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CMC Focus on: Advanced Web Analytics

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11th Sep 2006
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The New Shop Floor

If you run a shop you're going to have some idea of who came to your emporium today and based on looking at your shelves, you’re going to have an idea of what’s shifting and what’s not. If you're operating online you need to know that same sort of thing, but you can’t just scan your shelves anymore or watch where people go when they’re wandering around your shopfloor. So, you need to know where people choose to visit, how long they stay there, what they do when they are there and why they did or did not complete any actions during that time. All of which is where web analytics comes in.

The push into the analytics space is something that we’ve seen for a long time now in the CRM industry. There are specialist vendors who can offer pureplay analytics technology; there are the enterprise applications firms that argue that their 'good enough' analytical functionality is indeed good enough; and there are the emerging definitions of what constitutes analytics functionality, with the increased emphasis on predictive analytics rather than retrospective.

Into this mix we now throw web analytics, an area dominated currently by pureplays and start-ups, but which has just seen a big gorilla enter the market in the shape of Google. We know from our own web analytics at CMC that Google’s entry into any market sector generates a lot of interest. Will this be the 'mainstreaming' of web analytics? Will other established enterprise players choose to follow its lead? Read on as web analytics forms the basis of this latest CMC monthly 'Focus On...'

 

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The Web Face of Marketing

The face of traditional marketing is changing. Skills in analysis, measurement and search engine optimisation are becoming more important than traditional marketing competencies like branding and product promotion.

According to a study last month by web analytics firm Coremetrics, 73 out of 120 respondents said that analytics and measurement have become more important over the past two years and these skills are now seen as more important than branding and product promotion. Some 86 per cent said their decision-making is more reliant on analysis than two years ago, but 50 per cent admitted that they need to improve their analytical abilities.

There’s also a growing realisation among marketing departments that they need to be more aware of web site activity and how it relates to business objectives. In light of this, perhaps it’s unsurprising that the UK web analytics market is set to grow by 22 per cent in 2006 to be worth a total of £56 million by the end of 2006, according to a new report by internet marketing and ecommerce specialist E-consultancy.

"There has been a move in ownership of analytics from the IT department to the marketers," said Linus Gregoriadis, an analyst at the firm. "IT used to look at the data but not necessarily share it with the wider business, but now it is seen as a tool to drive business improvements."

Other research firms agree. According to International Data Corporation, the Web analytics market demonstrated high growth of 20.7 per cent in 2005, reaching $318.0 million. The market is projected to grow to $652.5 million by the end of 2010.

IDC defines the Web analytics market as "a critical dimension of the larger CRM analytics market. Understanding Web analytics in this context rather than as a market divorced from traditional CRM analytics and the more inclusive total CRM space makes the market forces and resultant trends in Web analytics more visible and more predictable. Web analytics falls solidly within the CRM analytic applications sector, and CRM analytic applications are designed to measure and optimize customer relationships."

So how does that work in practice? The basic principles underpinning web analytics are simple. Traditional bricks and mortar outlets change their inventory and shift the positioning of goods on the shelves based on customer traffic and monitoring consumer behavioural patterns. Online stores and outlets need to operate according to the same principles.

Web analytics enable online stores to see which keywords bring the most hits and more significantly the highest conversion rates. Clearly the longer people spend on a site, the more likely they are to buy something. Analyzing data about traffic allows you to see which keywords are most effective in bringing customers to a site and retaining them.

It can also warn online retailers if the traffic coming to a site is leaving too soon. Web sites can see where people are exiting which might explain underlying reasons for poor business. For example, if customers are leaving before filling out buyer information, the form they’re required to fill in might be too long or not the correct format.

Put like that, investing in web analytics technology ought to be pretty easy sell for most organisations. But there’s still an underlying problem in the need to find bodies who can interpret the data produced by the tools. After all, there’s no point in having reams of data that no-one can understand or translate.

A recent report by Forrester Research confirmed: "Because Web analytics is considered necessary for doing business on the Web, few managers... had to justify the cost of their initial investment. But when they seek increased funding, many have a hard time getting executives to open their chequebooks.

"Online marketers who use Web analytics data regularly to optimise their campaign portfolios get conversion rates about 25 percent higher than those who don't," the report observed. "Thus, by getting more people to use data, analysts can improve the performance of the marketing team as a whole.

"Because many firms get impressive results without dedicated analytics staff, site managers find it hard to make a case for why they need them. The tools have become relatively easy to use, so people without a lot of background in analytics or analysis can do some things themselves."

