Segmentify is a personalization platform for e-commerce businesses that is powered by machine-learning technology. It allows e-commerce businesses to track, recognize, and target every single website visitor, and recommend products that are most likely to appeal to visitors based on their unique interests. Personalized product recommendations make it more convenient for online shoppers to find the products they’re looking for, improving their experience. In other words, Segmentify is like a shop-assistant at an offline store who knows the customer and can give them helpful recommendations. Invest Foresight learnt the details of the platform operation from Ergin Eroğlu, Segmentify co-founder.
What had you been doing before launching Segmentify? How did you meet with your business partner Murat Soysal?
Murat and I were working at the same company when we met in 2013. He was already working at his PhD in machine learning technology and recommender systems, which later on became the foundation of Segmentify. I, on the other hand, had tried and failed several times as an entrepreneur. But I never doubted my willingness to start my own company.
During my trials as an entrepreneur, I started an online store specialized in hand-made babies’ and kids’ clothing. I was facing real pressure on profitability and keeping operations, which was due to low conversion rates and high customer acquisition costs. In aftermath, I figured out that without improving conversion rates, e-commerce can’t be done with profitability and sustainability. From this experience, I realized that there was an opportunity in addressing the challenges of online retail with personalized product recommendations which can be the solution for low conversion rates.
When we exchanged ideas and talked about our professional experience, Murat and I realized that together we could change the face of online retail for the better. My enthusiasm and dedication for starting a company and his vast experience and knowledge in machine learning systems combined, paved the way for Segmentify.
How long did it take you to develop the platform? Who were the first customers?
The foundation for creating a successful startup begins with finding the right problem to solve. In this case, it was the low conversion rates in e-commerce, which were a result of the failure to present the right products to the right customers at the right time on the right channels and devices.
Online stores often end up failing to recoup the money they spend on acquiring customers, and also end up missing out on profits. This happens because online customers who are unable to find the products they’re looking for on e-commerce websites often leave a store without making a purchase. The best way to avoid this problem is to present each customer the exact products they’re most likely to buy.
Once we realized that e-commerce success depends highly on personalization, we started developing our own algorithm. The initial beginning phase lasted about a year, after we acquired the capital and the workplace after winning the first place in a business project contest back in 2014.
During early days, we were also bootstrapping by developing customized project for a corporate customer, which became the first customer of Segmentify later on. This approach helped us to validate our vision and test our solutions. We both brainstormed and shaped the right product.
After all the initial R&D and the coding phase was over, Segmentify was established in the first half of 2015 and our first clients were Hürriyet and N11, which is a significant stepping stone for a starting company. Hürriyet is the largest and the only profiting newspaper in Turkey, whereas N11 is an online retail giant. First clients of a startup set the tone for the rest of the things to come, because your work ethics, your standards are all set by that early work.
N11 and Hürriyet combined had 200 million customers. Being able to handle this volume in such early stages proved the Segmentify’s competence as well as the strength of the machine learning algorithm we developed.
According to Forbes, Segmentify raised a total of €1,015,000 in funding over three rounds.
Actually, we raised €2.5mio in total funding and Forbes article missed our final round. We started with a small incentive and funding of around €50K to create first version of Segmentify.
Now we are witnessing the heyday of personalized marketing.
What makes you different from competitors?
The biggest problem in the market today is without a doubt low conversion rates, resulting in low ROIs for e-commerce companies. An average e-commerce customer spends 2.5 minutes on an e-commerce website before leaving the website (and probably jumping to a competitor’s website.) During those 150 seconds, you have to convince that customer to stick around and to direct him or her to making a purchase through efficient product recommendations.
The recommendation tool you’re using has to be able to analyze the online behavior pattern of this visitor in milliseconds and combine the most relevant products and campaigns to recommend. The same process is to be repeated anew for every single visitor in order to significantly increase the conversion rates. So, I would say generating accurate product recommendations in real time and being scalable are the two inevitables for a successful recommendation platform.
