How product taxonomy can help increase engagement and sales

During the pandemic’s beginning, when everyone spent endless time in their homes, shows like Tidying Up with Marie Condo and The Home Edit soared in popularity. People learned to organize areas of their homes by categorizing items and placing things in containers. Online stores have a similar practice called product taxonomy.

Since 70% of users prefer intuitive web designs, understanding how product taxonomy plays a part is invaluable.

Key takeaways:

• Product taxonomy is the online organizational structure of all your products so customers can find what they want with minimal clicks. 
• When the relevant product appears in a search, the probability of a customer buying it grows exponentially.
• Never have a “Miscellaneous” or “Other” category where random products sit together.
• Leverage automation to eliminate human error, which can result in poor search results and lower rankings in search engines.
• Observe how visitors use your taxonomy and make modifications when needed.

What is product taxonomy?

Taxonomy derives from two Greek words: taxis, meaning “arrangement,” and nomia, meaning “method.” So, taxonomy is a method of arranging (or classifying). An example of taxonomy is how scientists divide living beings into Kingdom -> Phylum -> Class -> Order -> Family -> Genus -> Species.

Product taxonomy is the online organizational structure of all your products so customers can find what they want with minimal clicks. Typically, there is a product hierarchy with products placed into categories. Then, in each category, products receive tags to form groups. Finally, products receive attributes, like size and color. This organization results in customers easily navigating through all the levels to their desired items.

You can overlay several taxonomies to give visitors different views of the same products. For instance, when listing books, you can categorize them by genre (e.g., fiction, non-fiction, romance etc.) or by author. 

The value of product taxonomy

When the relevant product appears in a search, the probability of a customer buying it grows exponentially. Product taxonomy improves these odds by categorizing the merchandise in the background.

When a company doesn’t correctly implement taxonomy, lost sales results. For example, suppose a customer searches the “Clothing” category to find a scarf. They see no results since scarves are in the “Accessories” category. The customer becomes discouraged and abandons the site. In time, the brand’s reputation may start to slide.

Consider these statistics:

• 1 in 6 shoppers abandons their purchase due to a poor customer experience.
• 61% of shoppers would pay at least 5% more if they knew they would receive an outstanding customer experience.
• 50% of consumers have left a brand to which they were previously loyal due to a bad customer experience.

Aside from creating better customer experiences and boosting sales, taxonomy also significantly impacts internal decision-making. Companies need robust reporting and analytics to determine which products are selling and which are not. As with any analytics engine, precise input is critical. Distinctive categories and proper labeling facilitate the delivery of accurate statistics across the complete product catalog. Decisions on what merchandise to feature or drop become more data-driven and effective.

Some businesses put earnest resources behind product taxonomy. They may even hire dedicated taxonomists, people with library or information science degrees.

3 Best practices for product taxonomy

Let’s look at four recommendations in striving for the optimal product taxonomy.

1. Know your customer

Psychology has a term called “cognitive fluency.” Cognitive fluency is the ease with which our brains process data, mainly when that information is brand new. The easier to process, the more inclined the individual is to stay engaged. A successful taxonomy will consider what matters to your customer and include it in the categorization and filtering.

Here are some examples:

• If you sell electronic parts, identify which vendors support that part.
• A travel site with cruise itineraries may provide a “must-see” or “must avoid” option for ports of call.
• For food products, list the potential allergens, permitting buyers to filter out items they should avoid.

Knowing your audience also comes into play when naming the categories. For instance, a fishing equipment website may feature saltwater, ice and fly fishing categories. Then, under the ice fishing category, there is an ice auger subcategory. This website’s target audience would understand these terms and value the simple process of getting to their products. Conversely, it’s best to keep the vocabulary straightforward if selling to a general audience.

image source

2. Don’t overcategorize

Lay out the taxonomy. To create the tree, you could use a whiteboard, index card, software etc. If you see that you have too many categories, then it’s time to reconsider the division criteria. We wouldn’t want visitors spending more time looking and drilling through categories than viewing products. 

Strive for two to three category clicks max until you display a list of products. A great example is Target’s website. On the homepage, you see the “Category” link. It takes no more than three clinks through the subcategories to see a display of products.

NOTE: Never have a “Miscellaneous” or “Other” category where random products sit together.

3. Automate categorization

The most significant benefit of not manually categorizing your products is eliminating human error. Miscategorization and duplication result in poor search results on your website and can also hinder search engine optimization (SEO), leading to a lower ranking.

4. Constantly fine-tune

Observe how visitors use your taxonomy. You may be surprised to find how they interact with it. So, review the existing structure regularly and modify it when needed.

Technology and human behavior are ever-evolving. Social media didn’t exist twenty years ago. Now, it’s a marketing platform. Dictionaries added the word “influencer” in 2016. And we don’t know what the future will bring. As a result, creating product names, categories and attributes will never stop.

Streamline product taxonomy with Optimizely

Partner with the experts at Optimizely to help you perform your product taxonomy. Our Digital Experience Platform (DXP) enables you to deliver the outstanding online customer experience that today’s shoppers expect.

Contact Optimizely today to learn more about improving the customer experience.