Uniting Tech and Business KPIs for Smarter Retail Recommendations
Imagine Hypotailer, an online retailer ranked among the world's top 20, is renowned for its impeccable recommendation engines. Despite spot-on recommendations, they faced declining overall sales and conversion rates. This paradox highlights critical questions:
- Are recommendations truly driving measurable business value, or are we merely guessing?
- Are we optimizing for a solid ROI, or just hoping for the best?
- Could we be overlooking key business KPIs without realizing it?
Citation: "71% of consumers expect companies to deliver personalized interactions. 76% get frustrated when this doesn't happen." - McKinsey
In today's retail landscape, a good recommendation engine isn't enough. Success lies in uniting technical and business KPIs to create smarter and more impactful retail recommendations. By aligning metrics and enhancing picks, we achieve retail success through the "Tech-Biz" mix.
Recommendation Engines Decoded
Consider customers searching for running shoes and receiving recommendations for fitness trackers and workout kits. While relevant and fast, we must ask: Is this truly optimal? It's time to question the engine's effectiveness and its real business impact.
Citation: "Analysis shows 81% of respondents use productivity as the prime measure of digital transformation ROI. Are organizations factoring the right KPIs to measure digital transformation success?" - Deloitte
Quality Caliber
High-quality recommendations don't guarantee business success unless they align with business goals. Recommending popular products is futile if they don't drive growth.
The Metrics Factor
To evaluate effective recommendations, we have some crucial ranking metrics like:
- Mean Reciprocal Rank (MRR): Measures how quickly relevant items appear in the recommendation list.
- Mean Average Precision (MAP): Assesses the precision of recommendations across all users.
- Normalized Discounted Cumulative Gain (NDCG): Evaluates the quality based on the relevance and position of recommended items.
Ground Truth Benchmarks
Establishing ground truth benchmarks ensures that recommendations align with customer behavior and business priorities:
- Median (Conversion Rates): Ensures top-ranked products have significantly higher conversion rates than the average. This leads to increased purchases.
- Quartiles (Revenue Impact): Ensures the top 25% of products generate a larger portion of total sales and profits. This maximizes business profitability.
- Percentiles (Customer Retention): Ensures that the top 25% of recommended products achieve higher customer retention rates. Repeat purchase-worthy products encourage returning audiences.
Citation: "Increasing customer retention rates by 5% increases profits by 25% to 95%." - HBR
Aligning metrics with ground truth benchmarks transforms a good recommendation engine into a great one.
What Does a Great Recommendation Engine Look Like?
Picture real-time recommendations that instantly adapt to new trends and individual customer preferences. Vision MLOps that seamlessly integrate with data science by ensuring your models remain fresh and exceptionally relevant, thus captivating your audience like never before.
With complete automation from data to deployment, this engine doesn't just suggest - it anticipates crafting personalized shopping experiences that delight your audience and foster unwavering loyalty. Let's coin this a "visionary" engine known for its vision-worthy capabilities.
Source: Mordor Intelligence
Supercharged Recommendations - A Talk with the "Good" Rec Engine
Let's engage in a conversation with the "good" Recommendation Engine - a personified representation striving for excellence. We had our doubts:
- How did it become a "good" recommendation engine?
- Why wasn't it effective before?
- How did it achieve its "supercharged" status?
Rec Engine's Talks
"I struggled, but at the end of the day, it's as simple as what broke in me, what I changed, how I did it, and what was my outcome. It's how I've embraced a few things deemed worthy:
- Metrics- It's about benchmarks like MRR, MAP, and NDCG that precisely measure and refine my recommended relevance.
- Signature Picks - These are frequently purchased items that eventually became customer favorites.
- Augmented Suggestions - These are products recommended to enhance basket items and boost average order value. We evaluate the profitability and relevance of each suggested item to ensure they add genuine value for both the customer and the business.
