Google analytics recently rolled out a new “Intelligence” feature which is a great attempt to solve this very problem. Google analytics now keeps track of “expected” data patterns on your site and can notify you via email or online reporting if there are any significant changes on your site activity. For example, intelligence feature could alert you if there was a 200% surge in visits from Twitter referrals during last 24 hours or let you know that bounce rates of visitors from India jumped by 40% last week. Instead of you having to monitor reports and comb through all the data, Analytics Intelligence alerts you to the most significant information to pay attention to, saving you time and surfacing traffic insights that could affect your online business.

Take a look at the video below to learn more about this awesome new feature:

Excited? Well, there is more. Now you can also setup custom alerts to tell Google Analytics what to watch for. You can set triggers on pretty much any dimension & metric such as conversion or orders, and be notified by email  when the changes actually occur. If you don’t have these features in your account yet, you should see them in next few weeks. I think this is a great addition and will really help you operate your online store with lot more intelligence and insights that would otherwise have taken significant amount of time to analyze.

Here are some specific examples of how online retailers can use these intelligence features effectively:

1. Understanding seasonality of the products – Setup alerts for changes in conversion rates for specific products or categories over a time dimension so that you can be notified when it is time to review your product assortment from seasonality and relevance perspective.
2. Understanding changes in zero search results – You can setup alerts that would inform you if the % of zero search results spikes above normal. This is usually an indicator that more customers are not able to find the products they are looking for. You can then evaluate the top searched keywords to find assortment gaps.
3. Understanding the effectiveness of PPC campaigns – Lets say you setup a PPC campaign that results in a drop in the conversion rate. This is typically an indicator that the PPC campaign is not driving productive traffic to your website. Setting up an alert in these cases would allow you to aggressively manage your Adwords and other marketing campaigns so that you can avoid throwing money on campaigns that are not very effective.
4. Impact of social media – You posted a new story on Digg which went hot last night. It would be nice to get an alert if the traffic pattern on your site changes due to your social marketing efforts.
5. Drop in conversion rate – Lets say your server receives a huge surge of traffic and the users are not able to complete checkout due to performance problems. Wouldn’t you want to be notified immediately so that you can take corrective action? You can setup an alert that notifies you whenever the conversion rate or the order volume on the site deviates from the expected range.

I think this is a great feature to provide you access to more real time, actionable insights that will not only help you make more informed decisions but would also point out operational problems on your website on a more realtime basis. And best of all, it is free!!

“What is Woot and who is behind it?
Woot.com is an online store and community that focuses on selling cool stuff cheap. It started as an employee-store slash market-testing type of place for an electronics distributor, but it’s taken on a life of its own. We anticipate profitability by 2043 – by then we should be retired; someone smarter might take over and jack up the prices. Until then, we’re still the lovable scamps we’ve always been.

Will I receive customer support like I’m used to?
No. Well, not really. If you buy something you don’t end up liking or you have what marketing people call “buyer’s remorse,” sell it on eBay. It’s likely you’ll make money doing this and save everyone a hassle. If the item doesn’t work, find out what you’re doing wrong. Yes, we know you think the item is bad, but it’s probably your fault. Google your problem, or come back to that product discussion in our community and ask other people if they know.

What are my shipping options?
Currently, your shipping options are limited. An item can ship if you order it, or not ship if you don’t. We will ship by common carrier and try to stick with the same service for most items.”

I am sure that reading above FAQs probably doesn’t give you a warm and fuzzy feeling about doing some serious shopping from this online retailer. But, it gets better. The site only sells one product a day. That’s right. The product changes every night, and there is only one product available for purchase at any given time. Products are never announced beforehand and can easily sell out in a few hours or even minutes of hyperactive buying and then the users have to wait till the next midnight for the next product to be listed – unless there is a woot-off which I will save for another discussion. The Woot model relies on the elements of simplicity and surprise – unlike the traditional online environment which is focused on expanding the product assortment. It is fun to read the product descriptions, which often mock the product being sold, and the community is encouraged to write negative posts to highlight the flaws in the products being sold.

