Monday, 7 September 2009

Who do you trust?

There has been a few reports that caught my attention over the summer. All have to do with trust online and the impact of social media on travel sites.

One of them was the Nielsen Global Online Consumer Survey, which includes an interesting measure of the forms of advertising most trusted by consumers.

90% trust recommendations from people they directly know, 70% trust consumer opinions online and brands. 69% trust editorial content.

Below is the full diagram and the press release can be found here.

"Recommendations from people known" stands very much alone at the top.

Not so surprising. We are far more inclined to listen to these than to those we don't. People we know have a great advantage as information providers. We are instantly able to filter what they say, because we know their taste. We know when to trust their judgment and when to discard their recommendations.

But that doesn't necessarily mean that the information delivered by them is better. I'm not saying recommendations from our social graph (people we know) aren't good, but they are usually too few to be really useful. A few simple reasons for this.
* We need information from people with taste somewhat similar to ours. After all, would you trust your grand parents recommendations to go clubbing?.
* We need a few advices to make an opinion. How likely is it that we know someone with taste similar to ours who's been where we want to go for holiday or more simply diner? The answer is not very likely.

An interesting complement to the Nielsen analysis would be to know the relative usage of these various forms of advertising. The top category is probably very small because of the reasons I've listed above.

And so we have to fall back on editorial content and consumers opinions, which are hard to trust, because we don't know the people who wrote them. While we may develop some level of trust with editorial content (as we get used to read the same person's article and develop what I would call a taste filter), we can't really do this with consumer opinions.

That's of course an area where we are very involved at LikeCube, We're changing the way people perceive User Generated Content (UGC) and we greatly enhance its value, quite a deal for web sites that have invested so much in UGC but are still struggling to see real value out of it.

In addition to providing really accurate personalized recommendations (some users have even qualified them as "quite spooky" in accuracy), our solution helps filter consumers opinions and extract the ones that are from people closest to us in terms of taste.

As a result, our solution can personalize each product page (think of a hotel or a restaurant review page) with reviews from our taste neighbors, reviews we can trust.

This solves a big issue for consumers when they read opinions ("Should I trust this person?") and I wouldn't be surprised if over time the 70% from the Nielsen report for "Opinion" moves toward the 90% from people we know, if not beyond.

Tuesday, 24 February 2009

Hotel industry in need of data or innovation?

In a recent interview from Sandeep Govil and Natasa Christodoulidou, the author was talking about the need to better understand your customer interaction with the hotel booking sites. Essentially, "hotels have a long way to go in talking to guests about the product, its attributes, locale, etc. in a way that each individual guest wishes to receive that information"

According to Natasa, "the key to working on CRM data gathering approaches in a manner that engages the customer as little as possible while obtaining the information that makes the biggest impact on the goals as a service provider is simply personalisation".

It is clear that there is a lot of value from capturing more data, as long as data is available. However, there is a significant challenge in the hotel industry. One that I usually describe with the number 4.

If users have used a site less than 4 times, then they are unlikely to use it by default for their next booking. They simply don't have much loyalty to the site yet.

Above 4, the users become more loyal to the site and use it as a natural starting point to their hotel research.

Now this is clearly over-simplifying a complex problem for marketers and CRM experts. But I think it's worth the analysis.

So in terms of numbers what does it means. Well the below 4 represent 95% of the bookings. 95%. To give you another representation of the challenge, the average number of bookings per user is below 2... Building user statistical patterns with such a low amount of data is unreliable. Hence the challenge of marketers and CRM specialists.

Now there is an interesting parallel that can be done here. 4 is also the number at which personalization solutions based on collaborative filtering (people who like the same hotels I liked also liked...) start showing interesting levels of accuracy and related impact on conversion rates. Before 4, consider yourself in a cold start situation.

We've addressed both sides of the challenge at LikeCube.

Leveraging our expertise in semantics, ontology and search, we provide very innovative solutions to address the cold start issue. Rather than asking data and trying to profile users as suggested by Natasha, our SaaS solution enables hotel sites to offer a powerful way for users to express their preferences and filter their results accordingly. Conversion rate improvements are expected to be of the order of 10% to 20%.

And for users that have crossed the '4' gap, our state of the art collaborative filtering solution could up conversion rate significantly more. The other key benefit here is that users get the noise filtered out automatically, including reviews and other form of user generated content. This of course results in drastically improved user experience. They will see first the content from their taste neighbors, the people most like them in terms of preferences, as opposed to hundred of reviews, most of which are non relevant to them.

So how are you going to differentiate from your competition to secure the 95% of users that are in cold start? And what are you doing to leverage your investment in UGC? Is data or innovation the answer?

Feel free to contact us at for your free Site-Matcher evaluation.

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