But this is a false assumption. Forrester found as part of its market assessment that the firms that achieved the greatest level of success were those that employed a dedicated person to ensuring that the system is delivering. Such people can often get involved in training business people on how to use the tools, what data means, and how to think about it as well as ensuring that there is someone there to answer questions.

There is now a specialist industry trade group dedicated to helping consumers better understand web analytics and the potential of the technology The Web Analytics Association (WAA) aims to dispel the myths surrounding cookies by creating materials for its members to share with consumers.

It will help WAA members, mostly Web analytics providers and Web publishers, to educate their users about the ways cookies are used by marketers, and how they can improve a user's experience on a site. The most common implementation of cookies is the use of persistent cookies, which identify a user as a repeat visitor the next time they visit a site. Site owners use that information in aggregate to improve site content and site performance.

"It's a continuing challenge to educate the marketplace that cookies are OK and are not spyware," said Ben Isaacson, co-chair of the WAA's advocacy committee, and privacy and compliance leader for Experian and CheetahMail. "Through the education initiative we will separate fact from hype."

So who are the major players? According to IDC, cumulatively, the top 5 vendors constituted 48.3% of the market in 2005, an increase of 3.7 percentage points from 2004WebTrends, the largest vendor by revenue in this market, holds a 16 per cent market share. Second through fifth by revenue is Omniture on 12 per cent followed by WebSideStory on 9.7 per cent, Coremetrics on 5.0 per cent and SurfAid from IBM on 4.5 per cent.

While there are multiple start-ups specialising in web analytics, the latest firm to make a move into this space may yet prove to set the de facto standard for the technology. Search engine giant Google is making it easier for web site operators to use its free web site Analytics tool, which is designed to give web site owners, advertisers and publishers more information about the traffic on their sites. The service was previously restricted to invited users but in the face of enormous demand is now open to anyone once they have created an account.

Google Analytics offers enterprise-level functionality and can be integrated with its AdWords system to let web site operators see how well they are spending their advertising money. Because the system can see how users come to visit particular sites, and how they navigate them, Analytics can also be used to target spending in certain areas and increase return on investment.

Google's main strategy is to provide a greater understanding of ROI for Adwords advertisers, to help them match up Adwords clicks to sales. Brett Crosby, senior manager for Google Analytics, said, "Regardless of how you use Google Analytics, what's important to me is that you're using it at all. In other words, the more you take action based on web analytics data, the better the internet becomes."

IDC's Mary Wardley reckons that the Google move will shake up the market. "The announcement that Google would be making its Urchin-born analytics free has caused every other Web analytics vendor to articulate its own value proposition more clearly," she predicts. "Certainly, those vendors that sell low-end solutions are in trouble; the bottom of the paid analytics market may diminish and even disappear. At the same time, the marketplace of businesses that know and trust the Google brand are now being exposed to a service that many may have ignored, and this is bound to expand the entire market of users."

 

Web Analytics In Practice

Eckler

Eckler's, a distributor of aftermarket parts and accessories for Corvettes, is using Coremetrics' strategic search engine marketing (SEM) services and reports a 602 per cent increase in online order volumes, and a 541 per cent increase in sales revenue. Eckler is a classic web analytics user having selected Coremetrics to help identify its highest demand items and the specific keywords that would drive accurate search results. The newly determined keywords position Eckler against itscompetitors and enables it to address irrelevant search results. New campaigns focus on pinpointing relevant and niche keywords, including negative keywords to combat unrelated search queries.

Encyclopedia Britannica

Encyclopaedia Britannica has turned to Omniture to use its SiteCatalyst product to understand visitors to the firm's Brittanica.com and EB.com web sites. Encyclopaedia Britannica expects to gain insight about visitors coming to their online product offerings and better understand their needs in order to deliver a more relevant consumer experience. Using SiteCatalyst, it expects to be able accurately to determine how to best align content databases with users' preferences as well as gaining better insight into the ROI of online marketing campaigns.

Fresh Direct

New York based online fresh food and grocery delivery firm FreshDirect has a web site featuring over 5000 products throughout 1000 different categories and processes thousands of transactions per day. It needed to find a web site analysis solution which could help it get an understanding various elements, including: identifying the product categories as well as marketing campaigns and product promotions that were working best, not working at all, or could be producing greater ROI.

FreshDirect segments its customer database based on order size, purchase history, geography, etc., for targeted email marketing campaigns. The company deployed NetTracker allows FreshDirect to track the success rate of these campaigns by tying check outs (marked by reaching the web site’s order confirmation page) back to the initial referring campaign. The firm is now able to execute more intelligent merchandising on the site as well as analyse local keyword searches in order to shape future product offerings.

