Many e-businesses excel at attracting heavy traffic to their Web sites, not surprising in an industry that has spent more than $2 billion on advertising to attract new customers. They've discovered, however, that it's far more difficult to convert browsers into buyers and to take them to the next level: turn them into loyal, long-term customers. Businesses are finding that even in the electronic age, customers thrive on individual attention and a high level of personal service. Those that employ highly advanced technology to build one- to-one, mutually beneficial relationships with their customers will prove the most successful at acquiring and retaining a satisfied and profitable customer base.

Since e-businesses never see their customers face to face, they turn to online clues to gain a sense of who their customers are and how to serve them best. They track and store customers' every move, clogging databases with millions of static images of customer behaviors. The sheer volume of information about each customer has turned analysis and response into an arduous and ineffective process akin to cutting the lawn with a pair of scissors. These technologies provide narrow views of customer behaviors. What businesses need to thrive in the immediate, interactive world of the Internet are more in-depth, complex customer profiles – as different as a slide show and a motion picture.

Fortunately, new technologies are emerging that can better meet e-business customer relationship management and marketing needs. Behavior-mapping technologies, for example, construct in-depth profiles of each customer based on their interactions with the business across all communication channels including the Internet, ATMs and call centers. These technologies provide a comprehensive view of customers, enabling businesses to view their behaviors continuously as they evolve. Instead of storing customer information in ways that make retrieval and analysis unwieldy, these technologies continuously distill and interpret behavior into current, multidimensional maps of each customer that enable businesses to respond intelligently and instantly to customers' needs. Most importantly, this approach detects when a customer's relationship with the business is beginning to change – for better or worse – enabling immediate response to either save the relationship or expand their business. With longitudinal customer profiles in their arsenal, e-businesses are able to:

  • Intervene at the exact right time to gain, maintain or expand a customer's business;
  • Identify customers' seasonal preferences and positive or negative trends in their behavior;
  • Gauge and act on customer inactivity – perhaps the most critical indicator of waning loyalty;
  • Predict when a customer is about to take an action that will affect the company;
  • Dramatically improve the success rate of marketing messages;
  • Gain and deepen customer loyalty;
  • Reduce defections and lower attrition rates; and
  • Gain more satisfied customers and maximize their profitability.

Instant Analysis and Action

The ease of cruising the online marketplace with its abundance of choices creates great challenges for e- businesses striving to build a loyal customer following. In the world of e- commerce, where customers come and go in seconds and competition lurks a mouse click away, rapid-fire responses to customers' needs are critical. Technologies are emerging that combine deep insights into customer behavior with the ability to deliver relevant messages at precisely the right time.

It's crucial to convert first-time visitors into buyers or, at the very least, entice them to return. Without background on an individual, businesses can turn to technologies that instantaneously compare their actions to behavior patterns of other first-timers. As the person navigates the site, the progression is scored as an "optimal path" or an "abandonment path." The system reacts accordingly with instant messaging pertinent to the person's interests.

For a visitor heading down a dead end, such as someone who keeps returning to the "search" button, an instant message can pop up offering a guided tour. Or when another visitor keeps filling his cart and then removing items, an "act now, free shipping!" message could nudge him over the hump. In a virtual world without borders, it's vital to supply such barriers to exits, subtly moving customers in more positive directions. Conversely, for customers who travel along the preferred, or optimal paths, displaying an intention to buy, businesses can present relevant cross- or up-sell opportunities, such as a notice on a rare vintage Bordeaux for the person whose actions reveal her as a high-end wine connoisseur.

On Top of the Trends

Behavior profiling technologies enable companies to see the evolution of customers' behaviors over time, the perfect view for anticipating and responding at the right moment to threats and opportunities. These technologies use various analytic tools in real time to:

  • See trends emerge in individuals and groups;
  • Track the strength and breadth of each customer's preferences;
  • Pinpoint when a customer's behavior changes could affect the business; and
  • Predict what the customer will do next.

With the long view of a customer, it's easier to see trends emerging over time. Behavior-mapping technology shows trends along a series of dimensions by continuously measuring the velocity of a person's behaviors, including the speed of browsing activities, frequency of visits to the site in general and to particular pages, and the varying amounts of money spent over time. The technology also captures customers' preferences, creating hierarchies that depict levels of interest in particular products or services. These measurements establish a baseline for each customer's regular behavior patterns and enable businesses to observe and react, when necessary, to any subtle or significant departures from the norm.
People naturally evolve over time, and their changing needs can stimulate new business. The ability to detect gradual changes can reveal, for instance, a customer's increasing sophistication in literary tastes, seasonal preferences for certain foods or wines, or growing knowledge of the stock market – all fertile ground for target marketing. On the other hand, the ability to pinpoint abrupt behavioral changes immediately – such as the high-value investor who suddenly cashes in some of his mutual funds – enables businesses to intervene decisively with, for example, a call from a friendly customer service representative to ensure that the customer's needs are being met.

The behavior-mapping approach is a sea change from the segmentation and model building that many businesses still use to interpret customer behaviors. These strategies focus on group behaviors, lumping individual customers into large groups of people and mass marketing to the perceived needs of the entire group. Behavior-mapping technology looks at the world differently. It sees how an individual performs over time, recognizes when behaviors change and enables businesses to target market to segments of one to suit each person's tastes, mood and time frame.

It's important to track what customers do on a Web site, but it's equally necessary to pay close attention to what they aren't doing there. Customers' actions reveal personal preferences and what they like about a company, while customers' failure to act often indicates a level of dissatisfaction. Few e-businesses today track and interpret customer inactivity because they simply don't recognize its ability to predict which customers represent the greatest risks. By honing in on declining Web site visits and even subtle departures from customers' typical behavior patterns, businesses can spot waning loyalty and serious defection risks while there's still time to save the relationship.

Savvy e-businesses will come to view customer inactivity as symptomatic of specific problems within their business or in a customer relationship and use all the resources at their disposal to identify the underlying causes. Drop- offs in activity can uncover flaws in a company's product offerings, customer services or delivery systems or reveal serious miscalculations in their understanding of consumer trends or the needs of individual customers.

A major financial services company that monitors its customers' inactivity levels recently found that among its high-value customers, even slight departures from typical behaviors can signal major threats. For example, a customer who one week failed to make his usual transfer of assets between accounts and check his investments online was preparing to jump to the competition. Only timely offers from the company, which anticipated his need for a higher level of services, saved the relationship.

Behavior-mapping technology can easily track customers' inactivity levels and continuously alert businesses to potential attrition risks. Armed with a continuous flow of information about customers whose activity has changed, slowed down or stopped, businesses gain an early warning system that prepares them to launch preemptive strikes – through e-mail, fax, screen pops or whatever it takes – to draw disaffected customers back into the fold. Although it may require a major shift in orientation for e-businesses to focus on what customers aren't doing, those that do can react quickly to specific threats and opportunities, lower customer attrition rates and increase profitability.

Ultimately, e-businesses are searching for the most innovative ways to provide personalized service through technical channels of communication. Unfortunately, much of the technology that they now rely on fails to keep pace with the interactivity and immediacy of the Internet. The challenges posed by the Internet's impersonal nature can only be conquered by equally fast-moving, complex and intelligent solutions. Businesses that take advantage of emerging technologies to build strong relationships with their customers, based on a deep understanding of and responsiveness to their individual needs, will dominate the competitive arena of e-commerce.

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