Corporates take measures to profit online - Industry Trend or Event

CommunicationsWeek International, July 16, 2001 by George Malim

E-businesses have moved on from attracting visitors in volume. Now, they hope to turn a profit by using metrics to better gauge Web performance.

Measuring the efficiency of Web sites has become a key marketing tool for businesses. So key, in fact, that control of it is moving out of corporate Information technology departments and into the boardroom, as the focus shifts to gaining returns on investment from electronic business (see feature, p. 20).

Where previously numbers of visitors was paramount, now companies are focusing on how those visitors are interacting with the site and measuring their satisfaction with the services being offered. "If we were discussing Web measurement 12 months ago, a lot of the conversation would be about measuring the number of hits and users," said Martyn Reeves, vice president, Europe, at NetGenesis Corp., of Cambridge, Massachusetts. "In the land grab phase, popularity was everything, but we're now seeing much more of a focus on return on investment from the Internet as a sales, support and marketing channel." Net-Genesis is a Web measurement software company that also provides consultancy services.

Guy Creese, research director, Internet Analytics, at the Aberdeen Group Inc., of Boston, Massachusetts, says businesses are now more likely to measure the way users navigate sites. "Hits and click-through. rates are still monitored, since they are important to the IT and now to marketing departments," he said. "That said, the focus has changed to better understanding customers' moods and frustrations. For example, a customer ping-ponging back and forth between an index page and product pages is clearly not finding what he or she is looking for, even though they might be spending a lot of time on the site."

The important thing, said Reeves, is being able to identify which data are of most use to the company. The most valuable metrics detail what proportion of visitors are converted to purchasing from the Web site, how many customers abandon an incomplete transaction and how frequently individual customers visit, he said.

Sussing out valuable visitors

"There is a need to focus on key customers," said Reeves. "We're finding that 90% of value is derived from 10% of customers in the online environment, so the ideal set of metrics will focus on the most valuable customers."

Creese, at Aberdeen Group, thinks companies have to be careful to identify the key metrics that will give them real value from an extensive list of options. "There's a really wide range of metrics," he said. "By no means inclusive, a list includes time on the site, number of repeat visits, acquisition cost versus revenue, profitability per path and revenue per path."

Creese acknowledges that organizations run the risk of drowning in data, but adds that they need to be selective. "The issue is being able to figure out the hotspot and then deeply analyze it," he said. "You can't fix the problem by gathering less data."

How best to use online data

Reeves, at NetGenesis, thinks the online channel is now recognized as part of a bigger picture by many organizations, but thinks many challenges are thrown up by the amount of data and personal information--or e-metrics--gathered by Web sites.

"The online channel delivers information about consumers that's not available in the offline world," he said. "It provides huge amounts of data, and the scary aspect is that there's so much data that no one knows what to do about it. A big ask is to compare the online behavior of a customer with their offline behavior. The issue is integrating online data with offline data."

According to some commentators, e-metrics are already helping Web sites demonstrate their value to the organizations they serve. "We can...demonstrate to management that we are now better equipped to significantly impact the financial performance of the company by having the capability to identify and measure the value of relationships between customers and partners," claimed Nick Stowe, head of management information at U.K. cable operator Telewest plc, of London.