1. IBM Software July 2011Thought Leadership White PaperFrom web analytics to customeranalytics: Making web data personal
2. 2 From web analytics to customer analytics: Making web data personalIntroduction longer “new,” and online marketers are beginning to face manyIf you are like most marketers, you’re facing an enormous head- of the same challenges as their colleagues. They’re encounteringwind: you must increase marketing returns, but conventional symptoms like:marketing techniques are rapidly becoming ineffective. What’smore, you’re seeing unmistakable signs that even some online ● Dwindling email open ratestactics are beginning to suffer from many of the same problems ● Growing competition for search keywords that has driven upas traditional marketing tactics. costs ● Lower online retail margins, caused by comparison-shoppingTo improve returns, many marketers are focused on making enginestheir communications more timely and relevant to recipients. To ● The failure of innovations such as “buy online” and “pickdo that, they must build communications around the interests up in store,” to guarantee success (as witnessed by theand preferences of each individual customer or prospect. Web recent bankruptcy of leading “clicks-and-mortar” advocateanalytics, if made personal, can fuel this process by providing Circuit City)speciﬁc behavioral insights about each individual. Marketers recognize that increasing the relevance and timelinessLearn about the gold mine that is available through use of of their marketing messages can help ﬁght these trends.personal-level web analytics. We’ll help you identify the speciﬁc Whether you call it “personalization” or “behavioral targeting,”nuggets to mine for, and apply them to increase marketing the underlying idea is the same: when you present the rightreturns at every stage of the customer life cycle, both online and message to the right person at the right time through the rightoffline. channel, it’s far more likely to be heard, and acted upon.The ﬁght against declining marketing It’s a great vision. But how can marketers learn enough about individual customers to predict which messages are perceivedresults as most relevant and when customers perceive the messagesFor years, marketers have struggled with the growing ineffec- as important? Web analytics provides an unparalleled, newtiveness of conventional offline marketing techniques. Online opportunity to help. Leading innovators are already using webmarketers took comfort in the rapid growth and eager accept- analytics to uncover a gold mine of insights about the interests ofance and ownership of the “new” media niche. But online is no their prospects’ and customers’ current interests, as revealed by their individual behavior on the web. These innovators are increasing margins and proﬁts by making web analytics personal.
3. IBM Software 3 behavioral data to make product recommendations, is one of the best-known examples, but many other ﬁrms are also effectively leveraging individual web data to personalize interactions. Access the individuals behind each funnel step ● A leading online marketplace provides personalized sugges- tions of available items that traders may also be interested in, based on their recent searches, bids, and purchases. This fea- ture has led to substantial increases in click-through rates. ● A leading travel provider links web visitor insights with cus- Example: A web analytics funnel report, tomer demographics to deliver marketing messages in inbound and the list of individuals in each funnel step, where some individuals are registered and outbound channels. By basing communications on all of and known while others are anonymous its knowledge about individual customers, it has achieved a but cookie’d. 10 percent increase in the number of leads sourced from its website. The company’s ﬂagship onboarding email programs now perform at 30 percent greater than industry average forFigure 1: Two uses of web analytics: aggregate and individual-level insights both open rates and click-throughs. ● A leading online bank uses advanced web analytics to identifyTwo uses of web analytics: aggregate customers that abandon an application process and delivers a multi-wave campaign that recaptures and converts a signiﬁcantand individual-level insights number of leads. The strategy leverages event triggers thatConventionally, marketers use web analytics at an aggregate start a communication stream when the online application islevel. They seek to report on the performance of their websites abandoned. It draws upon email, direct mail, and even callsand online advertising, so they can adjust their efforts to improve from relationship managers with whom a relationship exists.the results. Web analytics are a worthwhile application that can By eliminating communication overlap and reducing contactdeliver excellent return on investment (ROI). fatigue, the tool has both boosted conversion rates and enhanced customer loyalty.However, marketers may be squandering a huge opportunity ● A leading auto manufacturer has improved the way it priori-if they do not also leverage web analytics as a rich source of tizes leads that originate on its websites. To prioritize leadsbehavioral insights on individual prospects and customers. more effectively, the auto manufacturer proﬁles the prospect’sUsed this way, web analytics can play a far more direct role in interests based on-site behavior and scores the prospect’sengaging customers, improving customer experiences, and propensity for making a purchase. Leads marked as “hot” areincreasing sales, by enabling companies to deeply personalize twice as likely to close as “average” leads, and are six timestheir communications and interactions. likelier to close than “colder” leads. Using this data, dealers can now focus on their best opportunities to drive sales whenIndividual web analytics: a gold mine for they’re needed most.increasing marketing valueIndividualized web analytics isn’t mere theory: many companiesare already applying it to improve their marketing performanceand proﬁtability. Amazon, which has long leveraged web
