Software that reads customers' intentions

By Joe Gold, Senior Editor
OneChannel.net

Can your e-commerce site tell what your customer has in mind? Can you tell in a few clicks who's just browsing and who has a credit card propped up on the keyboard, ready to buy right now?

Simon Rakoff says he has software that can do precisely that, not through magic or trickery, but by analyzing human behavior by analyzing the sequence of the links that are followed, and how long people dwell on which pages.

Rakoff is CEO of The .COM Group (pronounced thedotcomgroup, which is also their URL), in Reston, Va. "We're a customer experience optimization company with solutions that can understand and interpret and react to user intent in real time."

The idea is to give the software application the savvy of a veteran department store person who can read the body language of a customer who walks into her department and can tell whether this is a buyer, a browser or someone just breezing through.

"We don't know who they are, but we watch the way they move through the site," Rakoff said. "We're able to categorize them into proprietary categories like window shoppers, browsers, information seekers or purposeful buyers who have the credit card propped up on the keyboard and they're actually going to buy something in the next five minutes."

The technology is called DUET—for Dynamic User Experience Technology. It is currently in beta testing, due for release at Internet World in late October. To create it, The .COM Group studied how people buy and how they interact with Web sites to develop statistical models of buyer behavior.

"We have a black box we drop onto a network that watches every user coming on to a Web system. It's totally anonymous. We can make some relatively accurate inferences based on their behavior about their level of experience on the Internet, their propensity to buy, and other characteristics expressed in a percentage," Rakoff says.

With a combination of cognitive scientists and engineers, The .COM Group uses what Rakoff calls human factors engineering to anonymously categorize customers purely by their online behavior during an individual session. DUET's purpose is to improve the customer experience by reacting to that customer's likely intentions.

Rakoff says the system increases sales conversion rates. "You see a higher per-customer purchase amount, so maybe a customer who came to buy one thing buys three, because our solution can also identify impulse buyers, people who, if you treat them the right way, are likely to put multiple things in their cart and purchase them," he says. He adds that "Decreased costs on the customer-support side are also a byproduct of what we do."

Rakoff launched the .COM Group in October of 1999, presided over the growth from three employees to more than 30, and raised more than $10 million in venture capital. Before that, he was a partner at Success Unlimited, consulting with Mobil Oil Corporation, the U.S. Postal Service, Coopers & Lybrand and others to develop teamwork, resolve conflicts and implement business procedures.

"Lots of tools can measure how many people clicked on a link, but what you really want to measure is how they behaved when they got to the site," Rakoff said. He predicted that the Internet will develop to the point where it is as user-friendly as the telephone, and businesses online will understand that in online business, "It's about the people, stupid, not the technology."

How does it work? The DUET black box can send a trigger to content-management software like Broadvision, which recommends a real-time action. It can predict that when a user clicks on the next page, he is going to decide that the shipping cost is too high and abandon the purchase. A decision is made on The .Com Group's appliance, which can send a message over to Broadvision to throw up a window that says that the shipping cost is going to be 50% off today only.

The bottom line: "If your site can afford to discount shipping 50%, and if it makes business sense to do that to save the transaction, you do, but not across the board, which would mean that you would lose 50% of your margin," says Rakoff.

There's more. "We can identify the people who are getting frustrated and need intervention from an online service representative. Let's say you've got 100,000 users on your site. We can pick out the 50 that have to have the content within three seconds or they'll click away, and we send that in the form of a trigger to an Inktomi or an Akamai that says, hey, give these people the priority in terms of serving the content to them."

The best results in testing the methodology have shown a 400 percent increase in the customer conversion rate. "That's beyond expectations, but it is attainable,” Rakoff said. “The beauty of the Internet is that if a site can get a five percent increase in conversion rate, it can equate to millions of dollars on the bottom line."

Some observers are starting to give the system serious consideration. Denis R. Pombriant is a senior analyst for The Aberdeen Group, specializing in customer relationship management. He's scheduled to have a look at DUET, because he's been advocating the concept. "You can develop a process that's more heuristic, but not identical, to human thinking. In going to e-commerce, we need to replace the information in the one-to-one dynamic in which people look at each other, read body language, can ask questions and suggest alternatives when a product may not be 100% of what they need. We're getting more and more sophisticated over time."

A more skeptical view comes from Phil Terry, the user experience evangelist and CEO of Creative Good in New York. He has not seen the software, but has little faith in the concept. "I am very skeptical of technology for quantifying human behavior and customer experience optimization. Generally, a quantitative, technology-based approach does not yield best insights."

Rakoff is willing to give skeptics a look at the program when it is released late next month. "This is where the Web has been trying to go for a long time now, being a much more intuitive and interactive medium."

Case study:
DUET creates a new beginning for OurBeginning.com

In consulting with the e-tail site OurBeginning.com, The .COM Group's co-founder Leonard Adelman says. The .COM Group identified several key elements to make the site more user-friendly. They recommended shortcuts to get customers where they want to go more quickly, adding exit links from every page to give customers a graceful way out, and make sure the major site categories are accessible from anywhere. He says OurBeginning.com accepted 98 percent of the recommendations, which resulted in easier navigation and a streamlined ordering process that increased conversion rates, turned visitors to buyers, all while each customer spent less time on the site.

All this comes from a system that Rakoff says requires a minimal capital expenditure and installs completely in about two hours. The .COM Group charges a $20,000 set-up fee and a monthly subscription rate of $15,000 to $20,000.

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