June 26, 2008, 12:00 AM

Web Site Analytics

Mining customer data guides the way to better, more relevant web sites

Marketing’s traditionally been an art, but online, increasingly, it’s a science. Web retailers don’t need to wait for a season’s sales reports to figure out whether their advertising is bringing in shoppers, or if the green jacket is selling better than the blue model is. In fact, depending on the data-compiling system they have in place, they don’t have to wait for more than a few hours-even a few minutes-to get an idea. The technology that makes that possible for online marketers is web analytics.

Web analytics, available as licensed software and as a web-based service hosted by the vendor, collects data on visitors’ behavior on a site, including which search engine or other referral source as well as which campaign brought them to the site. Data gleaned from analytics can tell a retailer which shopping engines or ad campaigns deliver the most customers, what and how much customers bought, what they looked at but didn’t buy, at what point they exited the site and much more.

Earning its keep

That data is typically captured by cookies-pieces of text sent by a server to a web browser-that track customer behavior on the site. The proliferation of web analytics has put data rather than experience or just educated guessing at the center of online retailers’ marketing and merchandising decisions. And the recent release by search engine Google of a free web analytics tool aimed specifically at allowing online marketers to track the performance of their search marketing campaigns on Google and other search engines has put the basics of web analytics within reach of any web retailer and spread the use of analytics to a much broader swath of web site operators.

It’s on the key metric of conversion that web analytics has been earning its keep in retail. Boosting the rate of conversion tops the to-do list at virtually every online retailer, and analytics has emerged as a key tool for not only measuring but also managing conversion rates.

While the meaning of conversion statistics is widely understood by online retailers, web analytics can also track virtually every other aspect of a customer’s interaction with a site. A recent survey by The E-Tailing Group found that 46% of online retailers queried rated conversions as an important use of their web analytics package, which ranked conversion analysis as the single most critical use of analytics.

41% said tracking shopping cart abandonment was an important use of web analytics, while 40% cited search marketing, 35% mentioned measuring the user experience, and 32% use analytics to track visits to specific landing pages they’ve set up for search marketing.

30% use analytics data to refine site navigation, 28% to increase average order values, 20% mine analytics to find new product opportunities, and 17% use analytics to check the effectiveness of the category and product classifications on their sites. 13% look to analytics data to help reduce return rates and 10% to test the effectiveness of e-mail promotional landing pages.

Lost cross-selling and upselling data

The survey also found, surprisingly, that half or more of the merchants surveyed don’t know their cross-selling or upselling conversion rates, which highlights one of the challenges attached to the wealth of information available from web analytics: data overload. As web analytics’ abilities to gather, slice and dice information on customer behavior become ever more sophisticated, web retailers are faced with having to identify what’s important to measure and how that information will lead to some action.

And more than a few retailers find that challenging to figure out as they venture beyond the basics. A recent global survey, “Web Analytics Demystified,” by web analytics expert Eric T. Peterson, sponsored by the Web Analytics Association, found that of nearly 1,000 web analytics practitioners, consultants and end-users, 82% said analytics is poorly understood in their organization and the majority of people interacting with the data don’t understand what it means.

“Companies need to recognize web analytics is not easy even for the most experienced users of the technology, and respond appropriately,” says Peterson in the study. For retail organizations and other users of analytics, that means stepping up education for web analytics professionals as well as for the business professionals seeking to build that analytics data into merchandising, advertising and other programs, he believes.

Josh Dahmer, principal consultant for the retail market at web analytics vendor Omniture Inc., says that customers provide retailers with an abundance of data on how to make their online experience better and more relevant. “Retailers now have a plethora of solutions at their disposal to listen more intently to their customers and deliver what they are asking for,” he says. “The trick for retailers today is to make sure that they are measuring what really matters and give customers what they want based on what they are telling you.”

Using a full suite

For retailers on the leading edge, those abilities can be powerful tools. With analytics capable of serving up so much data to guide online retailers’ decisions and help them align their online programs with their business objectives, retailers are looking to harness the power of analytics by integrating it with more of their sites’ marketing tools, Dahmer says. “Two years ago, early adopters in retail were starting to evaluate and adopt web analytics,” he says.

Today, they’re looking to plug analytics into a full suite of online marketing solutions that focus not only on metrics such as conversion and search marketing results, but also to analyze data from sources such as customer surveys and customer ratings, according to Dahmer “Retailers are now wanting to take a more holistic view of their online marketing and measure all the areas that really matter in order to gain a competitive edge,” he says.

Online retailers also are looking for analytics to help them gauge the effects of new marketing and merchandising technologies. Dahmer says that with the rise of Web 2.0 tools such as Adobe Flash and Flex, Omniture has received more requests from customers for help in determining their value on their sites. “Out of Web 2.0. we’ve also seen specific requests from customers to measure the influence of ratings and reviews and how that affects product performance,” Dahmer says.

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