February 28, 2007, 12:00 AM

SPONSORED SUPPLEMENT: Web Analytics

The Key to Successful E-Commerce

Internet Retailer

Little is more important to the success of an online retail operation than understanding how a shopper uses a retail web site. But hardly any aspect of online retailing has changed as dramatically over the past few years as what it means to understand shoppers’ behavior. For instance, e-retailers once decried all abandoned shopping carts as unsuccessful sales. Now, most understand that an abandoned cart can mean any of several things. “Someone puts three things in a cart and then leaves it, but you don’t necessarily know why,” says Larry Freed, president of ForeSee Results, a customer satisfaction measurement and management company that specializes in online retailers. “That person may have gone offline to buy, or may have bought from a different PC, or may have had someone else complete the transaction.”

ForeSee Results provides services and technology that ask customers how they use a web site, what they intend to do as a result of their visit to the site, and then creates a customer satisfaction score that helps retailers understand which areas need beefing up. It works in conjunction with traditional web analytics programs and extends the view retailers get from their analytics providers. “Everybody needs traditional web analytics,” Freed says. “Understanding how consumers use a site-how many clicked on something, how many bought, how many abandoned their carts-is very important.”

The starting point

But, he adds, it’s not enough. “That tells you what happened and leaves a lot to the imagination,” he says. “For instance, how can you tell just from what someone did that the problem was with the page design? Retailers tell us all the time they know everything that’s wrong with their site, but how do they know how to prioritize what to fix? It leads to a lot of trial and error and that’s an expensive proposition.”

Understanding what the customer wants to get out of a visit to a site is the starting point for deciding whether the visit has been a success-and the only way to get that information is to ask the customer, Freed says. “You need to ask the customer: ‘What were you trying to accomplish today?’” Freed says. “They might have been on the site just to browse, or maybe they went to buy, or maybe they wanted to check an order. Without knowing that, you’re left to guess.”

Only after getting answers to those questions can a retailer create a really successful web operation. “The best performance metric is whether you are satisfying the customer,” Freed says. “If they were using the site to do research, and you were able to answer their questions, then you satisfied them. Always focusing on the conversion rate of visitors to buyers is not a good metric. It can be misleading.”

The missing ingredient

The ForeSee Results methodology is based on the American Customer Satisfaction Index developed at the University of Michigan and proven over the years to be an accurate measure of the success of an enterprise. As Freed has been evangelizing the importance of customer satisfaction, the market has started to come his way. Today, retailers as small as $2 million in annual sales, or about 50,000 unique visitors a month, are prime prospects for ForeSee Results’ services, Freed says, noting that the company serves about 15% of the 100 largest retailers in the Internet Retailer Top 500 Guide. Entry level price is $30,000 to $50,000.

“Customer satisfaction, when done right, is the missing ingredient,” Freed says. “Everybody talks about Web 2.0, but I like to talk about Customer 2.0. Web 2.0 is internally focused, but this market is really about the customer.”

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