4. 4 From web analytics to customer analytics: Making web data personalIdentifying what nuggets to mine for The channels through which these initiatives can be executedIndividualized web analytics can reveal actionable insights into (website, email, offline, and so on) depend on the level of eachindividual prospects and customers. For example: site visitor’s registration, ranging from anonymous browsers to registered, known customers (see Figure 3).● Individuals’ personal preferences and current product or content interests What website events do marketers look for that trigger the mar-● Where individuals stand within the buying or customer life keting initiatives shown in the life cycle mapping graphic? The cycle table on the next page lists typical website session events to● When they are most susceptible to being persuaded, watch for in various industries. converted, or up-sold● When timely action must be taken to retain them As an example, a fashion retailer can use web analytics to proﬁle● Which offers are seen as most relevant and persuasive customers based on the price categories and clothing styles● How much each individual is willing to spend they’re browsing. Marketers can then use these insights to personalize emails with items that match these price levelsThese insights can be transformed into targeted marketing and styles. Similarly, marketers can leverage these insights ininitiatives at every stage of the customer life cycle (see Figure 2). other outbound communications or in inbound channels. For example, if a customer calls into the call center to inquire about a shipment, the company’s IVR or CRM systems could suggest promotions that ﬁt the same proﬁle. Life Cycle Initiatives Driven by Marketer’s Goal Stage Behavioral Analysis Suspects Behaviorally (anonymous Attract Identiﬁed Target across online and ofﬂine, inbound and outbound Targeted Ads cross-channel site visitors) customers channels depending on available contact details Registered online Target via web site, e-mail, SMS, depending on customers and prospects Prospects available contact information On-Site (registered Engage Anonymous visitors Behavioral Targeting (tracked through their cookie, typically) On-Site Behavioral Targeting visitors) New Lead Nurturing Convert Customers & Re-Marketing Figure 3: Various, actionable levels of visitor identiﬁcation High-Grow On-Boarding and Cross-, Lifetime Value Value Up- & Repeat Sales Customers Marketing At-Risk & Former Retain & Win Back Retention Marketing CustomersFigure2: Mapping life cycle stages and business goals to initiatives that canbe driven by personal web analytics
5. IBM Software 5Typical customer/visitor-level web analytics triggers (by industry) Retail Finance Telco Publishing B2BOn-site behavioral Product categories or Products and Service details Content categories Products andtargeting features studied; for educational content studied; for example, preferred; for educational content example, clothes studied, such as IRA regional coverage example, types studied, such as web colors, styles, calculators maps of sports pages covering and price levels technical details selected on a fashion versus business retailer’s site beneﬁtsRemarketing Contents of Abandoned online Cross-sell offers Subscription options When online lead abandoned shopping forms for quotes or received by email or studied but not form is abandoned, carts opening accounts on the site, yet not purchased capture company clicked name through IP address, and target by mail or phone salesOn-boarding Bad review rating Missing or failed Same as Finance. After registration, Unsuccessful given after completed events, such as no or Also, missing click- visitors don’t return to searches in the product purchase; or unsuccessful online throughs from site, or read few self-help knowledge failed site searches registration, or failed marketing emails content categories base, or keywords for accessories site searches used that indicate performed issues with using the purchased productCross- and up-sell Products viewed Account options Available service Articles read in a Products studied frequently together studied but not yet features studied on category that the that customer does owned the site, such as reader doesn’t not yet own email access normally useRetention Fewer product Repeated reviews of Review of contract Fewer content Reduced frequencymarketing categories viewed, or loan payoff amounts duration period, or categories read, or of self-service logins less frequent visits click-throughs from less frequent visits to the customer sites that compare support area, or competitors searches performed in knowledge base with no results found
6. 6 From web analytics to customer analytics: Making web data personalFive steps to success At most organizations, web analytics begins as a site analysisMany organizations, however, struggle to capture, organize, and solution, intended to monitor site health, report on site activity,effectively leverage individual web data to drive marketing pro- and prove ROI for the online channel. In this step, web analyticsgrams. Here is a ﬁve-step path to help marketers progressively answers basic questions such as:mature their capabilities and expand the use of web analyticsfrom aggregate-level reporting to leveraging individual-level ● How many visitors are coming to my site?insights to fuel interactive marketing. ● How are visitors using it? ● How are visitors ﬁnding it?Stage 1: Site analysis Stage 2: Site & ad optimization To begin generating substantial business value, web analytics must evolve at least to stage 2: site and advertising optimization. In this stage, web analysts seek to identify bottlenecks, for example, web pages that aren’t performing well. Marketers run experiments to identify and assess opportunities for overcoming these bottlenecks, and consequently increase returns. Marketers are asking: ● How can we improve our site structure and content to increase conversion rates? ● How can I reallocate online ad spend to attract more prof- itable customers? Example: Registered customers and their product and spending preferences as exhibited on the websiteFigure 4: Web Analytics can provide detailed information about registeredcustomers.
