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May 9, 2002

Over the Wall

You need your Web analytics to be scalable; how can you be sure they'll grow enough?

By Richard Winter

Continued from Page 1

Make sure you're getting a solution with the right function, architecture, and scalability. Don't forget that you also need the right capabilities; you need a quality product and vendor; you need a vendor that has staying power, commitment, and vision.

Longevity Pays

Web analytics offers one of the most compelling business opportunities of the coming decade by offering timely, cost-effective insights into customer behavior. Most important, Web analytics aren't just about what happens at your Web site. They often provide the clues needed to implement customer and market strategies across all market channels.

And here's the most overlooked point of all: Web analytics without scalability is a dead end. Success in understanding and leveraging customer behavior leads swiftly and intensively to a remarkable growth in requirements. A Web analytics system that isn't scalable dies in a matter of months. So, in acquiring these systems, you absolutely must minimize your risk of running out of headroom.

But if you implement a scalable Web analytics solution that can address your full set of needs, you have an excellent chance of realizing a big return on your investment.

Traditional Methods Failed

This costly promotion produced almost nothing in sales. Initially, the product manager feared that there was something wrong with the product or the timing or manner of its introduction. But she believed in this product line and kept asking questions.

Almost ready to give up, she discovered that online sales, while small in volume, were showing a definite upward trend. She asked for a profile of those who were buying the product online and learned that most of them were men who hadn't previously bought any investment product from the company other than mutual funds and had an income of $60,000 to $100,000 per year. Further statistical analysis revealed that a remarkably high percentage had an oldest child who was four or five years old. A modest survey of a sample of the buyers showed that these men were worrying about paying for college then because the oldest child was about to enter kindergarten. Somehow, the realization that the child was beginning school triggered worries about paying for college. Analysis also revealed 80 percent of those men had also checked out term life insurance while online.

The product manager was then able to win approval for a multichannel promotion built around family security and educational financing for relatives of children entering kindergarten. Brokers and call-center agents were trained to ask callers who fit the profile certain questions about security and educational goals. If the customer expressed interest, the agents and brokers were trained to present an offer bundling the new educational product with life insurance. The Web site was programmed to ask the same questions of those who fit the profile and, if they said yes, make a similar online presentation. A mailing was sent to just those male customers who fit the income profile and had an oldest child who was four or five. All these steps produced above-average response rates. Sales of both the new educational financing product and life insurance quickly increased. The return on investment (ROI) of these more targeted promotions was more than 70 percent, annualized. The product manager earned a hefty raise and a promotion.

Why Failure Turned to Success

The product manager was able to overcome the initial failure for one reason: Her company had an electronic customer relationship management (eCRM) program founded on a strong capability for Web analytics that was capable of dealing with very large volumes of data.

From millions of customers, the product manager was able to identify just 50,000 who were especially likely to be interested in the specific product she had to offer. It was the customer behavior at the Web site that tipped her off: she learned who her first set of buyers were, why they were buying, and how to appeal to them. And she learned all that inexpensively and quickly, once she understood that the company's standard approach wasn't going to work well for this new product. Most important, she leveraged her findings from the Web site across all channels in a coordinated strategy. That's how she realized the 70 percent annualized ROI.

Customer Insight

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Almost all enterprises are in some stage of planning, implementing, or using CRM. But CRM programs don't automatically tell you what will make the customers more satisfied, more profitable, or more frequent purchasers. To realize the business value of CRM, you need insight into customer behavior and preferences. Comprehensive, intimate knowledge of the customer is available rapidly and economically only by tracking Web activity.

When customers visit a Web site, every keystroke and mouse click is recorded, along with the time and date it occurred. If you analyze the resulting "clickstream," you can learn a great deal. For example, you can learn not only what purchases the customers made but also what they looked at during their visits. The resulting knowledge can be used not only on the Web, but across all channels.

Richard Winter [Richard.Winter@wintercorp.com] is a specialist in large database technology and implementation, and president of Waltham, Mass.-based Winter Corp. (www.wintercorp.com).