 

Market Makers

Andrew Walker, Clicktools

I'm sure I'm doing nothing revolutionary by claiming the Internet has changed the way the IT industry is doing business. This is particularly true coming from someone who works for an ISV, but I can say from experience that in 2006 the boundaries between vendor and buyer are becoming increasingly blurred. This is mostly down to the increasing popularity of software as a service applications, pioneered in the CRM industry by companies such as salesforce.com.

No longer is the traditional model of vendor-reseller-end user the only choice for those wishing to sell their services. But what are the advantages for ISVs of working with on-demand service providers?

I should probably start by explaining what my company does. Clicktools designs and builds feedback programmes, which collect and analyse opinions from employees, customers and partners. Our clients can either subscribe to our service, or ask us to manage their feedback programmes for them. Our customers range from o2 and Unisys to innocent drinks, the Economist Intelligence Unit and Yamaha.

Our service is hosted, and we have always been firm believers in SaaS. Reasons for choosing SaaS are well-documented – flexibility, cost effectiveness and reliability. This makes life much easier for us by enabling us to partner with similar organisations offering a different service to customers. Furthermore, we’re also able to take advantage of online trading platforms such as salesforce.com’s AppExchange. Think of it as an e-bay, but where apps, not CDs, cars and pushchairs, are bought and sold.

One of the advantages of selling via a hosted service is that we find we can concentrate on really getting the product right, without worrying about all the other 'stuff'.

Also, we find that selling via the AppExchange means that we are selling to the converted lead – a ready-made customer base of companies that already understand the on-demand model. Via reviews and comments from the community much of our marketing is done for us, meaning that we can free up money and manpower to concentrate on keeping our customers happy.

I think it's fair to say that our product is not a business essential or 'staple' – customer feedback is not yet a fundamental part of the business process (that's not to say it shouldn't be). It is viewed as a 'nice-to-have' rather than a 'must have'. Or in other words customer feedback is an add-on to staple services. One such staple service is CRM.

And this is where the added value from selling via the AppExchange starts. We've been using the service since its launch in January 2006, with the advantages very clear.

We can integrate our feedback products with other hosted applications to create a more complete enterprise solution. The result is known as a 'mash-up' – think Google maps on an estate agent’s website, where potential buyers can click on a real satellite image of the area they would like to buy a house in.

Combining customer feedback with organisation-wide customer data gives organisations much stronger insights than if the feedback was collected in isolation. And improving the value of the data for the user helps to increase the value of our product.

So trading via the AppExchange alongside an array of other business applications helps to turn my 'nice to hav' product into part of a wider 'must have' solution. Clicktools could be integrated with a CRM application but equally it could be an HR tool – whatever best fits the customers’ needs.

And selling via an on-demand platform has also helped us to break into new markets. In the first six months of trading via the AppExchange, we've seen a massive 25 per cent increase in customers, and dramatic growth in the US – 90 per cent of our new markets are in the US. We’ve also started to sell to organisations in mainland Europe and the Far East…who knows where our next customer will come from?!

So what’s next for us? I’m excited about the potential of mash-ups to further help organisations capitalise on the latest technological innovation and making The Business Web a reality. Life as an ISV in 2006 means capitalising on the Internet in every conceivable way, and reaping the benefits. Consumers have been relying on the web to serve their needs for several years now: it’s about time that businesses started to do the same.

Neil Morgan, Omniture

Whether you are a retailer, manufacturing company, bank or publisher, there is no doubt that online is where the strongest business battles are being fought. Broadband penetration at home is expected to reach 67 percent by 2010 and 61 percent of these Internet users will buy online by 2010 (Jupiter – European Online Retail Forecast, 2005 – 2010). In Europe, the number of online shoppers increased by 46 percent, resulting in 28 million new online shoppers (Forrester – Europe’s Search Engine Marketing Forecast, 2004 – 2010).

Online is the fastest growing area of marketing investment today. Witness this with the latest figures from the Interactive Advertising Bureau citing that online advertising spending in the U.K leapt 66 percent to £1.4 billion in 2005. There has been massive growth in all areas of interactive advertising. Search marketing alone saw 79 percent growth to £768 million during the year. This is no surprise when you realise that the cost of acquisition per new customer is, on average, £3.50-£5.50 via search, £8-£14 via Yellow Pages and £22-£44 via email and a whopping £32-£44 via direct mail. Equally, other areas saw rapid growth, with online display advertising growing 44 percent to £335 million, and classifieds exhibiting 62 percent growth to £262 million.

