Mining The Data Mountain

Wanna know the real reason e-commerce is going to change the way we shop?

It’s not the 24X7 instant access to products – anyone with a telephone and a catalog’s got that. It’s not the selection – have you picked up a Mac/Datacom/PC Warehouse catalog lately? It’s not even the depth of product information – a lot of e-commerce sites don’t provide more than the paper catalogs I’ve got lining my recycling bin.

No, the real change-the-world aspect of e-commerce is perhaps its most untapped feature – the ability to measure customer behavior and deliver solutions tailored to that behavior.

Think about it – retailers for years have used all sorts of techniques to try to get a handle on who buys what and why. “Club” cards, customer surveys, trench-coated cultural anthropologist snoops, and complex POS systems have all helped analog retailers discover what you’re buying in an effort to tailor what they sell you.

But actually getting individual customer data as to where people are going in the store, how long they’re looking at a particular item, what they buy, and (often more importantly) what they don’t buy have all been out of reach.

But the online store is different.

When you log on to an online store, everything you do is much more measurable than in the analog world. When and where you enter, what you look at (and how much time you spend looking at it), where you go, where you’ve been, what you’ve bought, and when you decided to leave your electronic shopping cart in the virtual aisles can all be tracked from the clickstream and server log data you generate. And since it’s all happening in real time, a savvy marketer can respond to your choices and preferences instantly.

At least in theory.

Unfortunately, in practice, most e-tailers do little more than simple server-log analysis to measure the success of their store and formulate strategies for future sales. Even though there’s a mountain of data locked into servers and other tracking systems, a lot of it doesn’t get used.

In a July 1999 study from Primary Knowledge, researchers discovered that while most e-business executives see measurement as a primary tool for building ROI, most still have their initiatives in the planning stages, often relying on “home grown” solutions for measurement and tracking. The situation is so bad, the report says, that “Many of today’s leading e-businesses are under-performing when it comes to meeting their Internet ROI objectives.”

In fact, if you aren’t tracking your customers and personalizing solutions to their behavior, you aren’t doing more than stationing a pimply-faced kid at the front of your store with one of those clickers to count customers. Sure, big traffic numbers might make the executives feel good, but that’s just the tip of the data iceberg. And if you don’t know your customers’ behaviors, how are you going to personalize solutions directly to your customers to entice them back again and again?

Luckily, solutions are starting to arrive that allow you to mine the mountains of customer data and respond to their needs. These customer-relationship management programs help make sense of customer data through profiling, targeting, and tracking. Using them, you can discover who your main visitors are, what they like, what they don’t like, and what they do on repeat visits.

DataSage’s netCustomer is one of the most complete e-customer management tools around. Combining customer targeting for promotions, messages, and content, along with product affinity analysis, market analysis, and the ability to optimize prices for products and customers, netCustomer allows you to optimize your site so that each customer sees the site she wants to see. Data Sage’s product even lets you target direct email to optimize all your channels for customer development.

One of the coolest features of netCustomer is its reporting. Using an Explorer-like interface, netCustomer allows you to get real-time information on vital statistics such as revenues, visitor trends, page affinity, customer browsing behavior, and the individual efficacy of your promotional efforts. These reports are available online whenever you need them. An “Ad Hoc Reporting” feature even lets you customize your reports so that you can see what you need instead of being forced into someone else’s idea of what’s important.

But Data Sage isn’t the only solution available: Andromedia, Oracle, Personify, Angoss Software, Annuncio Software, Epiphany, Verbind, and Manna all offer products that help mine customer data and build individualized solutions.

Customer measurement and personalization really are the next frontier in e-commerce and what’s really going to change the way we all buy in the future.

To learn more, check out the resources above and be sure to stop by the absolute best one-stop-shop for all you need to know about how personalization can build your business:

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