Analyse This

Did you ever wonder why the milk is always at the back of the supermarket? It's the science of retailing in action. Retail executives know that you'll walk through the aisles to get to the milk and probably see something else you need. It's logical, smart and built from analyses of carefully tracked data patterns.

But in the online world only one in five companies even bothers to track where customers go on a Web site. This can easily lead to abandoned shopping carts, lost sales and frustrated customers who quickly click over to competitor sites.

Web analysis is really just basic marketing with a fancier name. It's the same set of basic concepts: audience segmentation, cost per thousand people reached, etc. You track where people go, what they like and what they don't like - then plan campaigns or make adjustments accordingly. For example, in the online world tracking how a consumer wanders through a supermarket and buys milk - or anything else - is termed "path analysis." Yet in the offline world it's simply figuring out that consumers will likely buy some cookies on their way to the milk section.

The benefits to such online analysis can be enormous, but almost no one does it. In fact, according to analyst firm IDC, only around 20% of U.S. companies analyse their online traffic beyond simply counting the number of Web site hits on a regular basis. While this statistic is consistent with a young and evolving market for Web site analysis software, it is ironic because companies can potentially know much more about their online visitors than their offline customers.

Between the end of November and Christmas 2001 more than 256 million people visited retail and auction Web sites, according to Jupiter Media Metrix. I shudder to think how many times those sites essentially told their visitors to "go away" because of an unknown glitch on the site.

For example, Palo Alto Software is a company that helps people write professional business plans. Palo Alto analyses its Web data on a daily basis and noticed some weeks ago that many visitors to its web site were clicking away at a particular ordering page for its "Business Plan Pro" product. Palo Alto trimmed some of the excess content on that page, changed its layout and ultimately improved the order rate by 50 percent. So the data drove the decision - and fixed what could have been a very real drop off in revenue. The analysis "made a huge difference," according to Doug Wilson, Palo Alto's vice president for sales and marketing.

And online analysis can impact offline activities, too. Wilson said some Palo Alto customers have researched online and then purchased at retail stores. Camera maker Olympus recently held a sweepstake in which consumers could win an all-expenses-paid holiday by returning a coupon to its physical shops. Based on the analysis, Olympus discovered that the Web was a much more effective promotional vehicle than traditional media, thus they decided to run many of its future promotions online. Clearly, the Web is an effective tool that can make a significant impact for a business, not only for the Web site.

Online or offline, whatever you're selling you need to qualify who's likely to buy it. Let's say you're selling cars. A person walks onto the lot, peeks in a window and leaves. Another person peeks in a window, walks into the showroom, asks for a brochure and talks to a salesman. Who's more likely to buy? And on whom should you focus your marketing efforts on trying to convert into a sale? The answer is pretty obvious - and while offline marketeers pay close attention to qualifying visitors, it's something to which the online world must pay much closer attention.

Web site analysis is an absolute no-brainer but it also creates a hurdle - without careful analysis and clear reports, Web site data are like all the books in the library dumped in a big pile on the floor - the information is there but you just can't find it.

The business of analysing Web sites is still very new. Business schools don't teach it; executives don't get it and even webmasters don't fully comprehend it. It's a difficult predicament - especially given that analyst firms like Gartner believe that by 2005 large companies will need three times as many professionals on their analytic staff as they need today.

In the current economic climate, analysing Web traffic isn't just nice to have, it's a must-have. In fact 87 percent of companies surveyed by AMR Research said they would increase spending on items like Web analytics - even in the midst of a recession. And to manage your Web site, you definitely need to monitor it.

In real-world "offline" retail where a 3 percent profit margin is a roaring success, it's essential for supermarkets to put the milk in the back and analyse where to place various items. Likewise, online, delays or bottlenecks will kill your profit margin and send your customers to your competitors - no matter how many millions of pounds you pour into your Web site.

Your Web site is where the art of design and marketing and the science of analytics can come together to help you sell more - but almost no one is doing it right. It's clearly time to analyse this, and time for analytics vendors to keep it simple.

About the Author

Rand Schulman has worked in the marketing and product management fields for 28 years and is currently Senior Director of WebTrends at NetIQ where he focuses on the strategic direction for WebTrends Web analytics products.