Product Taxonomy: Best Practices for Better Organization and Classification

Solutions Review’s Premium Content Series is a collection of contributed articles written by industry experts in enterprise software categories. In this feature, Pimcore CEO Dietmar Rietsch offers a collection of product taxonomy best practices to know right now.

In today’s fast-paced and competitive e-commerce landscape, modern customers have high expectations for an efficient and seamless shopping experience. Consumers want to spend minimal time searching for products/services. This is where a well-designed product taxonomy can be incredibly useful.

By organizing product catalogs in a hierarchical and logical structure, businesses can make customers’ shopping experience effortless. With systematically organized products, consumers find what they are looking for with a few clicks resulting in a delightful shopping experience for customers. To manage product data, it is essential to be familiar with the components of product taxonomy, such as categories that group goods with similar features based on hierarchy, attributes that help specify product characteristics, and tags that allow businesses to relate products with one another through keywords. For example, mobile phone is a broad category whose attributes are model, color, storage, size, and operating system, among others.

Organized product information is beneficial not only for customers but also for organizations. By classifying commodities, companies gain insights about which items are in demand, why customers are buying those products, and the type of consumers that purchase them. With this information, marketers gain a better understanding of the goods and consumers, enabling them to allocate appropriate resources for research and advertisements and price the products accordingly.

Product Taxonomy Best Practices

Challenges of Product Taxonomy

However, the classification of product information is a laborious and time-consuming process due to the enormous amount of product data available. Each product in the catalog should be organized under appropriate categories and attributes. Moreover, the same commodity can belong to multiple categories, further complicating the classification process. Besides being an intricate process, it’s also prone to errors, resulting in poor customer experience, lower sales, and increased product returns.

Thus, companies must embrace product categorization as it boosts user experience by providing customers with relevant data and accurate search results quickly, aiding in a successful purchase.

Best Practices of Product Classification

To enhance the benefits of product taxonomy, businesses must classify goods realistically based on consumer behavior, facilitating easy navigation through the product catalog. Without a good product taxonomy, consumers lose interest, abandon their search and seek out competitors’ websites for a better product experience. Here are some tips for better organization of product taxonomy:

Identify Key Attributes and Characteristics of Products

For systematically organizing a product catalog, it is crucial to identify the main attributes of the goods. These attributes help distinguish a brand’s product or service from its competitors. When product descriptions are listed with verified attributes, customers tend to trust the product more and feel good about buying them. With regular upgradation of product features, some attributes that were important a few years ago might not be relevant in the present times. Whereas new characteristics are added due to advanced technological innovations and

capabilities that were unavailable previously. After recognizing related attributes, businesses must create a structure that relates products by their characteristics, resulting in efficient search results.

Use a Hierarchical Structure to Categorize Products

Hierarchical structure enables effective categorization of business inventory, enabling brands to access the product details and track the status of an order. Furthermore, it aids in the record-keeping of multiple products and services and helps consumers find relevant products quickly based on their filters and sorting. A proper hierarchical structure in the system proves beneficial when organizations want to scale their business. When a company adds new products or services, they can be categorized effortlessly while facilitating the growth of the organizational system. Additionally, a well-organized product catalog helps a website look more professional and appealing, thereby attracting more customers and increasing sales.

Consider Different Customer Perspectives When Organizing Products

Organizing products can be arduous, but this can significantly change if brands put themselves in their customer’s shoes to understand their perspective. Modern customers look for product reviews before making a purchase. They purchase products with exceptional results in authenticity, quality, and performance. So, when businesses display their quality assurance certifications in their product descriptions and image thumbnails, it helps build consumer trust. Proven safety credential is another critical attribute that allows a product to stand out among its competitors, as buyers value safe products. Moreover, considering different customer perspectives helps organizations find competing products and market segments. This aids in a deeper understanding of the competitors’ offerings. With this knowledge, businesses can effectively optimize their product taxonomy.

Use Clear and Consistent Language for Product Categories and Attributes

In an overcrowded online marketplace, properly attributed products can help brands in getting identified quickly. And to achieve this, product taxonomy must use natural language and descriptive words that customers tend to use. Buyers often search for products with a mixture of tangible features such as size, weight, and product design and intangible features such as price and quality. Businesses should ensure that they include these features in their product descriptions and personalize them according to customers’ desires. Additionally, to attract potential buyers’ attention among rival products or services, brands must offer product information that is easily searchable, understandable, clear, and consistent across multiple e-commerce platforms, company websites, and social media channels.

Test and Refine the Taxonomy Based on Feedback and Usage Data

Once the product classification is in place, companies must ensure that it works efficiently and put feedback and customer usage data to work if any changes are required. If product classification is done poorly, businesses will lack clarity and visibility into products being sold or focus on selling products that customers do not value. Moreover, poor categorization increases the amount of duplicate and redundant product data. To repair this, businesses should try to understand where the classification went wrong and its negative impact on the customers. The next logical step is to systematically organize the product catalog and make the purchase process transparent by updating the website with the latest information about the product.

To best achieve systematic organization of product catalogs, businesses must implement the right mix of tools and technologies, including:

• Product information management (PIM) systems: Initially, PIM’s usage was limited to the management of product data and the creation of product catalogs, but with the advancement of technology, PIM is now able to enhance buying processes with engaging product journeys and hence, increasing conversion rates. The key to successful PIM strategies lies in the overall quality of systematically organized product data. By leveraging PIM, businesses can craft engaging content that is available in multiple languages and channels, highlighting the essential product attributes to capture the customers’ attention.
• Taxonomy management software: Leveraging taxonomy management in a company’s current data organization ensures organizational structure to data, standardized terminology across systems, intelligent search results, and reusability of data. For managing product taxonomy, it is essential to understand the type of data a business has and classify it to align with customer needs. Another basic characteristic of taxonomy management is standardizing language by grouping synonymous terms and eliminating any confusion caused by mislabeling. This allows businesses to organize products for merchandising with a specific set of product attributes.
• Artificial intelligence (AI) and machine learning (ML) tools: AI and ML tools help reduce the manual task of assigning categories and attributes to each product. Tools like automatic tagging evaluate the product image and identify the product’s features with associated keywords from a predefined taxonomy and add a relevant tag to it. Furthermore, deep learning technologies ensure a quick labeling process and the creation of comprehensive product information. Additionally, with AI-powered tools, businesses can automate operations, focus on critical business processes, and strengthen their product discovery, recommendations, and filter options.

Boost Customer Experience and Sales with the Right Product Classification

By offering customers a seamless experience, brands have witnessed a 10-15 percent increase in conversion rates, 20 percent higher customer satisfaction, and 84% revenue growth in recent years. However, disparate data and inefficient operations can hinder businesses’ ability to offer seamless experiences resulting in the loss of online buyers. To tackle unorganized data issues, companies must incorporate product taxonomy tools into their operations and invest in technologies that enable accurate product categorization and effective search results.

With the logical and hierarchical classification of product data, companies empower buyers to access the correct product data through clear product descriptions, rich filter options, and sorting methods. This gives website visitors more control over their search. In addition, intuitive and satisfying search results can encourage shoppers to browse products for longer, increasing the likelihood of successful purchases.