Rising Above Spam

Putting e-mail under the analytics microscope, retailers pursue the perfect pitch

Marketers have long aspired to one-to-one marketing, sending the perfect pitch to a customer based on her individual interests at the moment she's most inclined to buy. And though the task of compiling and capitalizing on the data needed to support true one-to-one marketing keeps it an illusive goal, marketers continue to try to reach it. "It's the continuing pursuit to find the right message at the exact moment when a customer will convert to a sale," says Heather Blank, director of e-commerce and business development for Petco Animal Supplies Inc.

Blank and other marketers are finding that one-to-one marketing is finally moving within reach thanks to the integration of web site analytics and e-mail marketing applications. By using site analytics tools to compile and analyze data on shoppers' activity, then using that data to drive targeted e-mail marketing campaigns, marketers can create campaigns that drill down to smaller segments of shoppers based on information compiled from virtually limitless measurements of customer activity.

More repeat buyers

Marketers can measure, for example, how recently and frequently shoppers browsed for a particular type of product, and if and how often they abandoned a shopping cart, made a purchase, or came back later to buy something else. And with that information integrated into an e-mail campaign management application, they can send e-mail marketing messages designed for consumers based on particular sets of shopping and browsing behavior. To continue the cycle of analytics and marketing, marketers then use the same set-up to analyze how customers responded to those targeted e-mails and use that information to better design subsequent campaigns. And so on.

"We've definitely seen an increase in repeat buyers and revenue due to our e-mails," says Jason Roussos, senior vice president of strategic development at CompactAppliance.com, which began experimenting about a year ago with combined site analytics/e-mail, earning back the cost of the system in the first nine months.

Combining site analytics and e-mail campaigns may not yet be true one-to-one marketing, but it's closer to it than marketers have ever been before--and it is taking marketing to a whole new level. Retailers now face the challenge of having more data than they know what to do with, but as technology does the grunt work of gathering useful customer information, they're now able to concentrate more on designing the most effective marketing campaigns. "It's a great opportunity and it makes my job more challenging," says Jeff McCall, vice president of customer relationship management at GSI Commerce Inc., which operates web sites for more than 40 retailers, including Tweeter Home Entertainment Group's Tweeter.com, The Sports Authority's TheSportsAuthority.com and Kmart Corp.'s Kmart.com.

Combining web site analytics with e-mail marketing programs is still in the early stages and only a few retailers are providing details on how they'll implement it. But the trend is gaining steam, as major site analytics vendors and e-mail services providers work to integrate their technologies and retailers begin to see results of highly targeted e-mail campaigns. Among 52 users of web site analytics tools surveyed by Forrester Research Inc. earlier this year for its June report "What Matters to Web Site Analytics Users," 49% said the use of site analytics data was important for analyzing and generating e-mail campaigns.

Supporting the work that CompactAppliance, Petco, GSI and other retailers are beginning to do in combining site analytics and e-mail is a high level of competition among site analytics providers. Market leaders including Coremetrics Inc., Omniture Inc. and WebSideStory Inc. are all taking steps to expand their technological capabilities vis-‡-vis complementary marketing applications from leading e-mail providers like Responsys and CheetahMail.

Standing out

With site analytics almost becoming a commodity, industry experts say, analytics vendors have no choice but to expand capabilities--and the expansion of choice is into marketing applications. "All analytics companies want to be in marketing interfaces," says Eric Peterson, web site operations and technology analyst for Jupiter Research. "They're all frantically competing with each other and prices are falling, so they're trying to figure out what they can do to be on top."

And it isn't only the market leaders that are winning over retailers. CompactAppliance, after finding the services of Coremetrics and Omniture too expensive for its marketing budget, decided to go with Manticore Technology Corp., a 4-year-old company that offers its own built-in analytics and e-mail capabilities. Others are also making technology inroads. For instance, online marketing services provider DoubleClick Inc. recently introduced its integrated SiteAdvance analytics tool, and search engine marketing company OneUpWeb recently introduced its ROI Trax.

The integration of site analytics technology into e-mail applications is part of a broader trend that is also pushing site analytics into integrating with other marketing applications, including site search and comparison shopping rating services. (See "Site search technology's new goal: Making e-retail web sites think," Internet Retailer, June, 2004). "Coremetrics and others want marketers to always turn to them for the success of online marketing activities," Peterson says. "They'll tell retailers to send their message through CheetahMail or some other e-mail services provider, but measure its impact on sales with their site analytics."

While Omniture and Coremetrics have already made inroads in working with e-mail campaign management systems from companies like Responsys, E.Piphany and @Once, WebSideStory may be upping the ante with its recently announced IPO. Although it hasn't said specifically how it will use the targeted $57.5 million it hopes to raise, it has said it will use the proceeds to acquire new technological capabilities. "Omniture and Coremetrics have to decide how to answer that," Peterson says. "The problem will become how to differentiate themselves in the analytics market for more than six months."