7. IBM Software 7 on the site to anonymous website visitors through behavioral Stage 5: targeting. You can target registered online visitors via personal- Interactive Marketing (Online + Offline) ized email or SMS. Questions that can be answered include: ● What are the most valuable visitors segments for my business, Stage 4: grouped by common click behavior along with other informa- Interactive tion I possess about them? Marketing (Online only) ● What content or promotional offers are best suited for target- Stage 3: ing each segment on the site? Segment Targeting ● How can I begin leveraging what I learn on my site to Stage 2: improve my other communications? Site & Ad Optimization Stage 1: Stage 4: Interactive Marketing (online Site Analysis only) Tactical Reporting Tool Strategic Visitor Insights While marketers who move to stage 3 are laying crucial ground- for Interactive Marketing work for interactive, customer-centric marketing, they typically ﬁnd ROI temporarily ﬂattening out. There are limits to theFigure 5: Use the ﬁve step process to extend business value and gain amount of value that can be generated through segmentation.strategic visitor insights for interactive marketing Reigniting improvements in business value requires following the examples of innovators, such as the companies discussedStage 3: Segment targeting earlier: businesses that have made their web data personal.In stage 3, marketers realize that there is no such thing as an“optimized page.” That’s because different groups of visitors In stage 4, marketers reﬁne targeting beyond the group level tocome to the same page with different goals in mind. Therefore, the level of individual site visitors. They use individualized webin stage 3, marketers use web analytics to deﬁne their most valu- analytics to fuel Interactive Marketing; that is, to build a dia-able customer segments, and identify the dynamic content that’s logue on each visitor’s past and current interactions. To achievemost effective with each segment. You can deliver this content this goal, marketers ask and answer questions such as:
8. 8 From web analytics to customer analytics: Making web data personalExample: Using insights gleaned from personal-level web analytics to drive interactive marketing across online and off linechannels Fine Wines 1. Tap into Historic visitor-level detail Lisbon 2. Automate business rules 3. Trigger site offers 5. Prioritize leads 4. Trigger e-mail, for direct sales direct mail & moreFigure 6: Use the ﬁve step process to extend business value and gain strategic visitor insights for interactive marketing
9. IBM Software 9Stage 5: Interactive Marketing Climb the ﬁve-step growth path(online + offline) How do you move up the maturity model rapidly andFinally, in stage 5, marketers extend the Interactive Marketing cost-effectively? The table on page 10 deﬁnes the speciﬁcdialogue with identiﬁed cross-channel customers to include organizational know-how and technology requirements you’lloffline and online channels. Supported by web analytics, offline need at each stage.communications build on all past and current customer behavior.One example occurs when a customer receives promotional You do not always need to build out these capabilities sequen-offers delivered through a call center IVR system. In addition, tially. Even if your company is now using web analytics forinsights from offline customer transactions are used to extend aggregate reporting, you may already have some of the capabili-the web or email content deemed most relevant to each ties you’ll need to gain the individualized insights you’re lookingcustomer. for. For example, companies using the IBM® Unica® marketing suite may already have tools for delivering individualized contentWhether interactions are outbound or inbound, web analytics and communications across online and offline channels.can answer questions like:● What is the best way for me to continue my ongoing sales dia- logue with this individual?● Based on what I know from this individual’s prior interactions and transactions across all channels, what is the best offer or communication I can make next?● When is the best time to make that offer?
