Things To Look For

Terry Lund of Terry Lund Consulting, formerly responsible for managing Kodak.com, discussed how to evaluate Web analytics vendors.  He outlined five steps for vendor selection:

1. Involve the right people -- E.g., business, marketing, product, and IT managers; customer support; legal; and business research
2. Understand Web analytics basics -- Pages, visits, sessions, referrers, etc.
3. Set business goals and budgets -- Define the purpose of the Web site (e.g., e-Commerce, lead generation, product information) as well as some total cost of ownership (TCO) calculations
4. Select vendors -- Taking into account price, implementation details, Web site traffic, and the size/complexity of the Web site
5. Final selection and negotiation -- Narrow the list down to 2 or 3 solutions, and then run a pilot using your data

Eric Peterson of Jupiter Research, under the title of "Making Analytics Actionable," then discussed the use of key performance indicators (KPIs) in Web analytics.  A KPI, by distilling behavior into a single metric -- such as Percent Returning Visitors or Percent of Visits Under 90 Seconds --  makes it easy for business managers not intimately involved with the Web site to understand how the Web site is helping or hindering the business.  By distributing such "nuggets" to managers throughout the company, Web site monitoring breaks out of being the province of IT and Marketing, and instead gets woven into the business.

Jared Spool, Founding Principal of User Interface Engineering, stirred things up a bit by announcing in the middle of his presentation entitled, "Land of the Lost Revenue," that Web sites would best improve their conversion rates if they "Stopped Marketing Immediately!"  Distilled, his point was that (1) all revenue comes from a very small percentage of visitors, (2) we focus practically all our resources on people who will never purchase, and (3) what would happen if we only focused on the people who purchase?  Therefore, the best strategy is to (1) focus on the few who contribute the most, (2) aim to improve their experience dramatically, and (3) everyone else's experience automatically improves.

Jim Novo of The Drilling Down Project, former VP of Programming and Marketing for Home Shopping Network, talked about segmenting customers into three groups:

1. Those you want to keep -- High Potential Value/High Current Value)
2. Those you want to grow -- Low Potential Value/High Current Value, High Potential Value/Low Current Value)
3. Those you want to jettison -- Low Potential Value/Low Current Value).

Although it's easy to calculate Current Value, Potential Value is more problematic.  However, a proxy for Potential Value is Recency -- happy customers in a buying mood typically have a more "active conversation" with a company than lukewarm or dissatisfied customers.  Accordingly, by plotting Recency (e.g., last visit to the Web site, last purchase on the Web site), companies can rank their customers by Potential Value, thereby understanding which customers to keep and which ones to woo just as they are about to defect.  continued...

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