Web analytics is a basic building block of e-commerce that is undergoing a significant transformation, say e-commerce technology analysts.
Web retailers still use internally developed and vendor-supplied programs to measure such important metrics as site traffic, conversion rates and average tickets. But retailers are using analytics to understand a broader universe of data. "We are moving away from the days when analytics was only used to measure batches of data," says Gartner research director Bill Gassman. "There's a lot more real-time data to measure today, and analytics is the tool that will help retailers measure their performance in new channels such as mobile and social commerce."
Historically, web managers have used analytics to measure customer behavior on their primary e-commerce sites. But with new and improved analytics tools, retailers now measure interactions with shoppers across such channels as e-mail, display advertising, search marketing, mobile commerce and social media.
"Analytics will be used going forward to measure more data on a real-time basis and that will give web merchants insight into immediate customer behavior and how that behavior has changed over time," says Gassman. "Shoppers now interact with retailers through new channels, such as mobile commerce and social media, and will generate new types of behavior web merchants will need to track."
In the past two years, consolidation has spurred more investment by analytics firms, especially for social media tools, says Eric Peterson, senior partner and principal consultant for research firm Web Analytics Demystified Inc. "There has been resurgence in research and development on web analytics among the various software developers in the past year, and consolidation among vendors has played a role," says Peterson. "The new software releases are easier to use, let users measure and monitor multiple channels in more finite detail and look much more closely at individual buying behavior across a broader spectrum."
Retailers can benefit by making these increasingly sophisticated analytics tools available to more employees, says Aberdeen Group research analyst Greg Belkin. "The more individuals within a retail organization that understand and use analytics, the retailer will have a better understanding of what's driving customer behavior and their purchasing patterns."
The goal of better analytics reporting and understanding remains a top priority for some retailers, especially in using analytics to measure e-commerce and social commerce metrics on a tight deadline. Retailers also need to avoid information overload, says Lynn Lanphier, director, digital analytics, at Best Buy Co. Inc.
She says Best Buy at one point was using its web analytics program to collect an extremely wide variety of web site traffic and other related metrics. "We used to gather information from our web analytics program just in case someone should ever ask for it," says Lanphier. "But doing that wasn't the best use of resources." She says a better—and more effective—way to measure web data is to tie analytics in with specific end-user business requirements.
To streamline its web analytics program, Lanphier says Best Buy now collects and measures data based on the top priority of each e-commerce department. "We went to each of the departments, asked them to tell us what was really important to measure and then made up a list," says Lanphier. Best Buy now uses analytics to measure transaction and traffic data more precisely, view data on a priority basis and extract the best data to act on. "We're incorporating top user requirements and effectively measuring what's happening across new channels, such as mobile commerce and social media," says Lanphier.