1. Increasing Revenue with
Micro-Targeted Product
Recommendations
ChoiceStream, Inc.
210 Broadway
Fourth Floor
Cambridge, MA 02139
617-498-7800
www.choicestream.com
Executive Summary
Even amidst the global economic slowdown, the trend towards eCommerce presses
forward, offering increasingly rare growth opportunities for innovative companies
who are willing to take action. eCommerce revenue continues to grow—both as a
percentage of overall retail spending and in absolute levels. However, capitalizing
on this opportunity requires innovation and a willingness to experiment. As the long
tail grows and more products and services become available, online shoppers
Table of Contents can be bogged down by the nearly unlimited set of choices. That’s why it is
important to focus on finding ways to present your customers and prospects with
Executive Summary .........................1 the products and offerings that are most relevant to them, including personalized
product recommendations.
Online Shopping and
eCommerce is Increasing This whitepaper will:
Dramatically ....................................2
can increase purchases, revenue and customer loyalty
What are Personalized
Recommendations? How do
They Generate More Revenue? .....2 recommendations spending in just five months, and how another
company has seen revenue driven by recommendations increase by
Success Stories ................................3 ®
Recommendations
instead of its editorial-based approach.
Measuring Potential
Impact of Personalized
Recommendations ..........................4 to your site
Conclusion .........................................6
About ChoiceStream ........................6
ChoiceStream: Increase Revenue with Micro-Targeted Product Recommendations 1

2. an increasing share of consumer retail spending. Further, online shopping
continues to grow in absolute terms—one of the few bright spots in the current
economic environment for retailers. Some of the latest figures are as follows:
U.S. retail sales.1 The percentage has grown steadily since the U.S.
2
their holiday shopping online, and the percentage is expected to be
Though revenues from eCommerce are growing, so are challenges to online
retailers. A new report from eMarketer notes that websites’ relationships with
customers are increasingly important and that online consumers’ expectations are
now higher than what many online shopping sites provide. Regardless of what
type of product or service you sell online, catering to users’ preferences and site
expectations is a must.
How Can Personalized Recommendations
Generate More Revenue?
Personalized recommendations are a great way to personally connect with each
visitor every time he or she visits your site. They allow you to drive faster conversions,
larger order size and increased profitability by presenting each consumer with
product recommendations based on their preferences and shopping behavior and
your inventory.
ChoiceStream is the market leader in personalization services for e-retailers.
Recently named the company with the “deepest experience” and the “largest and
longest-standing of the ‘pure-play’ personalization engines” by Forrester Research,
ChoiceStream enables you to target each visitor with the products and services
most likely to generate interest and prompt a purchase, as well as encourage
shoppers to return to your site more often.
1. U.S. Department of Commerce | 2. JPMorgan, Jupiter Research, Forrester Research | 3. Turner Investment Partners
ChoiceStream: Increase Revenue with Micro-Targeted Product Recommendations 2

3. Success Stories
The following case studies illustrate how ChoiceStream RealRelevance
Recommendations increase purchases and customer loyalty for two of today’s
largest e-retailers.
Multi-billion Dollar, Multi-channel Retailer Achieves 14x Return on Recommendations
After years of outsourcing its online operations to a third-party, this retailer
decided to take its operations in-house. As part of the site re-launch, the company
sought a best-of-breed vendor to generate automated personalized product
recommendations.
The retailer selected ChoiceStream RealRelevance Recommendations because
of its:
a-service delivery model.
A particularly valuable differentiator was ChoiceStream’s ability to solve the ‘Cold
Start’ challenge. The ‘Cold Start’ challenge occurs when a retailer doesn’t have
enough purchase or transaction data about its consumers to generate good quality
recommendations when it first launches personalized product recommendations.
This multi-channel retailer had limited online purchase data, but ChoiceStream’s
RealRelevance Recommendations cold start feature bundle was able to leverage
purchase data from the retailer’s brick-and-mortar stores to bootstrap the
recommendation service while online data was accumulated. In addition, whenever
new catalog items or new users appear, the system uses a variety of algorithms to
quickly determine which recommendations will be most effective.
recommended
items now make up 17.1% of total online revenue
all buyers choosing to purchase at least one recommended item.
Online movie site sells more DVDs
A subscription-based online movie site wanted to boost revenue by increasing
add-on purchases made by subscribers. In addition, the Company wanted to sell
had already implemented its own recommendations, but felt that there was more
opportunity that it had yet to capture.
The Company chose ChoiceStream to replace its own editorial recommendations
that had been manually-picked in-house. Compared to these internally-generated
recommendations, the ChoiceStream recommendations resulted in a 38%
increase in DVD revenues. In addition, the ChoiceStream recommendations
generated more back-catalog sales resulting in a much higher margin than the
internal, rules-based recommendations.
ChoiceStream: Increase Revenue with Micro-Targeted Product Recommendations