10. 10 From web analytics to customer analytics: Making web data personalTypical customer/visitor-level web analytics triggers (by industry) Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Requirements Site analysis Site & ad optimization Segment targeting Interactive Marketing Interactive Marketing online only online+offline Organizational Deﬁne site and Set improvement Identify key Commit to Commit to a maturity marketing goals goals, and manage segments relevant to personalization and customer-centric clearly, so they can toward them; the business, and relevancy as your business strategy be translated into prioritize testing see the paradigm of doing that encompasses web analytics Key better than subjective company/web site business online and integrates all Performance opinions through the eyes of (versus “spamming”) channels Indicators (KPIs) representatives from each segments Know-how and Measure what Design and run tests, Discover meaningful Link site visitors to Link the identity of skills matters, instead of understand their behavioral segments their registered customers across attempting to statistical from click data and customer information online and offline measure everything signiﬁcance, and act visitor registration and identify the life channels and identify on the results by information using cycle events that are the life cycle events adjusting websites or web analytics and actionable for that are actionable ad spend allocation data mining marketing for marketing accordingly techniques Technology for Self-service access A/B analytics for Segmentation Web data mart that Web data mart for customer to personalized website and online analytics (in web provides open, online interactions, as awareness metrics for each role ads analytics and data secure access to well as access to in the organization mining solutions) for granular data on offline history of both click data and each individual’s transactions, registered customer website interaction campaigns, and data history responses Behavioral N/A Assign visitors Deﬁne business rules Select the most Choose the most targeting/decisionin randomly to test for targeting effective content for effective marketing g technology groups segments, and use each individual online communication or self-learning customer in real time, offer for each mechanisms to reﬁne reﬂecting past and customer, reﬂecting targeting current click data, past and current customer insights, interactions both and business rules online and offline Technology for N/A A/B test automation Deliver targeted Deliver targeted Cater targeted Delivering Targeted for site & content to each content to each content to each Content advertisements segment via site individual using individual regardless advertisements, personalized site of the inbound or recommended content, email, SMS, outbound channel content or products, or other means each interaction email, SMS, or other occurs in means
11. IBM Software 11Bring together the marketing team you Online marketers also have their misconceptions:already haveMany marketing organizations have virtually all the skills they ● “Marketing is primarily about ‘acquire, convert, retain.’”need to begin applying web analytics for targeting personalized This statement misses the urgent importance of growing eachonline and offline messages. However, these capabilities are customer’s Lifetime Value (LTV)—a concept that is onlyoften spread across the enterprise in disconnected teams; for incompletely expressed by “retention,” and can only beexample, separate teams for online versus relationship marketing. achieved through a more customer-centric approach.To succeed, marketing organizations must make it possible for “I couldn’t possibly look at each individual visitor.” It can’t bethese siloed resources to work together. They must also over- done manually. Your company’s relationship marketers needcome some widely held misconceptions about web analytics. tools that can automate analysis and action at the level of indi- vidual customers—solutions such as those in IBM’s EnterpriseFor example, some relationship marketers still hold beliefs about Marketing Management (EMM) suite.web analytics that might have been accurate years ago, but nolonger are: IBM can help you take the next step With our Unica solutions, IBM has helped companies world-● “Web analytics is summary-level data; it isn’t useful for wide drive business value by optimizing their relationships with customer-centric marketing.” Today’s best web analytics each individual customer and prospect. Our leading EMM web solutions—notably IBM Enterprise Marketing Management’s analytics and Interactive Marketing solutions give marketing web analytics solutions—now provide behavioral proﬁle organizations the capability to capture individual-level web data at the visitor/customer level in a readily accessible web behavioral data and then identify and act on insights to engage data mart. customers in a relevant dialogue. We know what works, and● “Click data is too much of a ‘ﬁre hose’: you can’t make sense we know how to overcome the obstacles. We’d welcome an of every click.” Successful marketers have learned how to opportunity to share what we’ve learned—and help you trans- focus on a subset of online events that are most likely to be form web analytics from a mere aggregate-level reporting tool signiﬁcant. into a powerful enabler of individualized, Interactive Marketing.● “Web analytics is only interesting to the web team, not my team.” Marketers that ignore web data about individual cus- tomers are disregarding an indispensable resource.