E-Commerce Tools: Web Metrics That Matter

So you want to buy a Saab. If you’re looking to buy one in the United States, you might start your search at Saabusa.com. There, customers can compare the latest models and find a dealer. Then they can actually go to the dealer showroom and buy a car. Or they could just move to another site and forget about a shiny new Saab. In either case, the folks at Saabusa.com have no way of knowing whether they are motivating online customers to visit a dealership.

So while the site’s operators can track the number of hits and level of traffic, they cannot analyze where or why a customer abandons the site. "We need to move beyond hits and traffic and find out what motivates people to go to dealerships," says Richard Amling, the webmaster for Saab Cars USA, based in Norcross, Ga. Amling notes that Saab is in the process of shopping for a Web analytics software package so that it can analyze customer behavior.

During the dotcom heyday, companies slapped sites on the Web and waited for traffic to pour in. They counted "eyeballs" and measured their site’s "stickiness" as a way to convey the online real estate’s value to advertisers. When the Internet bubble burst, "sticky eyeballs" seemed suddenly worthless. Now, as the Web has moved from being a technology pipe to a sales channel, companies such as Saab Cars USA need to update their Web measurement strategy with new metrics and analysis tools that can help them analyze customer behavior and improve their site’s business success.

But while hits were once the metric du jour, the new metrics are not so clear-cut. "There is no standard metric that a company can rely on for its website," says Randy Souza, an analyst at Cambridge, Mass.-based Forrester Research. "Metrics will be different from company to company." Where a retail site might be focused on conversion rate (the number of online shoppers who actually buy something), a business-to-business site might value site reliability and speed above all. In short, the most valuable metrics will depend on what you are trying to do with your site. Once that is determined, large enterprises should consider buying software to help analyze Web data, while midsize and smaller companies should consider a hosted service.

That’s already happening and will likely increase in the next few years as companies come under increasing pressure to document their website’s value. By 2006, Jupiter Research estimates, annual spending on site analytics will reach $1 billion, by which time ASP-based services will account for 29 percent of spending. While IT leaders don’t always need to be directly involved, CIOs should be able to suggest valuable metrics to marketing and operations departments. Measuring a website’s success can also be crucial when CIOs are forced to defend e-business spending. And IT leaders will need to partner with other business units on site redesigns that result from the analysis of Web metrics.

"Web metrics should absolutely be the concern of the CIO even if it’s housed in another part of the organization," says Gary Massel, vice president and CIO at Boise Office Solutions in Itasca, Ill. "If you’re concerned about your customer, then you have to be concerned about your website’s performance."

The following are descriptions of some of the most important metrics and analysis tools, depending on the type of website.

Business-to-Consumer/Retail Sites

Website metrics and analytics are especially important to companies that are selling goods on their website. First, retail sites should be looking at conversion rate and average order value in order to gauge success levels. In addition, they should tie revenue-based metrics with customer behavior. For example, companies can use techniques such as funnel-based analysis, in which they compare drop-off rates with lost revenue, says Matthew Berk, senior analyst at Jupiter Research in Darien, Conn. "Page views and visitors used to be key," says Charles Hachtman, CTO at Los Angeles-based Novica.com, a site that sells handmade items from around the world. "Now it’s back to basics. Every e-tailer has to have a Web analytics tool?otherwise they have no information about how their site is performing."

Here are a select group of metrics and tools that retail sites can use to help measure success.

Net dollar per visitor: When Novica.com first set up shop online in 1999, Web managers wanted customers to stay on the site for as long as possible. "Our mantra was: Build it and they will come," says Hachtman. "Now it’s about finding the right customer and getting them to check out as quickly as possible."

Novica.com uses customer data gathered by Fireclick, an ASP that helps companies track online customer behavior using caching technology to calculate the amount of money earned per visitor to its site. The online retailer uses that metric to compare its different advertising campaigns. Hachtman says he would be able to gather that data without using an ASP or software package, but the amount of time and effort it would take to go through the log files would be prohibitive.

Clickstream: More than a metric, clickstream analysis is a broad method for companies to analyze their customers’ behavior. A wide range of Web analytics software packages and ASPs offer clickstream analysis, which can help a company analyze where customers enter its site and where they exit.

For example, Web managers at Playboy.com in Chicago recently started analyzing clickstream in order to help grow the subscription side of its business. The site relied on advertising revenue in the past but now focuses on converting free visitors to paying members of its Cyber Club in an effort to reach profitability. Using a service from WebHancer, Playboy.com can examine where it converts customers and where it loses them. Webhancer’s "e-business view" captures the end user’s activity rather than focusing on log server data from a small application, loaded on the user’s desktop, that tracks his movements on sites around the Web. Companies such as Playboy.com receive reports and analyses that describe how traffic comes from other sites, where conversions are failing and how the site compares with those of competitors. "This has been a huge priority because our goal is profitability before the end of the year," says Phil Jacus, senior manager for e-commerce and marketing at Playboy.com. Jacus adds that he expects an ROI from Webhancer by the end of the year.

