E-Customization

Abstract

Customized communications have the potential to reduce information overload and aid customer decisions, and the highly relevant products that result from customization can form the cornerstone of enduring customer relationships. In spite of such potential benefits, few models exist in the marketing literature to exploit the Internet's unique ability to design communications or marketing programs at the individual level. The authors develop a statistical and optimization approach for customization of information on the Internet. The authors use clickstream data from users at one of the top ten most trafficked Web sites to estimate the model and optimize the design and content of such communications for each user. The authors apply the model to the context of permission-based e-mail marketing, in which the objective is to customize the design and content of the e-mail to increase Web site traffic. The analysis suggests that the content-targeting approach can potentially increase the expected number of click-throughs by 62%.