Despite these figures, whilst consumers have turned to new channels, the investment by CRM and marketing executives is lagging behind customer behaviour considerably. Research shows that European Internet users spend up to a quarter of their media consumption time online (EIAA, 2005). But marketers are typically only spending up to eight percent of their marketing budget online (IAB, 2006)! This effect is creating a gap that eBusiness oriented companies are only too happy to exploit.

The Internet has redefined many business processes and has created opportunities for new online marketing and other commercial initiatives. To make informed decisions about prioritising these, businesses require timely and accurate measurement of customer behaviour. Behaviour which is exhibited every day online. However few businesses have begun to realise the benefit of using the information gained from online customer interactions to improve their customer acquisition and relationship strategies.

Clearly online customer marketing and management must be an extension of well established systems and processes. However, there are two key differences between old style CRM and the challenge today. Firstly, where technology was an option previously, it is now core to how people research, compare, acquire and service products and services. Each step is driven by data which flows from the Internet search vendors, advertising networks, e-mail campaigns and lead generation sites and the need now is to consolidate this information across those channels into a single unified view. Since data and technology are inseparable, a technology platform is now a necessity to effective CRM, though as we discovered in the 90s, not at the expense of the people and processes!

Secondly, where CRM was about 'customers' that we can identify, in the online world much of the information we collect online is anonymous. Modern web analytics data utilizes aggregate information without acquiring personally identifiable information, from this we can determine trends and patterns, for example: which types of campaigns are most effective at bringing customers, from which countries and companies, how customers find your site, i.e. where they came from, what they find interesting (or not) about your business and where they leave to go next.

Measuring online behaviour by automating the capture and analysis of data is just the beginning of making more informed business decisions. Businesses also need to optimise the results of their online business activities, which have become increasingly complex with the emergence of multi-channel marketing initiatives. These combine traditional offline marketing initiatives, such as television, print and radio, with online ones, such as search advertising, e-mail and affiliate marketing. They make the measurement and analysis of customer behaviour more challenging, but present additional opportunities to optimise results.

But, the online world itself is fragmented. Customer targeting, acquisition and retention spans a myriad of new technologies that have sprung up to deliver what is now being referred to as Web 2.0 or the 'Business Web'. Like old-style CRM, there are multiple components to the processes required to drive a successful business. Audience segmentation, search engine marketing, content management, ad serving, web analytics, affiliate marketing, offer optimisation and email marketing are just some of the processes and inherent technologies that must be mastered to succeed in the online world.

Businesses have generally relied on a combination of manual processes, point tools and proprietary approaches to manage their online business initiatives. This limits their ability to provide an aggregated view of customer information, and becomes lengthy and costly to implement. More critically, it becomes unused. Businesses seeking to enhance their online presence need business optimisation services that can manage and improve all aspects of their business activities, whether online, offline or multi-channel.

And, just like CRM, in order to avoid frustrating the (potential) customer, these must come together around a single repository to enable effective targeting and marketing. But, this time we don’t know who the customer is! This time the repository will be of identified customers and unidentified prospects who could be anywhere in the world, in any time zone and speaking any language.

So the question is: are there any parallels from the growth of CRM in traditional businesses in the 1990s that can be applied in the online world this decade? I believe so. When businesses looked to consolidate their processes and systems around a single source of truth to create the much desired 'single view of the customer', they looked to the customer database as the main repository for their CRM systems. Indeed, this was the driving force behind the consolidation that brought together SFA, call centre,
e-commerce and marketing vendors into the few CRM behemoths that remain today.

Today, online marketers require a platform that will enable them to optimise their online business - where technology for traditional CRM was an option, in the online world it is an absolute necessity.

Luckily, most marketers have already been collating the data they need to drive their online business. Web Analytics has been used for the collection, integration, analysis, optimization and automation of online data and business processes. Until recently, web analytics has been the purview of the web master and IT department. However, just as CRM became more accessible as it was provided through a hosted model, recently the traditional vendors of web analytics software have given way to an on-demand model which can be implemented by the marketing team, irrespective of IT needs.

As this develops, we can expect the processes to orbit around a single online business optimisation platform which will enable the optimisation of how a business interacts with its potential and actual customers.

In the online world, a key aspect of this platform is that it is independent and unaffiliated with any online service provider. For example, the online business platform must interface with major Internet search engines, advertising networks, email services and lead generation sites and consolidate information across those channels into a single unified view without bias towards a particular company or industry.

Only then will the new breed of marketing managers be able to rely and trust the information that will drive all their decisions. Only this way will they have objective insight into the effectiveness of their multi-channel marketing expenditures across multiple channels, affiliates and partners. Don't just mind the gap, leap over it!

 

Vendor listing

 

 

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