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By Tom Groenfeldt
What’s your Web site contributing to your business?
Most companies don’t know, even though they often have all the tools they need to measure what the Web is contributing to their business, says Eric Peterson, CEO of consultancy Web Analytics Demystified.
This is a great opportunity for CIOs to make a difference by bringing the resources together and providing valuable information to the company.
Some companies definitely get it -- Wal-Mart, Harrah’s, Nokia, CapitalOne, Expedia, eBay and Amazon, to name a few. And most of them won’t talk about their Web site’s analytical programs because they provide a competitive advantage. But Peterson did hear an Amazon exec talk several years ago at an industry conference. The company runs hundreds of tests on its Web site, changing colors, placements and texts to see what works best, and then makes changes constantly.
Businesses are accustomed to measuring their employees, customer satisfaction, market penetration and even the effectiveness of advertising campaigns. The Internet now makes available huge amounts of data with details that were previously impossible to measure. In a physical store, a sales clerk might watch a customer search through items and then make a selection, ask for help, or walk away.
On an e-commerce Web site, a company can collect data on which items a customer scrolled over, what they put in a shopping cart, what they removed, when they stumbled and quit the site, if they looked at one television and bought another brand, and how they responded to special offers. A single day’s Web traffic can generate more than 50 terabytes of data, says James Dietz, who manages Teradata’s professional services marketing programs.
“Soon companies that historically relied on small samples, third-party data and gut feel will have access to huge data stores of information about their customers,” says Peterson, who predicts this will power new businesses , lead to new business models and create new relationships between businesses and their customers.
With the powerful databases now available at reasonable cost, firms can maintain stores of granular data rather than rely on aggregated data or ad hoc queries. Then, using tools like Adobe’s Omniture, SAS, Google, Interwoven, or SiteSpect, they can conduct sophisticated tests on the data. Using Teradata, Oracle or MySQL or SQL Server, companies can use the data from their Web sites to improve their returns.
“The technology is by and large in place,” says Peterson. “What is lacking is the methodology and process to bring these systems together and the human capital to know which questions are reasonable to ask and then go about getting those answers.”
First-generation use of data was aimed at improving digital media, second-generation tools offered the ability to drill down and measure the results of changes made. Peterson thinks the third generation will use statistical models, forecasting, predictive analytics and decision optimization.
This is not simply business intelligence or customer intelligence, although it is related. Peterson describes a financial services firm which created visitor-by-visitor views across its retail, phone and online channels and developed extremely valuable information for its customer acquisition program.
With the information, the analytics group is presenting management with future opportunities, not past results, he adds.