That's good news to marketers, who can expect to see analytics vendors continue to improve and expand their offerings to stay competitive. "In 2004 and 2005, especially if WebSideStory is successful with its IPO, we'll see a dramatic uptick in these kinds of relationships between analytics providers and e-mail marketing technology," Peterson says. (WebSideStory was unable to comment for this article because it was still in a government-mandated IPO quiet period.)

Creating alliances

Coremetrics and Omniture, meanwhile, have already taken several steps toward integrating their technology platforms with e-mail services providers. Coremetrics has integrated its new LIVEmail site analytics application with e-mail services providers @Once, CheetahMail, Digital Impact, Exmplar, PostFuture, Responsys and Yesmail, and will provide integration services to connect with other e-mail systems as needed by clients, says John Squire, vice president of business development. Profiles of customer segments developed with Coremetrics site analytics data are integrated directly into e-mail campaign management software, letting marketers send messages to these segments directly from their campaign management systems.

Omniture has established formal relationships with @Once, Digital Impact and CheetahMail, having tested the ability to track the results of e-mail campaigns with Omniture's site analytics, says John Mellor, vice president of marketing.

As they jockey for position in the market, Coremetrics and Omniture are quick to trade jabs about each other's performance. Coremetrics touts that it has direct integration with more e-mail service providers, providing for more seamless connections of clickstream data and e-mail campaigns. Omniture contends that it is the only analytics provider that offers both real-time data, which, for example, lets marketers instantly see customer site activity stemming from an e-mail campaign, and a data warehouse that can be used for re-marketing to customer segments based on stored clickstream data. "WebSideStory has strong real-time data, but not user-level information in a data warehouse, and Coremetrics has user-level information in a data warehouse, but not in real-time," Mellor says.

Coremetrics, in turn, contends that it has more experience in operating a data warehouse than does Omniture, which recently developed its own data warehouse, and that its data is available in near real time. "Our users can do a data report every hour," a spokeswoman says. "We've never lost a client because we didn't have real-time data."

The right combination

Analysts say there isn't much difference in the capabilities and strategies of Coremetrics and Omniture to store and present analytics data, but that their arguments speak to their competitive need to differentiate themselves from WebSideStory as well as from each other. "We're splitting hairs about the real-time nature of data and storage mechanisms between Omniture and Coremetrics," Peterson says. The main difference between the three market leaders, he adds, is that WebSideStory does not incorporate a data warehouse--a void it may address after its IPO.

Analysts say that each of the leading site analytics providers offers solid platforms for integrating with e-mail systems, but that retailers still need to figure which combination of analytics and e-mail providers will serve them best, a decision that may be based on a marketer's preference for a particular e-mail provider or analytics provider, hence the trend toward multiple alliances between these two groups of technology providers.

The idea of combining e-mail and online shopping is not new; marketers have been doing some form of it for years. But before e-mail and analytics technologies began merging several months ago, marketing strategies relying on e-mail and analytics had two common characteristics: they were limited in scope, and they were time-consuming and laborious to implement, requiring IT experts to code and track clickstream activity, experts say. "E-mail marketers have been tracking their success by identifying the conversion rate of e-mails for years for the 2% of consumers who respond to e-mails, but the problem is what happens to the other 98% that don't buy," says Mellor. "The goal is to find out information on that 98%. Where did they fall out of the process, what other products did they look at, did they come back days later and buy something else?"

Now, with combined site analytics and e-mail marketing, marketers can look deep into the details of site activity in relation to e-mail marketing efforts. "If a checkout process is four steps, all that marketers knew in the past was who received an e-mail, finished all four steps and made a purchase. Now they can see how many shoppers dropped out after step 1, 2 or 3," Mellor says.

At GSI Commerce, McCall is piloting Omniture's Site Catalyst analytics application integrated with e-mail campaign management from E.Piphany. After checking other analytics programs, GSI chose Omniture for its integration with a data warehouse and its visual presentation of analytics data, he says. "We can get five people in a room to see a graphical presentation, so they all see the same thing instead of getting different interpretations from everyone separately reading a report," he says.

The visual presentation uses different colors and varying thickness of lines connecting different sections of a web site. The lines could indicate, for example, the level of online customer traffic that purchased a particular product after clicking on an e-mail marketing message. But a review of the data could go even further: It could show, for instance, that the same e-mail may have targeted customers who had shopped for the same product in the recent past but had abandoned the shopping cart.

"The visualization helps to keep up a discussion of the data," McCall says. "It's a great way to explain to non-technical people, 'Here's what people are doing on your web site.'"

A crucial tool

Visualization is a crucial tool to GSI, as it strives to get more of its growing number of retail partners using integrated site analytics and e-mail marketing, McCall says, adding that GSI needs to move away from relying on its in-house IT staff to build analytics and marketing applications. "We're reaching a threshold by adding retail partners, and our IT resources are reaching a saturation point, so we're going with a fully dedicated team with Omniture," he says.

