Web Metrics and The Bottom Line

November 03, 2004

In 1997, IDC coined the term “analytic application” to describe applications that involved the following three critera � process support, separation of function and time-oriented, integrated data from multiple sources.

Today, Internet marketers and IT professionals alike are familiar with Web analytics applications, as such applications have no doubt been incorporated into their daily workflow.

On October 25, 2004, eMarketer attended the second day of the Keynote Systems Global Internet Performance Conference (GIPC), a gathering of Keynote’s clients, prospects and partners to discuss and demonstrate site performance maintenance and measurement. The name of the game was metrics, and eMarketer attended two panel discussions after the keynote (pardon the pun) address regarding the incorporation of metrics into a company’s workflow.

The first, “New Perspectives on E-Business Performance,” a discussion among chief executives from E*TRADE, Ameritrade, Charles Schwab and Franklin Resources, tackled the issue from the perspective of the financial services industry. One interesting aspect of the discussion among the financial institutions was the two different sides of the fence from which the firms were approaching their online business � two companies began as online trading sites (E*TRADE and Ameritrade), while the other two were bricks-and-mortar companies presented with the challenge of incorporating the Internet as a business channel.

Ultimately, the general consensus among all four panelists was that with e-business, the end user’s expectations are paramount. Important metrics used among the four panelists to measure end-user satisfaction were response time, reliability, transaction time and page flows, as well as identification of the most active customers and session analysis.

eMarketer then moved on to a panel discussion among Web and E-Commerce Managers from Avaya, Northwest Airlines, Hewlett-Packard (HP) and the Center for Disease Control (CDC) entitled, “The Customer Perspective: User Experience and the Bottom Line.” The key metrics mentioned among these marketing professionals were customer drop-off, gap analysis, customer experience and click-stream analysis. Avaya, HP and Northwest also shared the common goal of maximizing online sales or online customer service, and minimizing call center activity.

The online channel is significantly influencing the bottom line at most major corporations, and as a result, performance metrics have become increasingly more important. IDC estimates that CRM analytic applications software revenues grew by 12.7% in 2003 to reach $908.7 million. Specifically, A.T. Kearney and Line56 Research, in their August 2003 E-Business Investment survey, reported that 10% of total spending on e-business tools at companies with more than $250 million in revenues was allotted to customer analytics, with respondents spending an average $1.4 million on analytics tools in general.

Furthermore, in its Online Selling and eCRM report, eMarketer notes that a number of retailers made it a priority in 2004 to invest in Web metrics software.

The question that many companies keep coming back to when attempting to choose a provider to handle their Web analytics is, “What matters most?” A report from Forrester Research, “What Matters to Web Site Analytics Users,” evaluates 52 users of 14 vendors, and notes that the good news is, there are a number of options available. Forrester explains, “An expanding top tier of vendors means falling prices and increased capabilities � conditions that will help propel Web analytics to the center of a firm’s customer experience measurement strategy.”

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