June 30, 2006, 12:00 AM

Web Site Analytics

Web analytics technology may not be a panacea for Internet retailers seeking answers to how their sites are performing and how and why shoppers and customers act online, but it has become a key tool to help retailers enhance site performance and increase customer satisfaction, conversion rates and sales.

JupiterResearch estimates that U.S. companies spent about $463 million on web analytics applications in 2005 and that spending will increase to $931 million by 2009. (The research firm does not break out numbers for the retailing industry.) The number of web analytics technology vendors is nearing 100, Forrester Research Inc. estimates. 354 of the retailers in the Internet Retailer Top 500 Guide to Retail Web Sites report using web analytics either from a technology vendor or developed in house. And the 2005 Web Analytics Association Member Survey, which includes retail and other industries, finds that 56% of the association’s 500 members have four to ten years of web analytics experience and only 13% are new to web analytics with less than a year of experience. Thus many retail web site operators employ analytics or are at least familiar with the technology.

Too much information

The primary challenge in successfully using the technology can best be described as “too much of a good thing.” Web analytics programs can generate mountains of data. Sifting through the data to determine solid web retailing strategies requires significant time and effort as well as expertise in analyzing results.

Analytics information becomes mountainous because there is no shortage of measurements retailers can take to understand how their sites are performing. All this data helps them understand how and why browsers convert to buyers, and which portions of their site or promotions are working effectively and which are not.

But first e-retailers have to learn how to climb the data mountains. Many retailers begin web analytics work by collecting data on virtually every aspect of their e-commerce sites, which is important. Understanding the critical data on which to base key investment decisions, though, is the biggest challenge, experts say.

What’s more, sifting through the piles of data to follow customers throughout their shopping experiences can be a trial. “The big question is: How do you track a customer’s initial visit all the way through to purchase, even if that purchase may come three months and many visits later-and possibly through a different channel?” says John Yunker, CEO and chief analyst at Byte Level Research LLC.

Many retailers agree that knowing which metrics to track and how much weight to give each comes down to a very simple premise: understanding what they want to accomplish when it comes to site performance.

Earlier this year, for example, Benchmark Brands modified its shopping cart pages to make it easier for customers to enter their credit card security code. But Benchmark Brands started receiving page error reports that indicated shoppers were abandoning their shopping carts because they were having difficulty entering all of their credit card information. As a result, it made some slight page adjustments and almost immediately, the number of errors went down and sales conversion rate increased about 30%, reports William R. May, vice president of Internet marketing.

Blind(s) test

Analytics also plays a role beyond helping the customer make a purchase. Blinds.com reveals that the technology has not just helped with fulfilling shoppers’ desires but also with improving negotiations and relations with its product suppliers.

“We approach vendors and share our analytics findings with them,” says Daniel Cotler, chief marketing officer. “We produce a product conversion rate report and compare a supplier’s results with those for other products on our site. And we ask, ‘What do you want to do to raise this?’ Then we propose a promotion. The analytics that help us devise promotions gives us more credibility with our vendors. And we can show them the findings from our analytics quicker and better than they can produce their own internal reports.”

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