It takes courage and leadership for an online retailer to be as transparent as Woot in educating the customers about the good things and not so good things about the product being sold. But more than this transparency and sense of humor, Woot has been able to do something that no other retailer has been able to effectively. Woot has literally turned the world of web analytics upside down, and made this analytics information available back to its own customers. Take is a look below at a typical product page, the page contains a sea of analytics information – enough to make the likes of Amazon and Overstock.com turn green with envy and more than enough to turn a casual browser into a well informed buyer.

I have looked at analytics for a number of online retailers and have been in meetings where I have heard people make statements like “We have 10 Gazillion page views” or “Today we got 3000 visits from Who-Knows-Where-Ville”. Some retailers who claim to have a strong focus on analytics actually have managers responsible for collecting this information. There are regular meetings where information collected from these web analytics is presented to the management team. Then there is a lot of debate around the definition of visits vs. unique visits or where these numbers come from or how they are not consistent with the MIS systems but there is rarely any debate about what to do with this information.

The first step in achieving maturity related to web analytics is to build targets for few meaningful metrics and then creating an action plan around how to act on the insights collected from these metrics. Web Analytics should not be a separate function within the company – rather it should be part of everyone’s job profile – whether it is the category managers or the technology team or the operations team, all decisions should be made based upon the insights from these metrics. Analytics can provide a gold mine of information, but without any actions, analytics is nothing more than interesting trivia about the web site. Woot has actually taken the world of analytics to the next level – it exposes a number of these analytics to its customers so that they can make their own purchase decisions based upon this information. Not only that, Woot purposely uses terms like “seniority level” or “purchaser experience” in these analytics to make its customers feel part of this community where they are able to achieve a higher social status by purchasing more often from Woot.

So the question is why are other online retailers not doing this? Why don’t we see this kind of analytical information on the product pages across all eCommerce sites? The answer is very simple in my opinion. Retailers are very protective of this kind of information. They are concerned that by opening up this information, other competitors may be able to access information about their operations- information that is only meant for the eyes of internal management. I respectfully disagree with this thought process. Infact, this leads me back to my previous point – companies aren’t doing much to act on their own analytics – let alone acting based upon analytics collected from their competitors. Now I don’t want to imply that companies shouldn’t be protective of their confidential information – especially if that information is helping them differentiate from their competitors. But let’s be honest – disclosing basic analytics information such as page views or aggregated information on sales rank is not going to bring a company down. We are living in a digital world where information is easily available. My opinion is that online retailers should focus more on doing what is right for their customers. If this information helps customers make better purchase decision, it should be made available to the customers. So what, if other retailers find out? If the company is truly focused on delighting its customers and has differentiated itself based upon price, service or assortment, there is not much a competitor can do with this kind of information. Especially in the Indian context, where there is a lack of trust between customers and the online retailers, this kind of information can be extremely powerful in helping customers connect better with the online retailer.

In today’s world, we have the capability to learn so much, so fast from our customers. Sharing these learnings back with your customers is like giving back to the community you live in – it can only make you a more respected citizen in the society.

Having a strong base of repeat customers , on the other hand, can say a lot about the future potential of the online retailer. Getting repeat customers is not easy – it requires excellence in execution and a right mix of price, assortment as well as customer experience from an online retailer.  It is easy to pump up the marketing spend or run promotions to get customers to make a one-time purchase on the site – however, if that customer comes back again for a repeat purchase, that shows a big vote of confidence in retailers ability to deliver. If more than half of the customers are coming back for a repeat purchase, then the retailer has a strong potential to gain or maintain a leadership position in the category. That is why I think if companies start using repeat customer as a metric for their day to day operations as well as in establishing overall goals, it will promote the right kind of behavior in the organization. I would argue that a 1% increase in repeat customers actually can result in over 5% increase in net earnings – because the repeat customers are the most profitable customers.  I am sure everyone has heard numerous stories about Apple or Harley Davidson that carry such a dedicated following of repeat customers. However, maintaining that kind of a following for an online retailer is no piece of cake.

So what can one learn from Zappos.com? If you go to zappos.com, you will probably get overwhelmed with the information presented on the home page. However, they have done it for a reason – they want to create an image that they have the biggest assortment of shoes among all online retailers and they have been successful in that. What is more interesting is that they have a section on the home page for customer testimonials and there are literally hundreds of comments every day from raving customers. Just by reading the comments, one feels like shopping from this retailer. They are using other customers as the biggest marketing vehicle to convert new customers.

