American consumers love e-commerce so much that despite growing fears about identity theft, they spent $172 billion shopping online in 2005, according to Forrester Research. But on the Web, customers tend to be more fickle and price-sensitive than they are when shopping at the mall.According to a recent study by BizRate and Shopzilla, 59 percent of online shoppers use search engines and aggregator sites like PriceGrabber to research products and compare prices before they go to a particular merchant\u2019s site. In the virtual world, companies have always been challenged to make their websites user-friendly and engaging so that when the customer gets to their site, he sticks around and spends some money.However, differentiating websites is becoming easier for companies thanks in large part to the proliferation of broadband in American homes. Among American households with Internet access, 40.1 million have broadband connections (about 3 million more than use dial-up), according to eMarketer, a market research company. With more consumers accessing the Internet via broadband, companies now have the opportunity to create competitive advantage by deploying flashy new technologies that will make their sites more engaging\u2014and thus more likely to keep customers shopping.These bandwidth-hogging technologies, which include Flash, bots and multimedia, as well as the trendiest of the bunch, Ajax, aren\u2019t accessible or practical for users with dial-up connections. These technologies enrich and enliven the online shopping experience. In the case of bots, they can improve customer service, while Flash, multimedia and Ajax can make the entire process of shopping more intuitive. (For more on Ajax, read "Ajax Arrives for the Enterprise," www.cio.com\/021506.) Some companies are also using the next generation of Web monitoring tools, which enable them to track individual consumers\u2019 online behavior in real-time, to identify precisely how to improve their sites. The point of these technologies, says Troy Brown, senior director of e-commerce for boot-maker Timberland, is to "replicate in the virtual world the experiences people have in our stores." Leading-edge companies such as Timberland, Ikea, auto auctioneer Manheim and Safeway.com have increased their transaction sizes, boosted conversion rates of visitors to buyers and improved customer service by deploying advanced Web technologies.Your company can achieve positive results too. Here\u2019s what you need to know in order to keep customers returning to your website for more.What\u2019s Wrong with What You\u2019re Doing NowHTML is the cause of most of the usability problems associated with e-commerce. The programming language was developed for linking scientific papers and retrieving information, not for multistep transactions such as ordering galoshes online, says Fumi Matsumoto, cofounder of e-commerce vendor Allurent.Yet it became the standard for e-commerce because it was the standard for delivering information to a variety of operating systems and browsers. Furthermore, most consumers used dial-up modems to access the Web in its early days. HTML was simple enough for dial-up connections to digest, so that webpages didn\u2019t take 10 minutes to load, says Darryl Gehly, vice president of Molecular, a Web design company based in Watertown, Mass. Because most e-commerce sites used HTML, and those sites were designed to accommodate the slowest computers, all websites began to look and function the same way. "The main way you shop, by clicking on categories and drilling down until you find or don\u2019t find what you\u2019re looking for, is the experience everywhere," says Matsumoto. But that\u2019s no way to make your brand stand out from hundreds of others in the Web universe, or give customers any reason to return to your site a second time. What\u2019s more, the kludgey user interface has led to shopping cart abandonment rates of more than 50 percent, according to Forrester.The solution to e-commerce\u2019s problems is rich Internet applications. These are mini-applications that run inside a browser and function like desktop applications in that they respond instantly to user input. For example, rich Internet applications let users drag and drop images and text without having to get information from a server to refresh the page. They also enable information to pop up automatically when a user rolls her mouse over a graphic. Rich Internet technologies work by taking advantage of the capabilities in browsers, such as Flash plug-ins, that support such functions, says Gehly.Because these technologies make online commerce more fluid and intuitive, they can reduce shopping cart abandonment rates and increase transaction sizes, say Matsumoto and Gehly. In 2003, Yankee Candle deployed a Flash application on its website that allows customers to create their own votive candles. According to Gehly (whose company helped design the application), that capability led to a 25 percent increase in the number of items purchased per order and a staggering 1,400 percent increase in conversion rates. In addition to using rich Internet applications to improve the online shopping experience, companies are using streaming audio and video, artificial intelligence in the form of avatars and bots, as well as real-time analytics.Jeffrey Rayport, coauthor of Best Face Forward: Why Companies Must Improve Their Service Interfaces With Customers, says it\u2019s in companies\u2019 best interests to try out new Web technologies. "If you don\u2019t find a way to experiment with these new technologies to find out which will be relevant to your customers, and your competitors get it right, you\u2019ll have a lot of catching up to do," he says. let your customers customizeThe success of stores such as Williams-Sonoma, with its cooking demonstrations, and Build-a-Bear Workshop\u2014each of which engage customers in an activity or experience\u2014underscores a truth in retailing that is just as important in the online world as it is in the brick-and-mortar world: The more fun, satisfying and easier you make it for people to do business with you, the richer your fortunes will be. One company that understands this concept and is applying it on its website is Timberland. In August 2004, the Stratham, N.H.