In our previous blogs, we have explained the evolution of the recommendation engine and what it is. However, there is another essential factor that every store owner must know: the benefits of a recommendation engine. Before anyone decides to integrate a recommendation engine with their platform, they should know what lies ahead of them – this not only helps in developing future plans for their organization and helps in decision making.

There lie two important questions with a recommendation engine: Whether to buy or build a recommendation engine? And if you choose the former, then which recommendation engine to buy?

Once you know the benefits of a recommender engine or recommendation engine, both the above questions become easier to decode as you will have expectations and a definite view of your recommendation engine.

Benefits of a Recommendation Engine

Personalized Recommendations

Have you ever wondered why people turn to relatives and friends for advice rather than turning to someone new? Obviously, it is because relatives and friends know each other, their choices and their preferences. Now, what if a tool understands your customers the same way and suggests products to them? Chances of customers buying these suggested products will increase. This process of giving recommendations based on an individual’s preference and past activities is called personalized recommendations, and a recommendation engine does it. Personalized recommendations help in keeping the customer happy, which in turn helps organizations in selling products and services.

Product Discovery

There are different algorithms present in a recommendation engine, one of which is collaborative filtering which recommends products based on similar interests. Basically, if two people buy a similar product, then chances are they will buy different products purchased by each other. For example –
If user A buys a product item1 and item2 and user B buys a product item1 and item3. Then the recommendation engine will recommend item2 to user B and item3 to user A.

So, as seen in the above scenario, user A discovered the product item3 through recommendations made by the recommendation engine. This is how a recommendation engine helps in product discovery.

Provide Reports

Recommendation engines produce reports about the products on the website. It tells which was the highest sold product, which product didn’t get any buyers, and which product was not viewed by any user. All of this information helps in decision-making about the future campaign and all the necessary measures the organization needs to take in order to promote the unsold products. For example, putting offers on unsold products or recommending products that were not viewed by anyone.

Customer Satisfaction

The term ‘customer satisfaction has different meanings for different organizations and customers. For some, it may mean a mere visitor is turning into a customer. For others, it may mean that the existing customer gets all that they want. Both of these can be achieved via a recommendation engine. How?

Situation 1 – When a visitor comes on a website and sees a recommendation that catches their eye and forces them to buy it – also called impulse buying.

Situation 2 – When a customer viewed something the last time they were on the website, and now they want to buy it. The recommendation engine will most likely suggest the previously viewed products, and the customer will end up buying them without much effort.

So, in both scenarios, organizations will achieve customer satisfaction.

Increase in Revenue

When product sales and customer satisfaction increases, it positively affects the organization’s revenue. If we go by history, we can always take the example of the most successful e-commerce platform Amazon. Did you know that Amazon generates over 35 percent of its revenue from its recommendation engine? So, it is safe to say that one of the major benefits of recommendation engines is that it increases the total revenue of an organization.

Conclusion

The benefits of a recommendation engine are many, but the fact that it helps in increasing revenue tops everything. If you are one of those who still have doubts about recommendation engines, their working, and their usage, read the guide on recommendation systems that will help you have a clear understanding. We also recommend you to explore Alie – an AI-based recommendation engine that offers multiple features like different algorithms, a dashboard where you can see recommendations being made in real-time, and more importantly, you will be able to get timely reports. Try the 14-day free trial of Alie to understand how it can benefit your organization.