4. Measuring Potential Impact of
Personalized Recommendations
In order to get the most out of site personalization, it is important to forecast the
potential impact recommendations can achieve for your site. The forecast can be
done through a simple spreadsheet exercise like this example below.
For an eCommerce site, you will need to know the following:
contains several recommendations)
recommendations
Using these inputs, you can easily create a calculation to determine the potential
incremental revenue that ChoiceStream could provide. The following chart
illustrates the calculation using three separate scenarios, for three classes of online
retailers. While you should make assumptions based on your particular business
model, the estimates included here are based on the results we’ve seen among
ChoiceStream’s customers.
Conservative
Emerging Mid-Tier Large Market
Start-up Media Site Leader
Total annual pageviews 25,000,000 75,000,000 500,000,000
Pageviews that include recommendations 12,500,000 37,500,000 250,000,000
Recommendation sets per page 1 1 1
Total recommendation sets served 12,500,000 37,500,000 250,000,000
Click-through rate 8% 8% 8%
Recommendation-driven product detail page views 1,000,000 3,000,000 20,000,000
Purchase conversion rate 3% 3% 3%
Recommended items purchased 30,000 90,000 600,000
Average item price (ex. shipping & handling) $15.00 $15.00 $15.00
Annual Incremental Revenue
$450,000 $1,350,000 $9,000,000
from recommendations (ex. shipping & handling)
ChoiceStream: Increase Revenue with Micro-Targeted Product Recommendations

5. Moderate
Emerging Mid-Tier Large Market
Start-up Media Site Leader
Total annual pageviews 25,000,000 75,000,000 500,000,000
Pageviews that include recommendations 12,500,000 37,500,000 250,000,000
Recommendation sets per page 1 1 1
Total recommendation sets served 12,500,000 37,500,000 250,000,000
Click-through rate 10% 10% 10%
Recommendation-driven product detail page views 1,250,000 3,750,000 25,000,000
Purchase conversion rate 5% 5% 5%
Recommended items purchased 62,500 187,500 1,250,000
Average item price (ex. shipping & handling) $25.00 $25.00 $25.00
Annual Incremental Revenue
$1,562,500 $4,687,500 $31,250,000
from recommendations (ex. shipping & handling)
Aggressive
Emerging Mid-Tier Large Market
Start-up Media Site Leader
Total annual pageviews 25,000,000 75,000,000 500,000,000
Pageviews that include recommendations 12,500,000 37,500,000 250,000,000
Recommendation sets per page 1 1 1
Total recommendation sets served 12,500,000 37,500,000 250,000,000
Click-through rate 11% 11% 11%
Recommendation-driven product detail page views 1,375,000 4,125,000 27,500,00
Purchase conversion rate 6% 6% 6%
Recommended items purchased 82,500 247,500 1,650,000
Average item price (ex. shipping & handling) $35.00 $35.00 $35.00
Annual Incremental Revenue
$2,887,500 $8,662,500 $57,750,000
from recommendations (ex. shipping & handling)
ChoiceStream: Increase Revenue with Micro-Targeted Product Recommendations 5

6. to continue measuring their performance in order to ensure you are achieving the
best possible results and getting the highest possible return on your investment.
However, it is also important to remember that not all of personalization’s benefits
are captured in the above calculations. Personalized recommendations can also
improve customer experience, loyalty and retention.
For more information on tracking recommendations that are already implemented
“Personalization – A Top
Priority for Up-selling and Cross-Selling on the Web.” The Webinar is available at
www.choicestream.com.
Conclusion
The internet continues to offer a large and growing opportunity for retailers. In order
to capitalize on this opportunity, sites need to not only encourage purchases, but
also attract and retain a loyal customer base. Personalized recommendations are
a great way to make your site more relevant to each consumer, and to improve
your online business. Recommendations are easy to implement and proven to
provide uplift in click-through rate and purchases when executed well. A few key
things to consider when evaluating recommendation service providers include
performance and reliability, multi-channel support and editorial controls. For more
information, download our White Paper: “Seven Key Requirements for Personalized
Recommendation Services.”
About ChoiceStream
ChoiceStream is the premier personalization service provider for the world’s largest
AT&T, and Blockbuster. Recently named the company with the “deepest experience”
and the “largest and longest-standing of the ‘pure-play’ personalization engines”
by a leading independent research firm, ChoiceStream enables customers to put
the right content and products in front of the right people at the right time to
maximize the value of every interaction with consumers.
ChoiceStream can recommend all types of content and can be delivered via
any medium, including the desktop, kiosks, mobile devices, the TV set-top, and
call centers. And ChoiceStream delivers this innovation through a fully-hosted
service, providing everything customers need to dramatically increase revenue
and consumer satisfaction without a costly IT investment.
210 Broadway | Fourth Floor | Cambridge, MA 02139 | P: 617.498.7800 | F: 617.621.6780
ChoiceStream: Increase Revenue with Micro-Targeted Product Recommendations