How “relevance” became the Holy Grail in search

December 6, 2011, 7:31 PM UTC

By Paul Todd, contributor

FORTUNE — Imagine you want to plan a vacation, book a business trip or find a new book to read. You start by searching the web. If you’re planning a trip, you may visit 20 or more websites — spending more time on some than others — and piece together all of the different reviews and details that each site offers. The process is long and tedious, filled with hours of double-checking on prices and comparing user reviews.

What if, instead of having to sift through thousands of highly unorganized search results for the information that meets your unique needs, the options were dynamically structured and organized for you so the most relevant options floated easily to the surface, based on your personal preferences, your location and your previous purchases or searches?

Relevance-powered search is the future, and it’s already taking hold in travel and online retail.

For individuals, the reasons for this shift are quite simple. A more relevant and personalized search experience will save time, frustration and ultimately create a smarter and easier web experience. But the implications of relevance-powered search go well beyond impacting day-to-day web searches. Rather, relevance in search has the power to completely alter the way merchants go about interacting with their customers and building long-term customer loyalty.

At the most basic level, businesses can be more targeted in their outreach by making advertisements and information more relevant to the end-user. A simple example of this is Facebook, where the platform intentionally presents different advertisements to different individuals. Facebook’s ad strategy is highly targeted, and the information and offers you receive are based on who you are, what you have in your profile and advanced algorithms that determine what will be most interesting to you.

But the real power and potential of relevance is around building enduring customer engagement and loyalty. At times, businesses just want to sell more of their goods and services to anyone they can reach. But more often, they want to reach specific, target audiences. For example, the high-end restaurant considering offering a “deal” to entice new customers might prefer to target the business traveller who has just flown into town first class and is more likely to buy an expensive bottle of wine during her meal. That would help the restaurant maximize capacity and yield profits but, beyond this, it might want to build an ongoing relationship with customers who are likely to visit regularly, or to tell their friends and colleagues about their great experience.

For the diner who regularly visits on a weekend, the ability to offer an incentive to visit during the week might be highly valuable to both restaurant and consumer. Instead of spamming customers with irrelevant and unwanted emails, snail mail and sales calls, companies need to present offers unique to each of their customers. Once they learn what the customer needs and when they need it, they can deliver great value, at just the right time.

Travel and online retailers are ahead of the curve, but others are embracing relevance-powered search. Search engines like Google and Bing are also beginning to adopt the concept — serving up different results for different people, based on search history and personal preferences. And fast-growing daily deal businesses are working hard to incorporate relevance as consumers increasingly demand platforms that provide appropriate discounts (instead of offering steakhouse coupons to vegetarians). The more contexts that can be built around a user’s intent, the more refined the result set can, and will, be.

But travel is by far one of the best ways to showcase the power and value of relevance.

Today, travelers spend hours searching dozens of websites for flights and hotels that meet their requirements. It’s a major hassle every time they need to travel – especially this time of year, when air fare is so high that consumers will do everything in their power to get the best deal possible.

The problem faced by most travelers is that a typical flight search will yield 1,000+ nearly indistinguishable and unorganized results. Many business travel platforms – and even some consumer websites – are starting to solve this problem through the use of semantic data, statistical modeling and machine learning. Advanced platforms can quickly scan available data on a user – like the times they can fly, their price range, the in-flight amenities they desire and their preferred airlines – and highlight the best options for each user.

These tools won’t eliminate the tens of thousands of results available to the user, but they will organize and structure them so the most relevant options are presented first. This structuring means that the context of a search can easily be modified whether the user is in a ‘budget trip mood’ today, or a ‘no expense spared mood’ tomorrow. Either way, relevance engines can quickly analyze your personal preferences to serve up the best options.

The desire for relevance-powered search capabilities has been around for some time. Companies and search engines have long been trying to take advantage of the buyer’s need for personalized information, and it’s finally coming to fruition. In a lot of ways, it’s a reaction to how consumer behavior is changing. While the old-school buyer might start the process in the yellow pages, today’s digital-aged buyer lives online. They’re far less tolerant of unwanted advertisements spamming their inboxes and cold calls during dinner time – and want control over the information they receive, and how they receive it. Tomorrow’s buyer will be even more demanding when it comes to relevance and personalization.

While this fundamental shift in buying behavior will be a challenge for most businesses, it’s also a major opportunity. Businesses that adapt by collecting and analyzing data that the user openly shares to relevance and personalization into the buying process will have immense opportunity to increase their customer base and drive life-time loyalty.

But businesses have to achieve this with, rather than in spite of, their customers aren’t the only ones facing change. While individuals clearly want relevant, personalized information but many are concerned about privacy issues around personal information. Mindset is critical here. Most Amazon consumers expect Amazon to hold their purchase history and to make use of that data in providing recommendations and providing a better, more personalized, shopping experience. But, at least for now, fewer users want social networking sites —like Facebook —to have their credit card data or purchase history. There has to be a clear quid pro quo for the user and a clear connection in their minds between the data and an improved experience. But given the right value-based stimulus, consumers may yield in the interest of taking advantage of the many benefits a relevance-powered buying platform provides.

The bottom line: relevance-powered search has arrived, and it’s delivering a better, faster, smarter web experience for everyone involved. Buyers get the information they need and want faster and easier, and sellers have an incredible opportunity to more effectively reach their target audiences, and build life-long customer relationships.

Paul Todd is the Chief Products Officer at Rearden Commerce.