- Curated Products - These are the ones that pair with respective item halves naturally aligning for an interactive customer experience."
| My Journey Grid | Metrics | Signature Picks | Augmented Suggestions | Curated Products |
|
What Broke? |
I suffered from low accuracy, poor user engagement, and lack of success benchmarks. |
I provided generic products. Repeat purchases were rare, and I didn’t understand customer preferences. |
My basket size was limited, resulting in fewer products per basket and a lack of value in recommendations. |
I couldn't provide relevant products throughout the customer's journey on the platform. |
|
What Changed? |
I learned crucial aspects to adapt to. They are my MRR, MAP, and NDCG. |
I began highlighting Signature Picks to boost customer favorites. |
I offered augmented suggestions to expand basket value. |
I introduced carefully curated products which naturally paired with their selections. |
|
How Did I Do It? |
I optimized algorithms and adjusted models to improve my accuracy and user engagement. |
I analyzed their historical purchase patterns for tailored recommendations. |
I conducted a value-based analysis to identify opportunities for basket expansion. |
I presented curated products aligned with customer buying patterns. |
|
Outcome Gained? |
Higher engagement rates and increased purchases from the audience. |
Boosted repeat purchases and fostered customer preference. |
Increased average order value with bigger baskets. |
The audience came across products they had never known before. This encouraged repeat visits. |
"With these enhancements, customers were supercharged to purchase from me. This skyrocketed engagement, and I became known as the "good" recommendation engine. However, I aspire to reach the legendary "Griffin" engines renowned for their unparalleled excellence. My journey towards the pinnacle of big leagues continues."
Citation - "Sites with mediocre product list usability saw abandonment rates of 67-90%, whereas sites with just a slightly optimized toolset saw only 17-33% abandonments for users trying to find the exact same types of products." - Baymard Institute
Hypotailer's Case Study
Hypotailer adopted the "good" recommendation engine, resulting in elevated performance. Despite game-changing recommendations, product rankings were still subpar at best.
- Challenges Faced:
- Pain point - Subpar product rankings led to wasted opportunities, wasted investments, and a churned audience.
- Realization - Hypotailer recognized they were overlooking critical factors affecting product rankings and sales performance.
- Pitfalls Analyzed:
- Insufficient data on customer interactions hindered accurate recommendations.
- Incomplete data limited the ability to refine effective product rankings.
- Tech-Biz Factored:
Hypotailer leveraged the Tech-Biz factor to achieve proper business impact through the following strategic blueprint:
|
Strategic Blueprint |
Enhanced Data Collection |
Linking Recommendations and Profit Margins |
Real-time Inventory Recommendations |
Alignment with Promotional Campaigns |
|
Approach |
Added analytics tags to collect detailed customer interaction data. |
Integrated profit margins into recommendation algorithms to prioritize more profitable items. |
Connected inventory management systems with the recommendation engine to reflect real-time stock levels. |
Synchronized recommendations with ongoing promotional campaigns. |
|
Benefits |
Gained insights into customer behavior, hence enabling informed decision-making. |
Increased overall profitability by promoting products that contribute more to the bottom line. |
Avoided suggesting out-of-stock items. |
Boosted campaign effectiveness and encouraged customers to take advantage of special offers. |
|
Realization |
Recognized the importance of comprehensive data for accurate recommendations. |
It is understood that not all products impact profits equally. |
Acknowledged the need to align recommendations with actual inventory levels. |
Saw the value in cohesive marketing and recommendation strategies. |
Citation: "83% of consumers are willing to share their Browse data to create a more tailored experience, and the growing trend toward greater personalization suggests that number is likely even higher today." - Adobe for Business
What more could Hypotailer have done? - While there are significant benefits, there is potential to drive real business impact rather than just a proper one. This leads to unified dashboards.
Unified Dashboards
To fully capitalize on the Tech-Biz mix, Hypotailer needed a personalized way to monitor and analyze both technical and business metrics - a special shout out to MLWorks, our customized industrial-specific MLOps solutions.
Why is it important?
- Holistic View: Offers a comprehensive perspective on how technical performance influences business outcomes.
