Personalized Product Recommendations: Evidence from the Field

Abstract

Targeting personalized product recommendations to individual customers has become a mainstream activity in online stores as it has been shown to increase click-through rate and sales. However, as personalization becomes increasingly commonplace, customers may feel personalized content intrusive and therefore not responding or even avoiding them. Many studies have investigated advertising intrusiveness and avoidance but a research gap on the effect of degree of personalization on customer responses based on field evidence exists. In this paper, 27,175 recommendation displays from five different online stores are analyzed. The results show that the further the customer is in the purchasing process, the more effective personalization is if it is based on information about the present rather than past browsing session. Moreover, recommendations in passive form are more effective than recommendations in active form suggesting the need to dispel the perception of intrusiveness.