Zappos has been able to create this exceptional combination of aggressive price match policy, an assortment of over 3 million shoes, free two way shipping, no questions asked return policy for an entire year and an amazing group of friendly customer care representatives.  Clearly, India is not a mature eCommerce or Retail market to even think of offering such kind of return policies. However, one thing we must look at is the fact that Zappos.com started from nowhere few years ago. The only thing that made it stand up against even the likes of Amazon is its impeccable and relentless focus on service. It is a little known fact that every new employee that Zappos hires in their corporate department is required to go for 4 weeks of customer loyalty training – answering phones in their call center (even accountants have to do that!). To Zappos, customer service isn’t just a department, it is the entire company. If Zappos can take over 30% of market share in the shoes category in a saturated US online economy, it makes me wonder what an online retailer can do in the Indian context if they focus all of their efforts on delighting the customer.  

Most of the online retailers continue to focus on a “one size fits all” approach where they throw all kinds of offers and promotions at the customers, hoping that the customer will accept atleast one of them. This approach certainly works to some extent and can result in some moderate sales however, this is like throwing darts in different directions and then, later drawing bullseye around them, to feel good about one’s actions.

Retailers can significantly improve their effectiveness by really understanding how their customers are interacting with their website and other channels, and then targeting the offerings based upon these insights. The best part about an online environment is that these insights are readily available – online visitors are leaving these cues every single second. However in most cases, this information doesn’t go anywhere. For more sophisticated retailers, this information probably finds its way into logs or the database or some kind of analytics engine. However, even in those cases, this information doesn’t get effectively acted upon. This is even worse, because, taking our darts analogy further, this is like playing the game of darts in a well lit room, however keeping the eyes closed during the whole time.

Ok – enough with the darts analogy, lets look at what an online retailer can do to effectively collect and act on the information that is being collected in the online environment. The first thing an online retailer must do is to implement a good web analytics engine. The web analytics engines are fairly easy to implement and can offer significant insights around how customers are navigating through the site, what are they looking for and exactly where they are leaving the site. Comparing this to a physical store environment, this is like having a team of observers who are following all the customers in the stores at all times and literally observing every single move the customer is making to evaluate their buying options. Some of the sophisticated tools actually let you generate a “heat map” for the site, where you can visually see how much revenue every single link or Ad on the site is generating. There are a number of options available for a web analytics platform – however the two good options are Omniture or Webtrends. If you are not ready to make a financial investment, Google Analytics offers an excellent alternative to its paid counterparts.

Once you implement an analytics platform, you will immediately start seeing a wealth of information. However, now what? The information alone doesn’t mean anything, unless it can be acted upon. I strongly believe in fact based decision making, and therefore I would recommend that every single decision about what promotion or Ad or product placement on the site must be based upon the relative revenue potential of these assets.  Home page is the most prime area of the site and every single inch of real estate on this page should be optimized and allocated to the highest revenue generating assets.

One capability that all online retailers must implement is to use the concept of A/B or multi-variate testing. For marketers, this is not a new concept and really means the champion/ challenger technique to measure various marketing promotions. The idea is to run two versions of Ads or promotions at the same time and measure customer’s response to see which one generates higher conversion or revenue. This can greatly help in quickly testing new Ads, promotion concepts etc. and then rolling out the best concept based upon real time feedback from the customers. Offermatica offers a good and a cost effective way to perform A/B testing.

Once you have started to collect and use these insights in making business decisions, it is then time to augment this information with something even more powerful – customer profile. I am not talking about the basic profile which most retailers keep track of – e.g. customer’s billing address, shipping address etc. I am talking about an enhanced profile which provides psychographic and demographic information about the customer and can be used to understand customer’s desires, needs and motivations. Imagine that a customer calls your call center to make some changes to an order and inquire about a digital camera. A sophisticated customer profile engine will keep track of the fact that the customer is interested in the digital camera so that the next time the same customer visits the web site, the home page features some of the best selling digital cameras. These kinds of targeted offers have a much greater chance of acceptance. In addition, a company’s targeted email campaign program must be driven by the segmentation based upon customer profile.

By implementing site analytics, and using these insights to drive offerings on the site, an online retailer can significantly enhance its connection with customers. Although having good site analytics and targeting by itself doesn’t guarantee success, it certainly improves the odds in favor of hitting that bulls eye.