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It's Not Your Data; It's How You Use It

Posted on 4.09.2006
The Future of Web Analytics  

By Patrick McKenna, DMi Partners

Have you ever collected the spare change you find, only to dump it into a giant milk carton or empty pretzel bin that sits in a corner for years? Inevitably, you save and save, but the collection remains just a bin full of change — valuable, but useless sitting there gathering dust.

Thus could be the fate of customer data, if not properly nurtured and utilized. The technology to track online user behavior will always be available, and our ability to measure different customer interactions will certainly improve with new types of interactive media. But the real story of the future of Web analytics lies not only in e-tailers’ ability to mold the data into a pool of valuable information, but also to use that information to make improvements in marketing and e-commerce functionality.

Web analytics provide access to a wealth of valuable information that should be used  to make decisions in three key areas: reaching business goals, measuring performance, and identifying problems. Unfortunately, many businesses today are not using the data that they capture. Studies have found that as much as 40 percent of e-tailers still do not know their shopping cart abandonment rates.

Get Back To Basics
If so many online retailers are not utilizing customer data to its greatest potential, it could be because they simply don’t know where to start. Access to so much data can be a double-edged sword. There are countless valuable applications, but it is very  easy to get overwhelmed when trying to filter through it all. Reports are often generated, glanced at, filed and forgotten, simply because there is no clear reason for their existence. So for those folks stuck in the “where to start?” phase, let’s get back to basics.

The first step: identify specific goals for the website, and attach measurable actions to each goal. If your goals are to increase brand awareness and drive sales, what exactly does that translate to in terms of customer actions and interactions? By identifying quantifiable actions, you can narrow down the analytics necessary to capture that information and focus your efforts.

Be specific. For example, one of our clients is a sports apparel manufacturer most widely known for recreating vintage jerseys from the four major US professional sports leagues. One of their website goals was increased customer awareness for their new summer t-shirts. Quantifiable customer actions were attached to this goal, including: the amount of clicks through to the t-shirt page from a link/graphic on the home page, clicks from advertisements featuring the t-shirts on third party websites, and customer interaction levels with the different t-shirt options. Note that this goal does not refer to sales, so the corresponding action is not a t-shirt purchase. T-shirt sales goals are outlined separately, with separate measurable actions.

Once your goals and customer actions are outlined, creative development is complete and your site is humming with traffic, start to collect the data that will show where you are succeeding and where you need improvement. Conversion and abandonment rates are important, but by no means provide the whole picture. You need to look further to find the root cause of abandonment or, in the case of conversion, which factors came together to make that interaction a success.

Dig Deeper
This leads to the second and third key functions of analytics, measuring performance and identifying problems. Campaign performance should be measured against a predetermined ROI to maximize the volume and productivity of your marketing investment. Compare the generated sales to the marketing costs, but also take a look at other details, such as products purchased and the path through the site — from a search engine or through a banner ad, for example. Did the product featured in the ad match the product purchased? Or do many customers click through an ad for one product and purchase another? This information can help with decisions on which products to feature in future campaigns.

Do not rest on your laurels when you identify a strong click-through or conversion rate for a particular page or creative. Figure out what about that creative, copy, or product is appealing to your customer, and replicate it elsewhere. Look at hot spots and ask yourself how you can drive more traffic to those areas and how you can mirror those areas on your other pages.

Track conversions to assess performance of A/B test campaigns, but be careful. Make sure to compare apples to apples, especially when featuring different products at different price points. For example, say my client runs a campaign promoting NBA apparel. Ad A features jerseys, and ad B features hats. The hat creative converts better — a 5:1 ratio. B is better, right? Maybe not, considering price points. They have to sell 10 hats to equal the price of one jersey. So is A better? It depends which products sold. Perhaps ad A attracted less customers, but they bought mostly jerseys — high price point products. Perhaps they clicked through the jersey ad but bought mostly hats. What if most people bought NFL products instead of NBA? These are all factors that could be overlooked if conversion rate was the only measurement tool used.

Approach abandonment rates with the same curiosity and thorough investigation. Do not be satisfied with the knowledge of where your customers drop off; dig deeper to discover why. A link could be broken, or an item out of stock. Problems can also occur with the hosting, serving and coding that supports the website, which may require technical intervention and improvement. Identify patterns for where the user paths end and trace back to the root cause — is your copy not compelling, the product unpopular, or is it a technical issue? Track page view paths and connect them to both purchases and drop off pages — is there an easier way for your customer to get to what they want? If you notice a high number of erratic page views, perhaps your navigation needs improvement.

These examples and the many other possible data points are important to improving marketing efforts within a company, but they can also help enforce accountability on the part of publishers, ad networks, and other third party service providers that marketers rely on. The data arms the marketer with a system of checks and balances to ensure that your vendors are delivering.

Connect the Dots
Once you’ve rounded the first three bases in the analytics game, the home run will be your ability to integrate online and offline data. This will allow you to develop an image of who your customers are and how they interact with the brand, in more detail than ever before. It is especially valuable for retailers with a significant amount of shoppers who browse online but buy at a brick and mortar location. This data integration is also important for marketers of big ticket purchases or investments, which typically have long (and often offline) lead times before the customer converts.

When a company can accurately match up their offline and online customer data, they are empowered to make better decisions to achieve the overall business goals. Using the sports apparel example: The information we gather from the online business, connected with customer information from their retail location and their wholesale accounts informs decisions on everything from production, to allocation, to which products to feature in promotions and advertising campaigns.

The technology is there for the taking, but statistics show that most companies are not biting — yet. A recent Jupiter Research study found that 83 percent of US businesses exceeding $1 million in revenue are either underinvested or not invested at all in Web analytics software. This statistic represents a big opportunity for interactive agencies and technology vendors.

To predict the future of Web analytics is to predict whether online marketers and e-tailers will get better and more efficient, or will keep their penny jars tucked away. We say, take the jar to the bank. Collect the interest. You’ll be happy you did.


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