When it comes to ecommerce strategies, Needham, Massachusetts-based specialty content provider TechTarget.com has a rather unusual business plan.
The operator of a gateway site to 23 separat information-technology- related portal sites, TechTarget.com isn’t looking to attract millions of users or mass- market advertisers. Instead, the company is geared to a specific, well-defined audience: professional users of technology. ”Because we’ve narrowly defined our space, we’re not looking purely at eyeballs or number plays,” explains co-founder and president Don Hawk. ”With a targeted audience, we can court specific advertisers.”
To help with the courting, Hawk recently purchased Insight 5, an electronic customer relations management (eCRM) application from Accrue Software. The software enables TechTarget.com to suss out who’s visiting its various portal sites, what they do there, and how they utilize content.
Executives at TechTarget.com aren’t the only Web-site operators looking to get the skinny on their customers. Despite the economic downturn — some would say because of it — there’s been a noticeable pickup in the use of Web analytics of late. According to a recent report from AMR Research, more than 87 percent of companies surveyed expect to sustain or increase spending on services that focus on sales growth and customer management.
Even more intriguing: Managers at some of these online businesses are beginning to ditch accepted standards for measuring Web performance — old yardsticks such as hits and page views. Those metrics may present an aerial view of Web traffic, but they offer precious little detail. ”Everyone has a Web site now,” notes Kirsten Cloninger, an analyst with Cahner’s In-Stat Group, a research firm. ”There’s no need to justify a site’s presence anymore.”
The new wave of Web metrics — things like recency, conversion ratios, and churn — go well beyond mere traffic numbers. The analytics zero in on site users, providing more accurate profiles of online shoppers and their online habits. ”People need to look at what customers are buying once they get to a site, where they were before they got there,” says Cloninger, ”and what they’re looking at.”
To Hell in a Handbasket
What many etailers are looking at these days is abandoned shopping carts. Browse-to-buy conversion rates for most online merchants remain microscopic — typically, 3 percent or lower. That’s bad news, particularly since etailers are now wising up to the fact that it costs less to hold on to existing customers than it does to acquire new ones.
One vendor, NetGenesis, markets an application designed specifically to analyze shopping-cart activity. The software, called CartSmarts, tracks who’s going to a home page, what each visitor looks at on the site, and which shoppers actually get as far as the shopping cart. ”It helps to understand the narrowing of the funnel,” explains Dave Reiner, vice president of product strategy for NetGenesis.
One NetGenesis customer, for example, recently reported 490,000 visits to their site in a month. Great, right? Not exactly. Fewer than half of the visitors looked at the product catalog, only 15,000 went on to the shopping cart, and — out of those 490,000 –a mere 2,000 actually bought something.
It’s hard to make a profit off a 0.47 conversion rate. What’s more, the software revealed that, of the 2,000 or so purchases that were made, most were for less-expensive products. Armed with that data, the etailer considered adding live customer support and other forms of online hand- holding to boost the sales of higher-priced merchandise.
Another Web analysis application, designed by Black Pearl, uses an artificial intelligence model. The program helps online sellers predict which prospective customers are likely spenders — and generates ideas to keep them around. ”Based on what a customer does, clickstream data shows certain types of proclivities,” explains Lisa Hammitt, Black Pearl’s chief technology and executive officer.
The AI-based program costs between $200,000 and $2 million — not cheap. Then again, Black Pearl sells the software mostly to financial services companies, telco providers, and large manufacturers. Merrill Lynch, for one, rolled out the application this past spring. Brokers use the software to recommend courses of action, based on real-time events, to their high-net-worth customers. According to Hammitt, the software saves brokers up to six hours of research time. (Officials at Merrill Lynch would not deny or confirm that number.)
At National Instruments, Denise Winkeler is eager to have customers return to the company’s site more often. To that end, the content group manager for the provider of high- technology components and measurements, based in Austin, Texas, monitors where Web visitors are coming from. ”If it appears that a lot of our automobile customers are from Germany,” she notes, ”we can make the German-language version of our site more autocentric to keep them coming back more frequently.”
But Is Recency a Word?
Winkeler is not alone in this pursuit. Scores of online merchants have started placing a high value on recency, the duration between visits. At the same time, stickiness, the length of stay per visit, has lost some luster as an e-metric. Why? As in the real world, merchants don’t want customers hanging around all day — particularly if they’re just looking.
Bruce Richardson, senior vice president of research strategy for AMR Research, points out that a high level of stickiness does not give a true picture of customer retention. ”I use MyYahoo all the time, but I never buy a thing from Yahoo,” he says. ”They know who I am, know my age, but they are probably unable to figure out why I’m not buying, even though their site is sticky for me.”
Indeed, some analysts claim it’s a bad idea to put too much stock in any e-metric, even in more-refined metrics like recency and browse-to-buy ratio. ”Drawing conclusions from analytics takes a lot of supposition,” insists Charles King, a senior industry analyst with Zona Research, a technology research firm.
King says that far more people use the Internet for research than buying. ”You can’t simply say 42 percent of people hit this page and then abandoned their shopping cart, so there must be something wrong with the page or the process,” King argues.
He makes a good point. Even Hawk says it’s difficult to put a number on TechTarget’s ROI for its Web analysis. Still, if there’s one thing CFOs do, it’s measure. So it’s unlikely they’re going to stop using Web analytics — particularly as those analytics get more accurate. And Hawk says that even without hard ROI numbers, he gotten considerable mileage out of his Web analysis software. ”We’ve been able to explain to advertisers how our revamped site is doing and why the changes we made were smart,” he claims. ”The software makes it easier for us to keep advertisers and users happier.”