World Telecommunication Day 1999 |
Now that the Internet has more users than ever, on-line retailers are looking beyond customer acquisition and retention to the area of conversion the rate at which sites turn visitors into buyers.
Marketing data shows that on-line retailers are only converting about 2 percent of their visitors into buyers at the present time. To improve this figure, merchants are implementing more sophisticated tracking software that allows them to bolster registration information received from a shopper with information gathered while observing that customer's behavior on their Web site.
With research pointing to the fact that at least half of Internet shoppers abandon their purchases even after adding them to their on-line shopping cart, finding out why a customer has not made a purchase has become just as important as discovering why he or she has.
Data mine
The Internet customer data management business is thriving. Companies operate at the intersection of data mining (using complex algorithms to search large amounts of data and find patterns, correlation and trends), relationship management and real-time marketing. They sell software or services aimed at helping on-line retailers find and track the most valuable customers and help customize product offerings in real time. It is a booming business for companies such as Manna, Epiphany, Oracle and DataSage, with revenues expected to reach $8.7 billion worldwide by 2003.
Research shows that retailers need to have a presence on more than just the Web to be successful, which means that tracking and analyzing cross-channel activity is becoming more important.
Harbor Freight Tools (HFT), a company that sells hand tools, power tools and machine tools through its Web site, catalogue and 70 retail stores, recently selected Datasage's netCustomer system to conduct cross-channel analysis of all its customer contact points. HFT hopes that by capturing all cross-channel activity on the individual level, it can better tailor its Web site content, e-mails, advertising and promotions on a one-to-one basis.
Says Dave Martel, vice president of marketing at HFT: ''With netCustomer, we can track our customers across channels and integrate data from multiple sources easily and quickly so we can offer the right product to the right customer each time they shop with us.''
DataSage claims that unlike other customer tracking solutions (which stop at the group segment level), netCustomer captures and maintains the unique behavior of each Web site visitor, providing a three-dimensional view of each individual across time, activities and channels.
David Blundin, DataSage's chief executive officer, says: ''We've had great success helping retailers in the traditional brick-and-mortar market handle huge amounts of point-of-sale and other data to better target customers and improve profitability. The data volumes for electronic commerce are 10 to 100 times larger than those for any previous direct marketing channel, which means retailers and e-commerce businesses need a heavy-duty scaleable solution. We've pioneered a customer analysis technology that spans the in-store, catalogue and on-line universe.''
Datasage's software licenses start at $75,000 and scale upward based on the number of active customers and the analysis required. At the other end of the spectrum, FollowUp.net is far cheaper - about $2,000 a week. But clients must house their data on FollowUp.net servers.
Research has shown that customer data management is a tool sorely needed in this highly personalized medium. A recent study of 50 leading e-commerce sites by Rubric Inc., a provider of e-marketing solutions, found that only 16 percent of companies sent follow-up marketing offers to customers who purchased in the past 30 days. Forty-seven percent did not ask customers if they would like additional information on related products or services. Only 4 percent of these sites used any kind of personalization in their follow-up marketing campaigns and only a quarter recognized repeat buyers responding to another offer.
To make true one-to-one marketing a reality, on-line stores, according to experts, must gather as much information as possible about a customer and build a storefront tailored to that particular individual.
For example, Free-PC provides free personal computers and Internet access to qualified applicants in a one-to-one targeted marketing network. The company has distributed about 10,000 PCs, and has made free Internet access available to all 1 million applicants on its waiting list.
Julia Clerk