In general, recommendation engines and marketing automation tools are like black boxes, they learn by themselves and produce results with given data. But there is a huge opportunity to convert the intelligence learned by an AI machine into actionable insights. That’s what differentiates us from the competitors, as we offer 20+ actionable insights like ‘bad converting products’ and ‘products to be bundled’ to e-commerce managers to help them get better and timely decisions.
At which stage Segmentify is at the moment?
We are now working with more than 150 e-commerce businesses from over 15 different countries including some of the big players from the UK and Germany. We have grown out of our initial startup phase, but learning is an everlasting journey. We are always looking for new and innovative ways to develop our product and improve our services. During 2018, we introduced two new products at our platform: Personalized E-mails and Personalized Push Notifications. When you’re creating a software platform, there is always one step further. E-commerce personalization is moving faster than ever. Customers are now extremely used to being presented a personalized content, so you must always think ahead of them and find ways to surprise them.
What bonuses, besides increasing conversion, does a business get?
We are not the pioneers of personalized product recommendations. However, we are simply one of the most ambitious companies out there. We now offer 4 different solutions to improve e-commerce businesses. Three of them are based on real time, personalized recommendations: Onsite Personalized Product Recommendations, Personalized E-mails and Personalized Push Notifications.
As you can see, at the core of our business lays accurate product recommendations. So, it is safe to say that our biggest differentiator compared to our competitors is the accuracy of the recommendations our system generates. Our advanced machine learning algorithm tracks, learns and detects each and every onsite behavior of each unique visitor. It, then, combines behavioral data with static product data to come up with the most relevant product recommendations for each unique visitor on multiple platforms and through multiple channels all happening in real time.
As a result of our on-point recommendations, e-commerce businesses enjoy a 10% contribution to their online revenue in less than 2 weeks. When you look at third party tools, you can often find that the integration process usually takes weeks and is quite painful for both parties. Whereas integrating Segmentify to any e-commerce website is just a piece of cake. All we ask from our customers is to add one line of code to their web pages and that’s it. Our amazing Customer Success Team takes care of the rest of the process. The whole integration takes just five days, and in the end the customers are all set to go with six ready-to-use campaigns prepared for them.
Once the customers decide to go live with the campaigns, they can easily check campaign results on their dashboard, which is super easy to use. They have full control over the panel and edit ongoing campaigns or create new ones in minutes. However, if they lack the time or the team, or simply don’t want to direct their resources for Segmentify, our Customer Success team is always on hold. Each customer has their own dedicated Success Manager to make sure that their contribution rate stays around 10% or higher at all times. So I would say, our biggest differentiators would be our 10% contribution to online revenue, easy and fast integration and always ready Customer Success team.
What markets are you interested in and why?
We are currently expanding our operations in the UK market, due to the market-fit of the environment. Our London office is now the Sales HQ for all of our sales activities. We do not, however, limit our gaze to the UK only. Our ideal customer type is an online fashion retailer with a minimum of 300 monthly sales transactions. We have a low limit for transaction amount, because data fuels machine learning. The more online activity an online store has, the more accurate its recommendations will be due to continuous machine learning. We are eager to work with any ecommerce company that meets the needs and is looking to offer a better e-commerce experience for its customers.
How do you monetize Segmentify?
We run on 5% Contribution Share Model. This means that our fee is 5% of the revenue contribution we have generated for you. Not your total revenue of course! And the lower limit is €650. This includes integration, dedicated support team, limited number of campaigns and a 14-day free trial. And you can cancel the subscription any time. Of course, there are different options, too, for different businesses like marketplaces.
How do you think personalization will develop further?
We are long past the point where companies consider the possibility of using a personalization tool. Personalization in e-commerce is no longer an option. It’s a must for an effective marketing strategy. And basic product recommendations are the norm now. As the next step, we ought to develop new ways and never-before-done personalization scenarios to bring customers the exact products they’re looking for. Be it cross-platform personalization, bringing offline data into the picture or anything else that would increase the online revenues of ecommerce businesses.