- Quick Response: Enables the setup of alerts for deviations in key metrics, allowing swift corrective actions.
- Data Visualization: Facilitates the identification of trends and correlations through intuitive graphs and charts.
Citation: "92% shared a belief in personalization's value and have already allocated resources to support it internally." - dynamic yield
Introducing MLWorks
MLWorks is a cutting-edge MLOps platform that optimizes machine learning operations through data-driven efficiency and automation. It empowers businesses to achieve operational excellence and maximize value by minimizing complexity and downtime. We have developed accelerators that do it.
Why Accelerators?
We initially adopted a product-focused philosophy, but as we worked with various clients, we realized that a one-size-fits-all approach wasn't effective. To better address the diverse customization needs of our clients, we transitioned to an accelerator-driven philosophy, leveraging our deep expertise in services to deliver tailored solutions.
Integrating our accelerators into your operations offers several advantages. For instance:
- Increased Sales Performance: By leveraging MLWorks, businesses have achieved a 3% increase in quarterly sales, showcasing its capability to drive impactful business outcomes.
- Reduced Pipeline Downtime: MLWorks has streamlined ML pipeline processes, slashing downtime from 4-6 days to just 4 hours, ensuring continuous operations and faster delivery of insights.
- Optimized Resource Utilization: The platform effectively utilized $300M in trade funds with significantly reduced errors, enhancing operational accuracy and decision-making.
MLWorks provides a unified solution to scale machine learning operations with precision. Its ability to seamlessly integrate into workflows and eliminate inefficiencies ensures businesses can focus on driving growth and innovation.
Previously, we talked about the "visionary" engine with cutting-edge capabilities. Now, envision this a reality accomplished through MLWorks.
In our case, imagine tracking business metrics in your Power BI dashboards, you spot a drop in sales conversions. Instead of scrambling for answers, you turn to MLWorks. The dashboard offers:
- Tailored Metrics: Align technical metrics with business KPIs to uncover the root causes behind performance dips.
- Real-time Insights: Dynamic dashboards deliver up-to-the-minute insights, ensuring you stay ahead of the curve.
Citation: "Organizational managers using visual data recovery tools are 28% more likely to find information on time than those relying solely on managed reporting and dashboards." - Analytico
Let's get a glimpse of some of our technical and business indicators!
These sneak peeks can be customized and tagged using an intuitive UI, ensuring seamless interpretation and adaptability across all accelerators.
Recommendation
We have ground truth benchmarks set for some critical metrics amongst others, as mentioned earlier.
Figures 1 - 3
Drift
This is used to monitor and address model drifting effectively.
Figure 4
Model Interpretability
We have Explainable AI to provide clear insights into how models make decisions.
Figures 5 - 6
Business KPIs
For comprehensive tracking of relevant business indicators, we have our business KPIs.
Figure 7
Figures 8 - 10
There are other accelerators we provide to get matches made in heaven! To know more - reach out, anytime, anywhere!
Alternatives
In the crowded MLOps landscape, tools like Datadog, Grafana with Prometheus, New Relic, Elastic Stack (ELK),and Splunk are prevalent. However, they come with significant challenges that can hinder your business's efficiency and growth:
- Overwhelming Complexity:
- These platforms are often fragmented and convoluted. It requires extensive configuration to function effectively.
- Integrating multiple tools to create a cohesive MLOps pipeline leads to longer setup times and operational bottlenecks.
- Steep Learning Curve:
- Managing these platforms demands specialized expertise.
- Your team must invest time and resources into training and development.
- Implementation is prolonged, leading to higher operational costs.
- High Maintenance Overheads:
- Continuous maintenance is often required by dedicated engineering teams.
- Ongoing expenses and resource allocation can strain your budget.
- Limited Customization and Scalability:
- These tools lack the flexibility needed to tailor solutions to specific industry needs.
- Scaling to accommodate growing data volumes and expanding product lines without significant reconfiguration is challenging.
- Leads to performance issues and suboptimal user experiences.
