September 30, 2004, 12:00 AM

The web analytics riddle: How make the data mean something

If web analytics data fail to reach those in the retail organization that need to see them in a form they can actually use, has all that spending on analytics had any positive impact? Not enough of one, contends Jupiter Research.

Internet Retailer

If a tree falls in a forest and there`s no one there to hear it, does it make a sound? And if web analytics data fail to reach those in the retail organization that need to see them in a form they can actually use, has all that spending on analytics had any positive impact? Not enough of one, contends Jupiter Research Inc. analyst Eric Peterson, which is one reason analytics providers are offering a new form of reporting based on key performance indicators that strives to make web analytics reports more palatable with information that managers can act on.

According to Peterson, who details the problem and the opportunity in a recent Jupiter report, `Key Performance Indicators-Using Analytics to Drive Action," a surprisingly large number of companies that do business online don`t even bother to distribute data generated by their web analytics to key departments that could use it. Only 19% of the companies surveyed regularly distribute analytics data to merchandising departments for review. Only 53% of companies said their marketing team reviews analytics data, and only 41% said executives review web analytics data.

`Most companies fail to distribute key web metrics frequently, deeply, or broadly enough to appreciate their full benefit," concludes Peterson. While Jupiter`s survey included companies in industry sectors beyond retail, Peterson contends the numbers would likely differ little for a retailer-only pool because the same issues that hinder data distribution and use span industries. Take senior executives, for example. `More often than not, if you give a long report to executives they are not going to read it. They want the bottom line. KPIs are a great way to convey that," he says.

Key performance indicators are analytics data on metrics selected to illustrate specific aspects of site performance against specific business goals. According to Peterson, KPI-based reporting shrinks volumes of data into targeted reports consisting of a limited set of data points that convey significant, regularly-updated information about how the business is doing against the defined goal. The reporting is associated with a plan of action geared to getting and keeping the selected metrics within range.

Most top-tier analytics vendors have added some capacity to customize reporting in this format, with the execution of the application ranging from good to so-so, Peterson says. But even if an analytics product has the technology in place to support KPI reporting, infrastructure is only half the battle. Setting up KPI reports still requires human intelligence to define business goals and map the metrics and reporting against them. That`s where the help extended by an analytics vendor`s professional services group begins to differentiate one product from another, Peterson believes.

The overriding metric on any KPI reporting program should be how well it maximizes a retailer`s ROI on its web analytics investment, he adds. `The idea is that if you can put the data in front of enough people in a small enough way so they will think about it and make it easy enough to understand, you bring more minds to bear on a problem," he says. `If you staff properly and think critically about reporting and selecting the vendor with the underlying technology, you can be tremendously successful in using analytics to improve your business."

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