-based boot-maker launched a product configurator on its website that let consumers customize one of its basic boots. The idea came from Timberland\u2019s supply chain organization, which, the previous year, had successfully developed the ability to mass-customize boots in its manufacturing facilities. The configurator was developed in HTML and moved consumers through the process of customizing their boot with pull-down menus. "We sold a lot of custom boots that way because people loved the product," says Brown. "But it wasn\u2019t an experience. It was like filling out an order form." Instead, Brown wanted the configurator to give customers the sense that they were holding the boot and color swatches in their hands. So Timberland hired Fluid, a Web design company, to help create a more interactive and more satisfying-to-use version of the configurator. The new configurator is an example of a Flash-based rich Internet application.Now, when consumers click on the "Custom Boots" tab on Timberland.com\u2019s homepage, they download the configurator application onto their computer (it takes about 10 seconds). Because the application resides on the user\u2019s computer, it\u2019s much faster than traditional Web applications, which require communication with a back-end Web server. In the HTML version, whenever a consumer clicked on a color swatch, the webpage would go blank while it refreshed with the new image of the boot. Now, a person can drag her mouse over a color swatch and the image of the boot changes instantly. Consumers can also click and drag their mouse across the image of the boot to change its orientation, as if they were turning the boot in their own hands."The configurator on our site today is far beyond anything we\u2019ve had on our site [before]. It\u2019s an experience. You go in and play. You have fun. It\u2019s interactive and intuitive," says Brown. Consumers like it so much that as many as 1,000 of them every day click the "Tell a Friend" feature on Timberland.com to bring the configurator to others\u2019 attention.The configurator is more than just fun and games. It has created an important revenue stream, Brown says. The percentage of customers who buy boots after trying the configurator is quadruple the rate of purchases after the first version of the configurator. "That kind of lift is all related to the experience and interactivity," he says.Bring the Store to the CustomerAnother set of tools that makes the virtual shopping experience more engaging is audio and video. Multimedia technologies enable customers to view product demonstrations before they buy, much as they might in a brick-and-mortar store.Auto auctioneer Manheim uses real-time audio and video to simulcast its used car auctions. The video feed shows the car that is in the auction lane and all the bidders onsite around the car raising their hands as they make their bids. The audio enables the remote bidder to hear the auctioneer make his calls so that the bidder can experience what\u2019s happening on the auction floor. Manheim\u2019s VP and CIO, Joe Luppino, says simulcasting enables Manheim to reach a wider audience of potential buyers and makes it easier for buyers to participate in auctions since they don\u2019t have to travel to the auction site; buyers can bid in real-time over the Internet. "Simulcasting offers online bidders the ability to attend more sales [virtually] than they\u2019d be able to attend in one week, and it offers them the ability to [virtually] attend sales in multiple states in one day," says Luppino. The more buyers Manheim can attract to its auctions, the happier the auctioneer makes its sellers. Since Manheim began simulcasting its auctions in 2002, approximately 3,200 new dealers have come on board. Luppino adds that his company has seen buyers participate in sales in which they hadn\u2019t participated in the past.When Manheim launched its simulcasts, the company knew it would have to create a realistic simulation of the auction environment so that dealers would believe watching the simulcast was as good as being in the room. So Manheim made a decision not to create an experience that would appeal to "the lowest common denominator," says Luppino. "We didn\u2019t want to build on dial-up because it would prohibit us from building features into our product that would make the simulcast more compelling," says Gordon Warren, VP and general manager of Manheim\u2019s dealer operating system, Tracker, who used to work on simulcasts. "We told our dealers, You have to have high-speed [Internet connections] or else you\u2019re going to have a miserable experience."To simulate a live video feed, Manheim uses a codec, a piece of software that converts analog video signals into a digital format for transmission, in an MPEG file format. Luppino says codecs work by transmitting video stills in quick succession directly to the user\u2019s computer so that those stills look like they\u2019re moving\u2014much like a cartoon. Manheim opted to use codecs instead of a live video stream because in an auction environment where every second counts, video streams often start and stop due to the number of people trying to access that stream at the same time. If the video were to suddenly stop because of the amount of traffic on Manheim.com, a buyer sitting at his computer might miss out on an opportunity to bid. The other advantage a codec holds over streaming video is that it doesn\u2019t have to be downloaded onto an individual\u2019s computer; the audio and video are served directly to users through the browser. And it\u2019s cheaper than live video because Manheim can transmit more broadcasts over smaller pipes. (To read about the pros and cons of codecs and other technologies discussed in this article, see "Which Web Technology Is Right for You?" this page.)Provide a Human TouchOne thing brick-and-mortar stores have over online stores\u2014at least in theory\u2014is a salesperson to help you when you have a question. Now that more consumers have broadband connections, it\u2019s possible for companies to provide virtual salespeople to offer that humanlike touch. For example, Ikea, the Swedish furniture retailer, has created Anna, a graphical representation of a woman who tilts