- Requirement for In-House Expertise:
- To effectively set up and manage these complex platforms, clients must invest heavily in engineering talent.
- This involves hiring specialized engineers, ongoing training, and dedicated support teams.
Why Choose MLWorks over the alternatives?
MLWorks stands out as an MLOps solution that is designed to eliminate these pain points by offering a streamlined, efficient, and scalable tailored solution to your business needs:
- Tailored Metrics:
- MLWorks prioritizes business-critical KPIs specifically tailored to your industry and operational requirements.
- Our accelerators ensure every insight is actionable and aligned with your strategic goals to drive personalized growth with maximum value.
- Streamlined Collaboration:
- Enhances teamwork with centralized workflows to foster seamless collaboration between technical and business stakeholders.
- MLWorks reduces inefficiencies and ensures everyone is aligned by enabling faster decision-making strategies.
- Proactive Insights:
- Stay ahead with real-time monitoring and instant alerts that have slashed pipeline downtime from 4-6 days to just 4 hours.
- MLWorks ensures uninterrupted operations, allowing you to swiftly address issues and maintain optimal performance.
- Personalized Custom Dashboards:
- Gain comprehensive visibility with custom dashboards that provide detailed performance insights.
- MLWorks' flexible configurations help you effectively manage operations with reduced errors and enhanced data visualization, thus empowering informed decision-making.
- Intuitive UI:
- Our user-friendly interface simplifies navigation and minimizes the learning curve, enabling seamless model management for teams of all expertise levels.
- MLWorks ensures your team can quickly adapt and efficiently manage ML operations without extensive training.
By combining user-centric design, robust automation, and a focus on impactful metrics, MLWorks delivers an unmatched MLOps experience.
The Picture-Perfect Capture!
Great tagging! To get a picture-perfect summary, we've captured them in a feedback loop. As we're told, a picture is worth a thousand words:
Hypotailer Onward - The "Good" Engine's Journey Forward
- Hypotailer Onward: Upon integrating MLWorks, Hypotailer experienced significant transformations:
- Improved Rankings and Engagement - Enhanced product rankings led to increased customer interactions.
- Increased revenue and profitability - Focused recommendations on high-margin products boosted overall profitability.
- Enhanced Business Intelligence - Unified dashboards provided deeper insights into business performance.
- "Good" Engine's Journey Forward: The "good" recommendation engine has been pivotal in Hypotailer's success, evolving into a great engine. However, its journey doesn't end here. Striving for legendary prowess, the engine continues to advance with strategic enhancements and innovative features, setting new benchmarks in the industry. These may involve, and are not restricted to:
- Consistency in Performance: Maintaining high accuracy and engagement rates across all product categories, ensuring reliable and trustworthy recommendations.
- Scalability: Seamlessly handling increased data volumes and expanding product lines without any degradation in performance or user experience.
- Innovative Capabilities: Continuously integrating advanced machine learning models to stay ahead of market trends and customer preferences.
Conclusion
The path forward is clear as Hypotailer continues to enhance its supercharged recommendations. Together, they are steadily advancing towards the mythical "Griffin" engine, embodying a journey of continuous improvement and strategic innovation. This is the pulse of Tredence, we do things Beyond Possible.
Optimizing retail recommendations isn't just about sophisticated algorithms or advanced technology; it's about aligning every technical endeavor with business objectives. Integrating technical and business KPIs serves as a catalyst for transforming good recommendation engines into legendary ones. By fostering this synergy, businesses can achieve unparalleled growth, customer satisfaction, and market leadership.
Tredence - Beyond Possible:
At Tredence, we've empowered clients to achieve transformative results by uniting technical prowess with strategic business insights. We're excited to guide you on this journey, helping you unlock new levels of success that go beyond traditional expectations.
Ready to Transform Your Retail Recommendations?
Contact us today to discover how Tredence can help you achieve retail success through the perfect Tech-Biz mix."
AUTHOR - FOLLOW
Vignesh R
Consultant - MLOps
