The Rise of Relationship Commerce

Relationship Commerce is an innovative form of continuously engaging with customers and providing fresh, relevant experiences for every touch over the course of a relationship. There are unique requirements to effectively execute Relationship Commerce which include:

  • The personalization of many new and different customer experiences across a long relationship.
  • Recognizing customers across channels and understanding their changing preferences.
  • Adapting customer experiences in real-time to reflect expressions of customer’s interests.

Over the last two decades, e-commerce has dramatically evolved not only in terms of technology but in its core general approach. In the late 1990’s electronic commerce was conceived as transactional and over time it has evolved into relationship-based commerce, which is focused on retention and customer lifetime value. 


Comparing Transactional and Relationship Commerce

Transactional Commerce Relationship Commerce
SEO is the primary transaction driver SEO is a user acquisition strategy, not the transaction driver
Availability of guest checkout User identity/profile is key
Little focus on user identity Nurture relationship via personalized communication with the user:
  • Personalized periodic emails
  • Personalized lifecycle marketing
  • Welcome series, lifecycle triggers
Focus on triggers in response to a user session/action Provide engaging and personalized upper funnel experience
Product recommendations in the context of a specific session/product view. A 'one transaction and done' approach. Experiences take the entire customer journey into account to foster long-term satisfaction and engagement

The shifting e-commerce landscape: the impact of Amazon and Google

On one side, fierce competition from Amazon in practically every vertical with superior selection of merchandise, better prices, and faster logistics are displacing other transactional commerce players. On the other side, through SEM/SEO Google extracts an ever larger amount of customer lifetime value for the service of directing customers to a retailer's site. 

All recent success stories in e-commerce are prime examples of relationship commerce: Wayfair, Dollar Shave Club, Zulily, even marketplaces like Etsy. Instead of focusing on acquiring transactions, these companies established themselves as leaders in specific verticals by providing a unique, differentiated experience with engaging retention mechanisms.

Relationship Commerce provides a pathway to success in this competitive landscape. The retailer offers a steady stream of fresh, relevant experiences that solve customer needs and the customer continues to engage and thereby helps the retailer build a more robust, comprehensive understanding of the customer's preferences. This leads to a virtuous circle of ever better understanding and more customer needs being met. 


Different frameworks for personalizing experiences  

Traditional Personalization for Transactional Commerce

Today, most legacy personalization tools and efforts are designed for transactional commerce and have these characteristics:

  • Designed for the ‘lower purchase funnel’ where customer intent is usually known (product pages, shopping carts, browsing triggers). Often these technologies are mis-applied to recurring 'upper funnel' experiences with poor results. 
  • Customer profiles are represented by a collected set of recent actions: last purchased product, last shopping cart item, last browsed product. This limits recommendations to 'related products'; little exploration and adaptation can be done.  
  • Vendors offer dozens of “strategies” to personalize to an individual experience (reflect last purchase, last product view, or last shopping cart item, etc.); the maintenance of strategies is tedious, hard to maintain, and ineffective outside specific lower funnel page (product detail page, shopping cart). 
  • A specific product action (e.g., clicking on a product view) triggers a pre-computed set of recommendations. It does not matter who the customer is or what the retailers knows about their changing needs. 

This approach and the legacy personalization technologies designed for it lead to repetitive experiences in a world of relationship commerce. Unless a user makes a new action, the experience stays the same and there’s little adaptation or iteration from one experience to the next. 

The Emergence of Modern Relationship Commerce

Relationship commerce enables a retailer to develop a deep and lasting relationship with customers by understanding their preferences and providing fresh, engaging experiences for every touchpoint over the course of time. (see how eBay increased touch points by 54%)

To execute relationship commerce, there are some experiences that need a new approach and many other experiences that have not been personalized previously. The personalization of these experiences must incorporate a customer’s changing preferences over time. These preferences can be 'extracted' from engagement with different devices across channels including a retailer's website(s), emails (lifecycle, promotional, transactional, trigger), mobile apps and even ad engagement. Here's a summary example: 

Extracting information from many touchpoints over time in order to build and maintain a comprehensive profile that can be used to create fresh and engaging experiences.

Extracting information from many touchpoints over time in order to build and maintain a comprehensive profile that can be used to create fresh and engaging experiences.

CRM, promotional, and lifecycle emails 

CRM engagement emails are the 'workhorse' of retailer outreach, they:

  • Are the primary engagement mechanism with existing customers.
  • Drive the bulk of all email sales (up to 25+% of all online sales).
  • Are notoriously hard to personalize. Only a degree of limited relevance is can be achieved with segmentation.
  • Typically feature a combination of promotions, sub-catalogs, and products: all elements need to be personalized in a cohesive presentation.

Standard transactional recommendation widgets are ineffective (e.g., “similar products to the last shopping cart item”) and emails using them look repetitive and stale.

Home page and top category pages

These pages need to be optimized for engagement and discovery, they:

  • Attract a lot of online traffic.
  • Are the primary welcome experience for many repeat users.
  • Currently are not personalized by retailers other than basic A/B testing and creative optimization
  • Typically feature a combination of promotions, sub-catalogs, and products: all elements need to be personalized in a cohesive presentation. 

Currently, personalization on these pages is limited to transactional recommendation widgets (“Top sellers, similar products to the last browsed”) which are ineffective in these upper funnel experiences. 

Product listing and section pages

These pages are a big part of any customer session and are central to a customer's experience. Yet:

  • Sorting is typically only done by top sellers, ratings, and price.
  • No retailers currently support personalized product ranking.

Personalization has to be done at the user attribute level not at the individual product action level. Transactional recommendation widgets break down in this application and customers will only see top sellers. 

Search listing experiences

This is a common experience onsite, and displaying results in a manner personalized for the customer yields compelling results.

  • Searches occur lower in the funnel: the customer already has an intent but it is often ambiguous.
  • Results are driven by search query only: retailers currently do not personalize in this context.
  • Personalization greatly enhances the search experience by making it more relevant to the customer.

These experiences all need to communicate that a retailer knows the customer (not just their name) and understands their changing needs and preferences. In doing so, a retailer engages the customer more deeply, and over time, acquires a more comprehensive understanding. Relationship Commerce leverages this customer knowledge to make each experience more valuable for both the retailer and the customer.