One of the marketing techniques GSI is trying is e-mailing special offers to shoppers after they abandon a shopping cart. "If someone puts a Sony DVD player in a shopping cart on Tweeter.com and then abandons it, we'll automatically e-mail them an offer for free shipping for that product or a related one," McCall says.

It's also experimenting with a way to lure back shoppers who abandoned a shopping cart after having browsed for a product that was out of stock. "We'll automatically send them an e-mail telling them that the product will be in stock in two weeks and that we'll give them free shipping if they wait instead of going somewhere else," McCall says.

The latest version of Omniture's Site Catalyst starts at under $20,000 per year as a hosted application, Mellor says.

Sending automated e-mails requires marketers to first set business rules that can trigger messages based on particular sets of shopping behavior. The technical process of setting rules is designed to be simple to learn, particularly for marketers accustomed to working with clickstream data, experts say. Petco's Blank notes that her personal experience in site analytics let her begin using her Coremetrics application immediately, and that her staff learned the system in a half-day training course.

Finding the right mix

The most challenging part of using site analytics and e-mail is finding the best combinations of segmented customer data with the most effective e-mail creative for marketing to them and getting them to buy, experts say.

Effective marketers will use A/B testing procedures with different combinations of e-mail messages targeting different segments of shoppers, Omniture's Mellor says. A typical A/B testing project might be tied to a campaign of e-mail messages promoting a digital camera to shoppers who abandoned a similar product in a shopping cart and also purchased other electronic products in the past month. The test would direct half of respondents to a page offering a discount purchase price and the other half to a page offering free shipping.

But combining site analytics with e-mail programs also presents the challenge of deciding which segmented customer groups to test, experts say. "One scary thing is that we can get so much data that we can get lost in it," says Blank.

Petco plans to go live this month with LIVEmail from Coremetrics integrated with a Responsys e-mail campaign management system. One way Blank expects to narrow down her marketing options is to use Coremetrics site analytics data to determine how long it usually takes particular segments of shoppers to convert to buyers. "If I know a certain type of customer who abandoned a cart is likely to come back and buy later the same day, I won't send that type of customer a post-abandonment e-mail until days later," she says. "As time goes on, we'll learn to adjust delivery dates by product category."

Petco has used the Responsys e-mail system for about two years, and earned a return on its investment within the first three months, Blank says. That gives her confidence that using Responsys with integrated clickstream data from Coremetrics will also earn a quick ROI. "My hope is that we'll earn an ROI in the first three to six months," she says. The cost of running LIVEmail includes a set-up fee ranging from $2,000 to $3,000, plus a monthly hosting fee of $2,000 or more, depending on the volume of data a site carries, Squire says.

Prompting registration

In addition to testing and finding the right mixture of customer segments and e-mail promotions, Blank says, is the challenge of getting more shoppers to register on Petco.com. "The main challenge is getting shoppers to do something to identify themselves, because they have to be logged in to be tracked by Coremetrics," she says. Petco entices shoppers to register with a free bag of pet food with the purchase of 10 bags and by sponsoring a pet Halloween costume contest with shoppers voting for winners. Petco requires photo contributors and voters to register to receive e-mail.

CompactAppliance hadn't done much e-mail marketing before implementing the Virtual Commerce Master application from Manticore Technology last year, Roussos says. "We weren't doing e-mail marketing before VCM, but now we can set up a rule that says, if a customer buys a trash compactor, we automatically send them an e-mail 60 days later offering a promotion on compactor trash bags." The application, which is served on a hosted basis, starts at about $2,000 per month, covering 250,000 page views and 50,000 e-mails for combined analysis and marketing efforts, he says. The application also allows CompactAppliance to monitor and analyze multiple marketing campaigns, including Internet search keyword campaigns, online banner ads and e-mailed promotions.

With marketing based on integrated site analytics and e-mail campaigns still at the head of the curve, retailers will continue to find ways of capitalizing on it. And because the technology is designed to be user-friendly for marketing managers without the help of IT experts, it will evolve further as more managers get involved with it, experts say. "As we get better with using these tools, each business manager will have more insight into what's happening," GSI's McCall says.

paul@verticalwebmedia.com

Marketing analytics is for search campaigns as well

While e-mail marketers are integrating analytics into their offerings, other marketers are doing the same. Search engine marketing company Oneupweb, for instance, in July introduced a marketing analytics tool that lets retailers and marketers track results of their online marketing campaigns, including pay-per-click keyword buys on search engines, e-mail campaigns, banner ads and affiliate marketing. The product is aimed squarely at better understanding of marketing results. "This is an analytics tool for users of search marketing, it's not a full-blown analytics tool," says Lisa Wehr, president. "It's a measure of all the marketing things that cost you cash."

The product--ROI Trax--was launched a year ago to existing clients with little fanfare and has undergone refinement since then; the company is rolling it out to the rest of the market now and will offer it as a stand-alone product separate from the other search engine marketing functions that Oneupweb provides, Wehr says. Its metrics include responses, click-throughs, conversions, sales, cost per click, ROI for campaigns and other measurements that retailers want.