The acquisition will add more than 300 products to L’Oreal’s lineup.
In their short history, web analytics have become widely accepted as an important part of conducting retail sales on the Internet. In fact, 90% of senior marketing executives believe that measuring performance of their web sites is important, according to a recent study by the CMO Council.
But understanding the importance of performance measurement and doing something about it aren`t the same thing. The same study shows that fewer than 20% of senior marketing executives have developed measurement metrics. And even the definition of what should be measured varies widely. For instance, only 23% of online retailers define conversion rates the same way and 66% still use click-throughs to measure ROI of a marketing campaign, according to Jupiter Research`s Online Retail Metrics Report. "The industry still needs a lot of education and even simple definitions of terms," says Brent Hieggelke, vice president of web analytics provider WebTrends, a unit of NetIQ Corp.
Delving more deeply
Further complicating the industry is that web analytics continue to delve even more deeply into online retailers` operations. From monitoring how consumers use a web site, analytics have moved into marketing applications, measuring the success of e-mail and search engine marketing efforts. And now, analytics are moving even beyond that frontier. "The marketing department is the point of the spear," says John Mellor, vice president of marketing at analytics provider Omniture Inc. "The use of analytics has pushed broadly across the organization to finance, product development, even human resources. It`s even pushed up into the board room. We have CEOs who look at click maps every day."
Analytics are also moving even beyond the web site to retailers` other channels to measure how the web affects offline sales and how the offline experience affects consumers` attitudes toward and perceptions of retailers. "Understanding what`s happening in multiple channels is still very much an emerging part of the business," says Larry Freed, president of ForeSee Results Inc., a company that uses the American Customer Satisfaction Index to gauge consumers` feelings about retailers. "But there is a huge focus on learning what customers think in a multi-channel environment."
Industry participants say that analytics have finally evolved to the point that they are allowing the Internet to live up to the promise that was apparent to many users as far back as the late 1990s. "The promise of the Internet is that it is the most measurable channel in marketing and sales," Mellor says. "But in 1999, the tools were not around to allow marketers to tap into that. Now the tools have matured. Leading marketers have been using them and now mainstream marketers are following."
Indeed, Omniture is an example of that trend. 2004 sales reached $20 million, Mellor says, more than double 2003`s $8 million. "We`ve had both a tremendous growth in our customer base and expansion of the use of analytics within our existing customers," Mellor says.
As the amount of information that analytics make available grows ever larger, analytics vendors are increasingly taking on the role of interpreters of data. "We used to all be tool vendors, but customers today are taking this very seriously and asking for more than tools and reports," says Akin Arikan, senior product manager of Sane Solutions. "There`s a big gap between giving them piles of reports and having a better web site. There`s a lot more slicing and dicing and question-driven interfaces going on today."
That is driving retailers deeper into the data, he says. "High-level reports aren`t cutting it any more," Arikan says. "Retailers have already gotten all the low-hanging fruit. They already know, for instance, the 10 most frequently visited pages, the most frequent referrers, the most productive keywords. Marketing departments today are much more informed and so they`re looking for deeper information. They`re looking for the ability to drill down and find nuggets deeper in the data."
Indeed, understanding shoppers` motivation, and not just how they click through a site, is a large part of what ForeSee Results believes it brings to the analytics market. "When some people think of analytics all they think of is clickstream analysis," Freed says. "But knowing what and not why doesn`t do a lot of good. Learning from what people say completes the picture."
Looking behind the data
ForeSee Results surveys a portion of shoppers about their level of satisfaction with the online experience, whether the customer was there to shop or for customer service reasons or for other purposes, asking them not only what they thought of the experience but what other actions the experience will prompt them to take and their likelihood to buy from that retailer in any channel.
But Freed also stresses that traditional analytics play a role in understanding how shoppers use a site. In fact, ForeSee now is working with a couple of analytics vendors to integrate their two measurement approaches to obtain an even deeper view of customer behavior. The two approaches can work together, for instance, by using the ForeSee approach to identify first-time shoppers with a low satisfaction score who had intended to buy but did not, and combining those answers with clickstream analysis to see how the customer actually behaved on a site. "You can look behind the data and gain a level of insight that will allow you to fix the problem," he says.
That level of detail is important, analytics vendors agree, and all are offering more than just clickstream analysis. "Not all visitors are created equal," Hieggelke says. "A first-time visitor who comes from a search engine is different from a first-time visitor who comes from an e-mail."
Further, he adds, retailers must understand their sales and conversion rates by customer segments. "Conversion rates in the aggregate are less than useful today," Hieggelke says. "If you really want to improve your conversion rate, you have to get to the individual segments that come to your site. You have to know what specific action to take to get them to convert."