her head, blinks and smiles as she answers text-based questions.Ikea launched this interactive shopping assistant feature, Ask Anna, on its U.S. website in 2004 in order to help customers prepare for their store visits. Because Ikea stores are so far-flung (the company operates only 26 stores in the United States), customers may drive hours to reach one. They prepare for their visits in advance in order to make the most of them\u2014arriving armed with measurements and information from Ikea.com about the furniture pieces and accessories they like.Melissa Robinson, central services manager of Ikea Direct, Ikea\u2019s online operation, says that Ask Anna has enabled the company to reduce call center volumes by making it easier for people to find information on its website. "We wanted to find a way to make information more accessible," she says.Anna is a bot, or software agent\u2014a software program that "intelligently" answers text-based questions. Ikea created a knowledge base for this feature consisting of 1,600 questions, each with at least 10 variations and 2,100 answers altogether (because there can be more than one answer to the same type of question). When a user clicks on an Ask Anna link anywhere on the site, a pop-up window opens with an animated representation of Anna (who is not based on a real person), along with a text message in which she introduces herself as Ikea\u2019s online assistant. Users can enter their questions in a box at the bottom of the pop-up window. Within three seconds an answer appears and a new webpage loads with additional information.Developing Ask Anna\u2019s knowledge base alone took two people six to eight weeks during the course of several months, says Robinson. The software development took four months. Robinson considers the development costs moderate and says a company looking to do the same can probably expect to pay less than $500,000. The investment in such a new technology has been worthwhile for Ikea. "We see our user counts constantly increasing," she says. Between 5,000 and 10,000 people use Ask Anna each day. In the year after the feature was first launched, Robinson says, call center volume grew a mere 7 percent, compared with 20 percent growth the previous year. Robinson also says Ask Anna has been "especially efficient for reducing incoming e-mails, which are most costly to manage." The software paid for itself in less than a year.Now Ikea is expanding the database so that customers can get help assembling products, and is considering ways to have Anna answer people\u2019s questions verbally to make the interaction more lifelike and conversational.Even though Anna is totally 2D, customers seem to be impressed. Some users have even proposed marriage to Anna. "Several times," says Robinson. "People are connecting with Anna on that level. Part of the reason she gets those questions is people having fun and part of it is people thinking, You answered my question and you did OK, so let\u2019s see what else you know." The Benefits of Real-Time Analytics Web analytics can help you pinpoint how to make your website more engaging and easier to use. There\u2019s a host of products on the market that generate Web metrics, but few provide real-time data. And few go beyond traditional ways of measuring customer behavior, such as tracking clickstreams and page views, to tell you precisely what individual customers are doing or trying to do on your site. But Safeway.com has successfully used a new Web monitoring product that tracks individual user behavior on the Web in real-time in order to quickly diagnose usability problems and increase revenue.Business Signatures\u2019 Customer Intent Processor is one of a few new products that help companies identify what customers are trying to do on their websites in real-time. Safeway.com deployed Business Signatures\u2019 software in November 2004. The software captures the entire HTTP stream that goes through a company\u2019s network in real-time. It then matches those streams to sets of activities customers can engage in on a website, such as search, add to shopping cart, checkout, check account balance, or any series of activities or clicks a company wishes to track.Safeway.com used the software to determine why a new version of a feature on its website that lets shoppers edit their grocery orders wasn\u2019t working properly. Customers had complained that changes they had made to their orders using the order edit function weren\u2019t sticking. So the online grocer set the software to monitor what happens when people tried to edit their orders. Joe Devine, Safeway.com\u2019s CTO at the time the software was deployed (the current CTO, David Popejoy, came on board in October 2004), says the data that the software collected showed that customers\u2019 changes weren\u2019t taking because customers didn\u2019t realize they had to click an additional button to process them. Within an hour of making that discovery, Devine\u2019s developers created more prominent instructions on the webpage telling customers they had to click one more button, and the problem was solved. Devine likes the intent processor because it makes technical and usability problems easier to diagnose. He says it\u2019s also simpler to use than most Web monitoring tools, because he didn\u2019t have to run debugging code or add tags to his pages in order to create logs. In addition, he used the software for more traditional Web monitoring functions, such as keeping track of users\u2019 activity on Safeway.com (known as session management), playing back users\u2019 sessions, as well as collecting metrics.Devine won\u2019t provide numbers, but says that between the money he saved by replacing older Web monitoring tools and the increases in sales that came from quickly fixing problems with the site, his ROI reached seven figures within eight months of deploying the software. "If you improve the customer experience, ease of use and navigability on your site, you get significant returns," says author Rayport. Timberland, Manheim, Ikea and Safeway.com can testify to that. And since so many websites remain shackled by HTML, there\u2019s plenty of room for your company to start using these new technologies to differentiate your site from the rest of the pack.