"To pinpoint marketing and add value to Web site services, you need to attract the right people," says Mike Ragunas, CIO of Staples.com, the Web site of the office supplies giant Staples, and a member of the InfoWorld CTO Advisory Council.
What Ragunas is talking about is Web analytics. Research firm Gartner defines Web analytics as "the metrics that measure effectiveness of e-business operations in terms of operations, customer experience, and ROI. Web analytics help enterprises prioritize Web channel activities and solutions." Even with the growing number of sophisticated tools, few IT professionals are able to define and interpret the big picture.
Ragunas does have a few staffers who connect Web activity analysis to business improvement. The four Web sites that fall under the Staples.com umbrella generated US$500 million in revenue last year, up from $94 million in 1999. That number is expected to hit $1 billion this year, Ragunas says.
Staples.com's CIO attributes the rapidly increasing revenue to his staff's analysis of customer behavior and development of key metrics derived from Web activity data. This in turn has allowed the company to improve its Web sites and to maximize revenue through better on-site marketing.
"You need people who know what to track, how to measure, and how to improve all your sales and marketing channels. Today you get metrics from many different sources, including the Web," Ragunas says. And, say other IT executives, these people must be able to work across various departments.
The recent Gartner report on Web analytics states that in the near future "enterprises will need three times as many professionals on their analytic staffs as they need today. The demand for analytic talent today outweighs supply by at least 2-to-1."
Plotting an analytics attack
With Web professionals skilled in analytics in short supply and many companies holding the hiring line, some IT executives are redirecting the talent of in-house business analysts to focus on Web analytics. Furthermore, some combine the business analyst's efforts with those of a handful of specialized consultants or partner firms to meet their needs.
Steelcase, an office furniture supplier, assigned three technical reporting and analysis staffers to a Steelcase.com team within the communications department.
Although the Steelcase.com team was formed five years ago when the company's original Web site was launched, in-depth analysis of Web data began only a year ago as the company prepared to launch a revamped site. Two of the team members handle reporting, and the third -- who is the most recent hire -- combines technical and communications skills to translate analysis findings for marketing and other departments.
"That's the brave new world. The person needs to examine data in an analytical way and present it to 150 people," says Eileen Raphael, manager of Steelcase.com. Monthly report recipients include executive management, the communications department, heads of marketing, and a portion of the IT department focused on BI (business intelligence) tools.
Staples.com's Ragunas explains that companies have to analyze not only customer behavior and clickstreams, but also financial and marketing information to determine, for example, the percentage of visitors who complete a purchase in a given time period. That figure reveals important information about the bottom-line effectiveness of a specific Web page.
Analytics at work
Web analytics has become especially important to the auto-manufacturing industry. Research analysts report that half of new car sales spring from consumer research done via the Web. Despite that fact, less than 5 percent of car sales are transacted online.
To help track customer buying habits, Toyota Motor Sales USA Inc. employs several staffers to scour the company's Web data in order to provide a complete picture of the company's auto-buying customer base -- a difficult job, says Al Smith, e-business manager, in Torrance, Calif.
"The level of sophistication required to assess Web activity is a challenge for organizations because they don't understand what to do with the information. They'll need the resources that can do this," Smith says. "As we include e-business in different existing business units, our role [in the e-business department] becomes more strategic than tactical," Smith adds.
At Toyota, Web researchers scrutinize visitor demographics and traffic along with other data to gauge customer experience and satisfaction. The company's business partners provide so-called "Net ratings," such as types of Web activity, how long a visitor stayed at the site, and geographical statistics.
Web data overload is often the biggest problem for companies, says Manavendra Misra, senior director of strategy at KBkids.com LLC, a Denver-based subsidiary of 80-year-old retailer KB Toys. The biggest challenge, says Misra, is consolidating data from myriad sources -- Web site traffic from the Web server, financial information from the accounting and finance system, order placement data from the enterprise system, and performance metrics from the database management system -- into the data warehouse.
"The tools are there, but people need to change their mind-set," Misra explains. "People have basic analysis skills, but they also have to understand Web architecture, how cookies are produced, and the difference between a Web crawler hitting your site and actual hit from a customer, for example."
The change is an evolutionary process. "As people get more familiar with the Web environment, they get to understand it holistically, and some of the missing pieces get filled in," Misra says.
Often e-businesses place several people who combine these Web analytic skills in one department. These people also work with other staff members in business analysis, financial, and marketing groups.
According to Anne Estabrook, vice president of marketing at NetGenesis Corp., a Cambridge, Mass.-based vendor of Web analytic tools, new titles and expanded duties are emerging in the Web analytics field. She cites titles encountered by the company -- "head of management of information" and "project manager of e-metrics."
"We're starting to see other new titles as measurement and evaluation become more important. After the Webmaster, it was the vice president of e-marketing. Now it's joint decision-making between CIOs and marketing people," she says.
At Staples, which employs more than 50,000 workers and has 1,300 stores, Web analysts involved in site improvement efforts work in multiple departments in a few different business areas, but the core Web analytics team works in a single department.
"We have decision support analysts in place across the business, but we concentrate our 'Web' analysts -- who are focused on our e-commerce businesses -- into a single group," Ragunas says. "This allows them to centralize and coordinate reporting of key metrics and [to] better understand the interdependencies between metrics to give us a full view of the business."
Web analytics on-the-fly
At other large organizations, such as Atlanta-based Delta Air Lines Inc., only a few people are currently dedicated to this kind of comprehensive, cross-business-function Web analysis.
The company has two entities performing this type of Web analysis. Delta has partnered with a research agency that specializes in analyzing database technology to help incorporate the researchers' findings into the company's core customer data store.
Delta IT staffers redesigned Delta.com last year based on information gathered by the small analytics staff using BI and Web measurement tools. The analyses allowed the company to implement specific features on the Web site that target Medallion customers from its Sky Miles program, who account for approximately 20 percent of its customer base.
"We don't have enough people doing this," says Ron Casas, general manager of e-business at Delta. "The available so-called experts out there are numbered. There will be more qualified people who specialize in this new dimension, and ultimately we will hire more for our department."
John Webster is a freelance writer in Providence, R.I. Contact him at email@example.com.
Find Web analytics talent within your staffGartner analyst Bill Gassman gives these hints: "Left-brain/right-brain analysis" is a combination of data analysis skills with communication and/or marketing skills. Analytics staff decipher complex Web activity data then develop reports for nontechnical managers.
-- Technical skill: Web analytics staff should understand query language and database design. They must know how to structure data and queries to produce meaningful results.
-- Detective: Sniff out the "bad" data. A good Web analytics pro knows that some data gathered by a Web traffic monitor might not reveal accurate information about site visitors.