January 30, 2003, 12:00 AM

Designing by the Numbers

It’s the little things that customers do that tell the story about site design—and some retailers are measuring and reacting to those little things to boost sales.

Online retail flew high in last year’s last quarter, posting a double-digit increase over a year ago. But with the last bit of tinsel packed away, it’s back to the reality of retail as a 365-day-a-year business. Absent holiday spikes, online retailers must still look daily for sales. That means looking beyond the broad impact of a few must-have gift items or killer seasonal promotions to smaller gains to be found throughout the site and across a wider spectrum of the customer experience.

To find those opportunities, smart web retailers are using analytic tools that yield data so immediately illustrative of customer behavior that some in the industry now talk of web page design as a design-by-numbers game.

“The low-hanging fruit has been picked,” says Doug Greene, chief technology officer and chief marketing officer for Overstock.com Inc. “The easy wins have been gotten. What you want to do at this point is get that .05% increase in conversion by trying this or that with the web site. You have to be scientific about it, with a control group to quantify the effects of changes to the site. And you can’t do that without these kinds of testing tools.”

It’s all about usability

Jupiter Research Inc. analyst Matthew Berk notes a surge of interest in measuring the performance of web sites, not only to justify money spent, but also with an eye toward optimizing the site. “It’s all about usability,” Berk says. “Most of the work that sites have done on usability has been myopically focused on the customer-let’s take surveys to find out what they want and who they are. That’s great, but it’s background information. What you really need to know in managing your site is what you want customers to do on the site and how effective the site is in getting them to do it.”

In other words, understanding actual behavior is more useful to site operators than understanding visitor demographics, which after all, say experts, only hint at how people will behave online. Achieving that understanding is the goal of a rapidly growing field of web site analytic tools.

Toward that end, Berk has praise for Overstock’s use of analytics to manage by the numbers. “It’s a complete data-centric approach to managing what they sell and how they sell it,” he says. Overstock had been capturing, testing and measuring the effect of site changes on conversions internally, but boosted its analytics power by implementing Omniture Inc.’s SiteCatalyst analytics product in December.

“The biggest benefit in using the tools is being able to quantify changes we make to the site,” Greene says. “If we change the color of the Buy button, I want to be able to measure that change’s impact on conversion. A company like ours might have 100 campaigns going on any day. Given all the noise, it is impossible to quantify the results of small changes to pages, and whether they help or hurt conversion, unless you have this kind of tool.”

Greene adds that he saves the cost of one or two full-time staffers otherwise needed to generate the reports that Omniture’s hosted application produces. Greene won’t disclose what Overstock pays for the service, but the cost structure is a fixed fee for bandwidth use up to a designated level, with higher volume-dependent fees after that level.

Measuring variables

Web retailers are now using analytics tools to measure everything about the customer’s site experience from loading times to different shopping technologies to the presentation of content and merchandise on pages. And those measurements are informing improvements that show measurable results. San Diego-based flower site Proflowers Inc., for example, recently put analytic data from WebSideStory Inc.’s Enterprise product to work in a page redesign at Proflowers.com.

Using the tool to follow the behavior of site visitors, Proflowers tested response to some 20 elements on its landing page by setting up a series of test pages and directing selected customer groups to them. The tested elements primarily involved the use of real estate on the page, such as number of products or a product’s location.

“We identified variables on these pages that we thought might have an impact on conversion, and we set up a matrix to test the elements against each other,” says Richie Hannah, web strategist at Proflowers. Visitors from selected major engines were routed to the test pages while control visitors were routed to the former landing page. After several rounds of testing response to different elements, and statistical analysis to determine how each element affected conversions, Proflowers put the winning elements on a test “superversion” of an optimal landing page.

Over a period of about six weeks to gather data and test response, the newly optimized landing page containing all the top-performing elements drove a 10% to 15% increase in conversions, says Hannah. The analytic tool tagged visitor response to each of the variables, so Proflowers could see, for example, that version three of the landing page was driving more conversions than version four.

“We’ve had opinions of what we thought would help or hurt conversions, but we’ve seen time and time again that what seems to make logical sense isn’t necessarily true,” Hannah adds. “The only way to really test that and prove it is to have people come to the site and vote with their mice.”

Likewise, Tower Records saw click-throughs on featured offers at TowerRecords.com rise by a healthy 10% to 20% and sales increase proportionally after it redesigned its home page based on site visitor data supplied by Fireclick Inc.’s analytics reporting, says Kevin Ertell, Tower’s senior vice president of online operations

Tower got a few surprises after implementing Fireclick’s Netflame analytics tool and an accompanying product, Site Explorer, in August, Ertell says. The analytics provided aggregate data on where visitors went on the home page-and where they didn’t go. “We had special offers on the page where people weren’t clicking at all, or very little,” he says.

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