December 26, 2000, 9:55 AM

Buystream hopes knowing how a shopper arrives at a site will mean more e-retail sales

Shannon Ryan believes that most Internet retailers are taking the wrong approach to boosting sales. He is especially critical of strategies designed primarily to drive more traffic to a site on the theory that attracting more visitors will increase sales.

As Ryan sees it, is that approach does nothing to encourage visitors to buy. Instead of simply trying to get more people to their sites, Ryan urges retailers to try to determine whether the people who do stop at their sites consider it a pleasant experience.

“The quality of a visitor’s experience is really what influences behavior,” says Ryan, CEO and co-founder of Buy-stream.com, a software company based in Ottawa, Ontario. The company says its products help retailers pinpoint what moves web site visitors to buy. “If you understand what type of experience visitors are having on your site,” Ryan says, “you should be able to optimize that experience in a way to help you close more sales.”

Buystream’s flagship product, called Merchant, combines three types of information to help a retailer determine how best to design a web site and present merchandise. Merchant can tell the customer’s type of computer and access equipment, the customer’s location, the customer’s preferred language and the customer’s actions on various pages.

By using Merchant, Ryan says Internet retailers can shift their focus from the number of site hits to conversion ratios. “People have been focused on driving traffic to their sites for so long that it has become the accepted method of trying to increase revenue,” Ryan says. “But a 1% increase in your conversion rate will produce more additional revenue than a 3% increase in traffic.”

Are they having fun?

The process starts with knowing whether a customer is having a positive experience. To assess how much a visitor will enjoy traveling through a site, says Ryan, first determine what type of vehicle the customer arrives in.

Buystream has classified computer users into high, medium and low TechnoClusters. A high TechnoCluster includes people using the most advanced computers with fast processors, large, high-resolution screens, numerous multimedia plug-ins and high-speed Internet connections.

Ryan says that people in high TechnoClusters are more inclined to buy things on a web site, primarily because they typically have better experiences than medium or low TechnoCluster shoppers. But, he adds, that does not have to be the case.

With Buystream’s software, Ryan says, e-retailers can determine which TechnoCluster most of their visitors fall into and then create a site that offers that group the best possible shopping experience. PrimeLight eCommerce Inc., a Los Angeles-based company that operates retail web sites for companies that sell high-end women’s fashions and cosmetics, is using Buystream’s software in just that manner.

“We start out building sites that are on the cutting edge,” says Ivan L. Arnold, PrimeLight vice president. “Our sites do a great job of converting people in the high TechnoClusters, but we are leaving a lot of money on the table in the low and medium TechnoClusters. So, we are planning to make sites specifically for those tiers.”

Buystream introduced Merchant in February, but that was its second offering. The first, called Architect, was introduced in November 1999. The Architect package helps web site designers ascertain which TechnoClusters their audience contains.

What works?

Merchant, which was slated for a second version in October, uses TechnoCluster information. Its primary function is identifying which marketing activities are most effective at closing sales on a particular web site. It starts by collecting a broad spectrum of information about a site’s visitors. In addition to identifying the TechnoCluster, Merchant records such things as the visitor’s city, the time in that city and the computer’s predominant language.

Armed with that information, Ryan says, a retailer could present that customer with a special offer likely to immediately convert that customer from a browser to a buyer. Merchant also can gauge broader marketing strategies, such as banner ads or sponsorship programs.

“Buystream Merchant not only can tell whether a banner ad is generating more traffic than a sponsorship program,” Ryan says, “it also can tell how many of the people being drawn by those different devices are actually buying, and whether they become repeat customers. Through that type of analysis, retailers might discover that their sponsorship programs generate more long-term sales, even if they initially pull fewer people than a banner ad.”

Industry analysts believe Buystream has identified a need within the online retail marketplace, but not all of them are convinced that Buystream’s solutions are unique.

Lynne Harvey, senior analyst with The Patricia Seybold Group, says Buy-stream’s technology is intriguing but not necessarily new. “They are slicing and dicing click stream data in different ways to come up with some interesting statistics about a customer base,” she says. “But they do have competition.” Harvey identifies Buystream’s closest competitors as Angara E-Commerce Services and OneChannel.net, both based in Mountain View, Calif., along with San Francisco-based Coremetrics.

Randy Souza, Forrester Research analyst, agrees that traditional click stream analysis is little help to retailers making strategic decisions. “It is virtually useless to know that 100 out of 1,000 visitors ended up at a particular page,” Souza says. “That doesn’t tell you anything about why they went to that page, or what they did once they got there.”

Souza says it would be more valuable to know that a visitor came to a site, initiated a purchase and paused to visit the customer service page before completing that purchase. “With that type of information, a retailer could see that they were losing X amount of dollars because people are getting hung up or not finding what they are looking for at a particular point on the site.”

Ryan says that is exactly what Merchant does. “The simple fact that we can collect all of the steps someone takes on the Internet has created this idea in the market that all of those steps are valuable,” Ryan says. “They are not.”

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