Online retailers are honing their skills at using analytics data to boost sales and profit margins.
Data on shoppers’ behavior is a gold mine for e-retailers, and web analytics is the online data miner’s spade and shovel. Where visitors went on a site, what they bought, and what they looked at but didn’t buy all provide valuable insight for web merchants on a continual quest to improve the customer experience and boost sales.
Analytics also work off of the site in tandem with marketing initiatives, for instance, to measure how search campaigns are performing, and to sharpen e-mail campaign segmentation and results. Online retailer Dale and Thomas Popcorn fused analytics with an e-mail management system to see how its customers responded to e-mail marketing offers, and then followed up with e-mails that included targeted offers. The targeted campaigns improved on prior campaigns with open rates up 300% to 600% and click-through rates higher by 600% to 1,000%, the retailer reports.
And multichannel merchants like The Wine House use analytics to dig out actionable data from store operations. Through analytics, The Wine House discovered that it had $400,000 of inventory on the floor that hadn’t moved in a year or more, a fact it used to host a sale and guide future inventory purchasing.
But while these and many other e-retailers can point to specific insights and results from the application of analytics, still others are at sea about how to harness the power in all that data. A report by Forrester Research Inc. analyst John Lovett, “U.S. Web Analytics Forecast, 2008 to 2014,” notes that while 73% of the businesses surveyed are currently using or testing web analytics, many companies lack the personnel needed to get the most value out of analytics technology.
“Many adopters of web analytics technologies underutilize their tools, fail to recognize ROI or simply don’t apply the data,“ Lovett says in the report.
Finding personnel who have mastered the advanced functions of analytics tools, or training staffers in that art, remains a major challenge. The spread of analytics tools has outpaced the training of analytics professionals, making it hard for many companies to effectively use analytics, Forrester’s report notes.
But that could change in the future as more e-retailers gain exposure to analytics and have the opportunity to develop knowledge by experimenting with the free web analytics tools that have emerged. In 2005 Google introduced the free, downloadable Google Analytics, with a streamlined interface that strips out features some users may find confusing or not immediately useful, and makes what’s left easier to understand. Yahoo Web Analytics, available free to e-retailers using the Standard or Pro packages on the Yahoo Stores platform, also tracks shopper behavior on sites.
The free tools are becoming widely used. According to Forrester, about 78% of web analytics market share is held by free applications, and 37% of companies that use commercial web analytics applications also use free ones.
Bill Gassman, research director at Gartner Inc., says Google’s free analytics tool is helping to promote use of analytics by introducing marketers to some of the basics-for example, training users to tag all pages, a tracking requirement of all the advanced analytics packages and a skill that retailers will need should they decide to upgrade to one.
Whether experienced with analytics tools or just starting out, retailers must work to get control of the data generated to use it effectively. Lovett says this includes establishing a process for its use, cultivating staff expertise, managing data intake and dissemination among staff, putting usable data into action, and testing to see what needs to be changed.
But with all there is to be gained, indications are online marketers are up for the challenge. Forrester projects that spending on web analytics will grow to $953 million by 2014 from $363 million in 2008, a compound annual growth rate of 17%.