, this data can be collected in a number
of different ways, including site behavior, buying behavior from
other channels, response to marketing collateral, etc. This
information, when aggregated, allows search results to return highly
relevant results that mirror this behavior, increasing conversion
potential. Laggard retailers should begin this process by identifying
high-priority customer interaction points, collect data from this
interaction, and analyze accordingly.
Industry Average Steps to Success
Provide search optimization training for relevant staff to
increase internal coordination and overall conversion
potential. Fifty-nine percent (59%) of Industry Average retailers
have yet to establish training requirements for best-practice site
search management. Given that many different departments within
an enterprise can influence the search management process,
Industry Average retailers would be wise to establish a common
benchmark that delineates roles, objectives, and best-practice
utilization for managing the process most effectively. Best-practice
site search training is especially relevant for merchandising and
Consumer Choice
Page 21

marketing staff, who are charged with managing customer cross-
sells, up-sells, and overall search marketing. In fact, over half of
Industry Average companies (51%) have specific plans to implement
search marketing, and a similar percentage (46%) have plans to
implement search merchandising in the near future.
Address consumer-facing ease-of-use challenges to make
search easier and more successful. According to Aberdeen
data, just 26% of Industry Average retailers are utilizing search-as-
you-type technologies, and 33% are using natural language
processing. Before a consumer can make a purchase (or view
relevant cross-sells) he or she must be able to find the product first.
To that end, retailers must make the initial discovery as easy as
possible. Both search-as-you-type and natural language processing
address this goal. The former allows consumers to make
adjustments to search criteria before submitting data and waiting for
criteria, shortening the time required to achieve a desired result.
The latter recognizes and translates common aphorisms and
colloquialisms into accurate requests, also decreasing time to
desired result. For a retailer to focus on treating search as a
revenue-building opportunity is acceptable, but recognizing that
opportunity requires high degrees of ease of use by the consumer.
Best-in-Class Steps to Success
Define search result performance metrics for measuring
result effectiveness. According to Aberdeen data, a majority of
Best-in-Class retailers (53%) have yet to identify the appropriate
metrics for quantifying the impact of search management on their
organization. Search management can be used as an effective selling
tool not only from merchandising and marketing executives, but
from supply chain managers, customer service executives, and
others as well. Each of these different stakeholders is therefore
likely to have different definitions of search management
effectiveness. Best-in-Class retailers, however, would be wise to
determine which of these definitions is most relevant to the overall
success of the organization. This allows retailers to determine if
search investments have retuned a proper organization-wide ROI
and make justification of additional expense possible.
Increase the frequency of search application performance
measurement to ensure consumer- and retail facing goal
attainment. According to Aberdeen data, 36% of Best-in-Class
retailers measure the success of their search management program
on an ad hoc basis. An additional 36% of respondents measure this
success on either a quarterly or monthly basis. Given the increased
importance that retailers are placing on the product research
process, Best-in-Class retailers would be wise to increase the
frequency at which they measure their search management
effectiveness. Given that a majority of retailers make moderate or
Consumer Choice
Page 22

extensive adjustments to their search campaigns, a weekly or bi-
weekly results review might be the most beneficial. If nothing else,
these top retailers should establish process measurement regularity,
which would provide for more meaningful and measureable
campaign results on a regular basis.
Aberdeen Insights Summary
In a challenging economy, consumers are naturally going to be extremely
careful with how they spend their money. To this end, they are likely to
conduct extensive amounts of research not only on high ticket items
such as televisions and entertainment systems, but also on day-to-day
living needs, such as apparel and groceries. Accordingly, Aberdeen's
September 2009 E-Commerce Merchandising benchmark report indicated
that a top pressure driving retailers to address and improve their e-
commerce functionality is increased customer research prior to
purchase.
With this increased focus on consumer research, Best-in-Class retailers
are turning this reality into an additional customer touch point that not
only helps facilitate the research process, but does so in a way that drives
additional revenue. Sixty seven percent (67%) of Best-in-Class retailers,
for example, are collecting analytical data to strengthen search result
relevance, and 73% of these same organizations shave implemented
search-as-you-type to make the product discovery process easier to
accomplish from a consumer standpoint. Indeed, the more relevant and
easy to manage a search process is, the more likely the consumer and the
retailer walk away satisfied.

Consumer Choice
Page 23

Appendix A:
Research Methodology
Study Focus
Responding retail executives
completed an online survey
that included questions
designed to determine the
following:
The degree to which site
search optimization
management is deployed in
their retail operations and
the financial implications of
the technology
The structure and
effectiveness of existing site
search optimization
management
implementations
Current and planned use of
site search optimization
management to aid
operational and promotional
activities
The benefits, if any, that have
been derived from site
search optimization
management initiatives
The study aimed to identify
emerging best practices for site
search optimization
management usage in retail, and
to provide a framework by
which readers could assess
their own management
capabilities.

