Larry would like to thank Tim Perry for his contributions to this month's article.

In 2006, Time magazine awarded its annual Person of the Year distinction to the newly empowered blogger, article review writer, photo uploader and videomaker. They gave the award to "You" - the prosumer (a new word that combines producer and consumer). While their selection was controversial, it does mark a very significant turning point in business. People browsing Web sites are no longer purely passive viewers - in some cases, they can be as active as your employees.

Companies across all industries have been spending a great deal of time and energy in recent years eliminating customer intelligence gaps and becoming customer-centric within their off-line processes. Hiring anthropologists and performing in-depth customer observation has impacted product development and refinement from organizations. Understanding customers' real issues and how they use products during their daily routine has provided valuable feedback for organizations designing new products and services.

For organizations with a significant Web presence, the same type of observation can be performed on a much grander scale through Web analytics. Within progressive companies, Web analytics has moved away from a pure IT-based consideration into a primary focus for management, sales and marketing resources trying to answer questions such as:

  • Where are your customers or registrations coming from?
  • Which parts of your Web site are used to perform which functions?
  • Do your online activities impact offline sales?
  • Why/when did your customer abandon the shopping cart?
  • Which customers are providing feedback, and when?
  • How do you effectively measure campaign performance?
  • How does site personalization drive customer response?
  • Where should products be placed on the Web site to maximize customer retention?
  • What keywords are being searched?
  • Which parts of the site inspire regular visits as opposed to special visits?

Web analytics includes the following functionalities: online behavior, predictive analytics, search engine marketing and market research.
Online behavior accounts for the process of monitoring a user's interaction with a Web site as well as the site's performance and response times. By examining online behavior, you get information on the various ways people use the site, which, in turn, allows you to tailor services that are more efficient and customer-oriented. New products from Web analytics vendors enable you to turn insight into immediate action, for example, a follow-up email to an individual who abandoned a shopping cart, a real-time call to an individual inquiring about a new product, notification to a sales executive when certain users have logged on or the ability to replay an entire Web session to analyze each movement and click.

Predictive analytics such as data mining and text mining can provide both historical and predictive insights into Web activity. Leveraging this information can help an organization detect which user path will lead to better online sales, predict the likelihood of a visitor to respond to a promotion or determine what will entice a customer to participate (review, upload, blog) in a site. Predictive technology can use past browsing and purchasing behavior mixed with the current context (what they are browsing or doing right now) to make a decision.

Search engine marketing (SEM) is a grouping of marketing activities used to increase a Web site's visibility to consumers. This is accomplished by having their links rank higher on the major search engine result pages. The three primary processes within SEM are search engine optimization (SEO), pay per click and paid inclusion. SEM can help direct the right kinds of customers to your online services. Using pay-per-click advertising, companies can implement ad campaigns for search engines where an ad will appear next to the actual search results. A company's ability to implement and track SEM procedures can influence the other components of Web analytics.

Market research gathers information on target consumers and demographics, identifies what they buy and why, how willing they are to try new products or how satisfied they are with the products and services they use already. Knowing this information can be a valuable overlay to other Web analytic metrics.

Further, industry-wide Web site activity aggregates can give you insight beyond your Web site into how your industry is performing as a whole. Organizations exist that aggregate browsing information from across Internet service providers (ISPs) nationwide for defined industries. Though detailed personal information is hidden from these ISPs, they are able to track browsing behavior of individuals across Web sites. This information allows organizations to benchmark their Web activity and performance across their competitors.

The next generation of online users and functionality is making Web analytics an essential resource for assisting in customer relationship management initiatives, optimizing marketing, increasing sales and measuring site effectiveness. The challenge is how to harness all of a consumer's (individually or as an aggregate) activity across all of the different online touchpoints, including advertising clickthroughs, blog participation, general browsing, purchasing and competitive activity. 

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