Five Things Every CMO Must Know About Web Analytics, Part 3

 

In part one, I outlined the five critical things every CMO must know about Web analytics. Today, I’m taking a little different approach. I recently sat down with Sam Decker, Web analytics pioneer and former e-business leader for Dell. Decker’s about to join a word-of-mouth marketing startup, and I asked him about his views on Web analytics and what he’d recommend other marketing executives do to solve their measurement challenges.

Decker spent the last seven years as a marketing leader at Dell. He ran Dell’s consumer Web site for four years, which became the largest consumer e-commerce site in 2003, and drove Dell’s customer-centricity strategy and directed marketing for a multibillion-dollar division of Dell. He’s also the chairman of the board of advisors for the Web Analytics Association, a frequent speaker at marketing and e-commerce events, and the author of one of the first books on customer evangelism for the tech industry, “How to Market With Computer User Groups.” H’s also written several articles for the Word of Mouth Marketing Association’s site and his blog.

In other words, Decker’s one of the most qualified people I know to speak on how to better utilize the wealth of Web data to improve business results. What follows is an excerpt of our conversation that corresponds to this executive series.

Atchison: Coming off seven years at Dell, what’s the most valuable lesson you learned there?

Decker: Businesses with a blood flow of metrics will grow and outlast the competition and sustain growth. My advice is to build a business and culture that captures metrics, ensures their accuracy, looks at them often, and holds all levels of the organization accountable to the results.

Start by asking yourself these questions: What are your business’ most important metrics? How often does senior management look at the key metrics that actually drive the P and L, and who is accountable for them? Who owns each of those metrics? What are the goals? Are there stretch goals?

Success is execution based on metrics followed by repeat improvements.

Atchison: What’s your philosophy on Web analytics, and how did you apply it at Dell?

Decker: Web analytics is typically not a player in core business operations for a multichannel company. Executives who look at the P and L every day may not be familiar with the causes and effects of Web analytics to their financial dashboards. So the key principle is to make those connections visible. Bring Web analytics closer to the bull’s-eye of how things operate within your business.

There’s a lot to this, but mostly it has to do with education, frequency, and intermingling Web metrics with other P&L performance indicators in managing the overall business. Once these links are established, there is a heighten focus to improve the Web channel.

Atchison: What are the top key performance indicators (KPIs) that you suggest to effectively measure and optimize the performance of an e-commerce Web site?

Decker: Online revenue and margin are the top-line measures. The drivers of those are visits, conversion, and average order value (revenue and margin). These are pretty obvious. All other measures are diagnostics.

What’s more important is the frequency to which you forecast, measure, and diagnose the causes of when and why you’re off target. And identify areas for improvement.

Atchison: Why do you think so many organizations have struggled to leverage Web analytics tools to their full potential?

Decker: I’ve talked to all the major analytics providers, and they all tell me their solution is rarely used to its full potential. I’ve also learned that there’s very little high-level interest in the Web metrics solution during the purchase process. Another data point is that the number one issue in Web analytics is the lack of skilled talent, according to an Emetrics Summit survey.

This is why I go back to my philosophy described earlier. Once Web analytics is appreciated for its impact to the P&L, this leads to executive interest, which leads to career opportunity, which leads to people wanting to get involved in Web analytics. Then perhaps Web analytics and tools can reach their full potential because there is the focus and competitive drive to do so.

So, I guess the short answer is that the tools haven’t reached their full potential because organizations haven’t seen their full potential to impact the business.

Thanks, Sam, well said.

Foreshadowing

In part four of this series, I’ll discuss how to create a monthly scorecard to organize and share your KPIs within the organization and with other executives.

Questions, comments, a story to share? Let me know your insights on how to overcome the measurement challenges that exist in marketing. I may include your story in a future column.