Between September and October 2010, Aberdeen examined the use, the
experiences, and the intentions of more than 94 enterprises using site
search optimization management in a diverse set of retail enterprises.
Aberdeen supplemented this online survey effort with interviews with select
survey respondents, gathering additional information on site search
optimization management strategies, experiences, and results.
Responding enterprises included the following:
Job title: The research sample included respondents with the
following job titles: CEO / President (24%); EVP / SVP / VP (8%);
Director (12%); Manager (16%); Consultant (14%); General
Manager/Managing Director (9%); and other (7%).
Department / function: The research sample included respondents
from the following departments or functions: Marketing (25%);
Information Technology (18%); corporate management (17%);
customer service/support (5%); other (35%)
Industry: The research sample included respondents exclusively from
retail industries. Consumer Packaged Goods (CPG) was the largest
segment with 13% of the sample.
Geography: The majority of respondents (66%) were from North
America. Remaining respondents were from the Asia-Pacific region
(20%) and Europe (14%).
Company size: Seventeen percent (17%) of respondents were from
large enterprises (annual revenues above US $1 billion); 40% were
from midsize enterprises (annual revenues between $50 million and
$1 billion); and 43% of respondents were from small businesses
(annual revenues of $50 million or less).
Headcount: Thirty-eight percent (38%) of respondents were from
large enterprises (headcount greater than 1,000 employees); 15%
were from midsize enterprises (headcount between 100 and 999
employees); and 47% of respondents were from small businesses
(headcount between 1 and 99 employees).

Consumer Choice
Page 24

Table 5: The PACE Framework Key
Overview
Aberdeen applies a methodology to benchmark research that evaluates the business pressures, actions, capabilities,
and enablers (PACE) that indicate corporate behavior in specific business processes. These terms are defined as
follows:
Pressures external forces that impact an organizations market position, competitiveness, or business
operations (e.g., economic, political and regulatory, technology, changing customer preferences, competitive)
Actions the strategic approaches that an organization takes in response to industry pressures (e.g., align the
corporate business model to leverage industry opportunities, such as product / service strategy, target markets,
financial strategy, go-to-market, and sales strategy)
Capabilities the business process competencies required to execute corporate strategy (e.g., skilled people,
brand, market positioning, viable products / services, ecosystem partners, financing)
Enablers the key functionality of technology solutions required to support the organizations enabling business
practices (e.g., development platform, applications, network connectivity, user interface, training and support,
partner interfaces, data cleansing, and management)
Table 6: The Competitive Framework Key
Overview

The Aberdeen Competitive Framework defines enterprises
as falling into one of the following three levels of practices
and performance:
Best-in-Class (20%) Practices that are the best
currently being employed and are significantly superior to
the Industry Average, and result in the top industry
performance.
Industry Average (50%) Practices that represent the
average or norm, and result in average industry
performance.
Laggards (30%) Practices that are significantly behind
the average of the industry, and result in below average
performance.

In the following categories:
Process What is the scope of process
standardization? What is the efficiency and
effectiveness of this process?
Organization How is your company currently
organized to manage and optimize this particular
process?
Knowledge What visibility do you have into key
data and intelligence required to manage this process?
Technology What level of automation have you
used to support this process? How is this automation
integrated and aligned?
Performance What do you measure? How
frequently? Whats your actual performance?

Table 7: The Relationship Between PACE and the Competitive Framework
PACE and the Competitive Framework How They Interact
Aberdeen research indicates that companies that identify the most influential pressures and take the most
transformational and effective actions are most likely to achieve superior performance. The level of competitive
performance that a company achieves is strongly determined by the PACE choices that they make and how well they
execute those decisions.
Consumer Choice
Page 25

Appendix B:
Related Aberdeen Research
Related Aberdeen research that forms a companion or reference to this
report includes:
Retail Social Media ROI: Customer Engagement, Brand Value and
Revenue; August 2010
Retail E-Commerce Analytics; February, 2010
Fast-Track Cross-Channel Gains: The Final Frontier for Customer Share of
Wallet; January, 2010
Data Management for BI: Strategies for Leveraging the Complexity and
Growth of Business Data; December 2009
Online Customer Loyalty: Converting Occasional Shoppers into a Loyal
Consumer Base; October 2009
Web Analytics: Actionable Insights for Unlocking the Hidden Potential of
Online Data; September 2009
High Definition Retail E-Commerce: Higher Customer Conversions
Through Effective Online Merchandising; August 2009
New Age Multi-Channel Retailing: Prospects for Digital Retail Revolution
and Avenues for Better Integration; January 2009
Increasing Retail Productivity: Enterprise-Wide Business Intelligence;
November 2008
Technology Strategies for Multi-Channel Integration; April 2008
Information on these and any other Aberdeen publications can be found at
www.aberdeen.com.

Author: Greg Belkin, Retail and Banking Research Analyst,
(greg.belkin@aberdeen.com)
Since 1988, Aberdeen's research has been helping corporations worldwide become Best-in-Class. Having
benchmarked the performance of more than 644,000 companies, Aberdeen is uniquely positioned to provide
organizations with the facts that matter the facts that enable companies to get ahead and drive results. That's why
our research is relied on by more than 2.2 million readers in over 40 countries, 90%of the Fortune 1,000, and 93%of
the Technology 500.
As a Harte-Hanks Company, Aberdeen plays a key role of putting content in context for the global direct and targeted
marketing company. Aberdeen's analytical and independent view of the "customer optimization" process of Harte-
Hanks (Information Opportunity Insight Engagement Interaction) extends the client value and accentuates the
strategic role Harte-Hanks brings to the market. For additional information, visit Aberdeen http://www.aberdeen.com
or call (617) 723-7890, or to learn more about Harte-Hanks, call (800) 456-9748 or go to http://www.harte-hanks.com.
This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies
provide for objective fact-based research and represent the best analysis available at the time of publication. Unless
otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be
reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by
Aberdeen Group, Inc. (071309b)

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