Customer drop-off rates: According to Jupiter Research, 71 percent of sites do not analyze customer drop-off rates, even though 66 percent of consumers reported having abandoned a purchase while on a website. Companies can use clickstream analysis to determine their drop-off rate. In order to improve it, they can conduct usability testing to see where users have trouble maneuvering on the site. Although Saabusa.com, for example, is still looking for a Web analytics package, it has used a hosted package from Vividence, which sets up panels of users and then analyzes the data from their actions (see "A Good ROI Is Hard to Find," Page 86). Where Saab Cars USA would normally count an online sign-up for a test-drive a success, usability testing can determine whether the process of signing up was pleasant or awful for the user. And most customer drop-offs come when the process becomes awful.

Content Sites

Websites that offer free content need to be concerned with basic metrics such as page views and unique visitors (those who visit a site more than once during a specific period of time) in order to satisfy advertisers. Otherwise, metrics aren’t as straightforward as they can be for sites that measure success in revenue from sales. However, these sites?which run the gamut from media sites to government information portals?need to gauge how customers are faring. "We spend a lot of time and effort making sure that our online readership is highly satisfied," says Michael Smith, CTO of Forbes.com in New York City.

Here are some ways they can do it.

Loyalty index: PennWell, a Tulsa, Okla., company that publishes more than 40 business-to-business magazines, tracks the number of visitors and unique visitors to its site, as well as page views?all of which are important to its advertisers. The company also looks at the top domains and vendors that are visiting the site in order to show that it is attracting the right audience for advertisers.

PennWell is able to track clickstream behavior and determine who is visiting through its use of WebSideStory, a San Diego-based ASP. Mark Heimberg, who oversees 23 of PennWell’s websites as director of technical marketing, says he can track a "loyalty index" by determining how many times a visitor comes to the site each week, month and year.

Customer satisfaction: Clickstream analysis can gather important information about how users navigate a website, but it can’t explain how a person feels while they are doing it. Enter the online customer survey. FirstGov.gov, a government information portal managed by the General Services Administration, gets reports on customer satisfaction from ForeSee Results, which quantifies customer satisfaction through online surveys using the American Customer Satisfaction Index. "The most important metric to us is the measurement of whether a user has a positive experience on our site and whether they will recommend FirstGov to another user," says Michael S. Messinger, director of marketing and communications for the site.

B2B Sites

When a businessperson goes to a website to buy supplies, she is usually going there to make a purchase and leave, rather than browse. Therefore, business-to-business websites need to worry most about their site’s performance and how easily and efficiently customers can get on and buy what they need. After all, most businesses are using B2B sites to cut costs from their supply chain. "In B2B, there is a contractual relationship, so users can’t just go to another site," says Boise Office Solutions’ Massel. "Therefore, if they go into your site and have problems, it’s terribly frustrating for them."

Site performance: While all websites worry about how fast and easy their site is to use, businesses are perhaps the most demanding and impatient users of all. "We get a lot of feedback when things aren’t going well on our site," says Chris D’Agostino, e-commerce development manager for Boise Office Solutions. D’Agostino says that raw performance numbers are the most important metric for his site, which sells office supplies to businesses. Boise Office Solutions uses a service from Keynote Systems to evaluate its site performance. Using automated agents around the country, Keynote runs transactions typical to a site and collects data on such metrics as how long it takes to place an order. Boise Office Solutions can then access the data via browser.

User efficiency: At Englewood, Colo.-based IHS Engineering, which provides engineering information and resources to Fortune 1000 companies through subscription and custom data, a full-time Web analyst scours the log server files for user patterns and trends. "For example, if we see that a set of users on the system are searching for something too often, that might cause us to go in and take a look at why they are having trouble," says Paul Magin, vice president of product development for IHS Engineering. Magin calls that approach "user efficiency analysis." "If they are having to conduct three searches to get one answer, we’ve done something wrong," he says.

Average time spent on system: In the past, consumer websites kept track of how long users stayed on their site, hoping to increase stickiness. Now, most Web managers?especially those working on B2B sites?want to help users get on and off their sites as quickly and painlessly as possible. "Our goal is to reduce time spent on our site, and that sounds counterintuitive," says IHS’s Magin. "If our users are satisfied, we should see more sessions and less time per session."

Like Saab Cars USA, many companies are just now deciding to get serious about Web metrics, even though the technology is not brand new. "Until the recession really hit, there wasn’t much urgency around Web metrics," says Forrester Research’s Souza. Now, the focus is on getting business results, and quickly. "Ultimately, we need an analytics tool that can work for our websites around the globe," says Amling, of Saab Cars USA. "And we need to get moving quickly."

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