During the dotcom heyday, companies slapped sites on the Web and waited for traffic to pour in. They counted "eyeballs" and measured their site's "stickiness" as a way to convey the online real estate's value to advertisers. When the Internet bubble burst, "sticky eyeballs" seemed suddenly worthless. Now, as the Web has moved from being a technology pipe to a sales channel, companies need to update their Web measurement strategy with new metrics and analysis tools that can help them analyze customer behavior and improve their site's business success.
But while hits were once the metric du jour, the new metrics are not so clear-cut. "There is no standard metric that a company can rely on for its website," says Randy Souza, an analyst at Forrester Research. "Metrics will be different from company to company." Where a retail site might be focused on conversion rate (the number of online shoppers who actually buy something), a business-to-business site might value site reliability and speed above all. In short, the most valuable metrics will depend on what you are trying to do with your site. Once that is determined, large enterprises should consider buying software to help analyze Web data, while midsize and smaller companies should consider a hosted service.
That's already happening and will likely increase in the next few years as companies come under increasing pressure to document their website's value. By 2006, Jupiter Research estimates, annual spending on site analytics will reach US$1 billion, by which time ASP-based services will account for 29 percent of spending. While IT leaders don't always need to be directly involved, they should be able to suggest valuable metrics to marketing and operations departments. Measuring a website's success can also be crucial when forced to defend e-business spending. And IT leaders will need to partner with other business units on site redesigns that result from the analysis of Web metrics.
The following are descriptions of some of the most important metrics and analysis tools, depending on the type of website.
Clickstream: More than a metric, clickstream analysis is a broad method for companies to analyze their customers' behavior. A wide range of Web analytics software packages and ASPs offer clickstream analysis, which can help a company analyze where customers enter its site and where they exit.
Customer drop-off rates: According to Jupiter Research, 71 percent of sites do not analyze customer drop-off rates, even though 66 percent of consumers reported having abandoned a purchase while on a website. Companies can use clickstream analysis to determine their drop-off rate. In order to improve it, they can conduct usability testing to see where users have trouble maneuvering on the site.
Loyalty index: Tracking the number of visitors and unique visitors to its site, as well as page views--all of which are important to advertisers. Also track the top domains and vendors that are visiting a site in order to show that it is attracting the right audience for advertisers.
Customer satisfaction: Clickstream analysis can gather important information about how users navigate a website, but it can't explain how a person feels while they are doing it. Enter the online customer survey to report on customer satisfaction.
Site performance: While all websites worry about how fast and easy their site is to use, businesses are most demanding and impatient users of all. For example, collecting data on such metrics as how long it takes to place an order.
User efficiency: Web analysts scours log server files for user patterns and trends. For example, if users are searching for something too often.
Average time spent on system: In the past, consumer websites kept track of how long users stayed on Shopping Cart their site, hoping to increase stickiness. Now, most Web managers--especially those working on B2B sites--want to help users get on and off their sites as quickly and painlessly as possible.
In spite of the number of analytical Web tools on the market (as software or a hosted service), most companies tie website success to outdated metrics, according to a recent report. Yankee Group says 66 percent of companies determine website success by measuring traffic. New customer acquisition ranked second on the list at 34 percent, and revenue generation ranked third at 23 percent.
That's a mistake, says Lisa Melsted, Yankee Group analyst. Melsted thinks the weight of such metrics will decrease as website managers become more savvy over the next few years. Measuring traffic simply doesn't say enough about how much work a website is doing for a company. "It's still an important measurement," Melsted says, "but traffic is not the way that you should be measuring your success at this point. It's still about getting people to the site, but it's about getting the right people to come."
Some cost-reduction measurements that scored lower in the survey, such as fewer customer service calls (20 percent) and customer service cost savings (19 percent), are what companies should be looking at, according to Melsted. The analyst says it's way past the time to just look at "eyeballs" or "stickiness." She says companies should look deeper--find out how the website helps the sales department or marketing department cut costs; learn more about customers to provide better customer service, and so on.
"Companies are starting to get into that mindset that the Internet can save them a lot of money and provide internal efficiencies they haven't seen before," Melsted says. "I think we're going to see that measurement of success is going to be more related to efficiency gains that the site is bringing to the company overall."
Melsted also notes that large enterprises are more likely to buy software to help analyze Web data because they want to control the data and customize the package to meet their needs. Medium-size enterprises that cannot afford the software are more likely to go with a hosted service. In either case, she says, companies will have to answer some questions before they make a purchase: Who in the organization will use the product? How much training will be required? Does the product provide the right data? There are relatively few companies doing major Web analysis, but Melsted thinks that will change in the next few years as laggards catch up.
"Large, tech-savvy companies are using Web analysis," Melsted says. "There probably aren't as many companies out there doing it as should be doing it. The more sophisticated the Internet strategy, the more companies realize they need more information about what's happening on the site beyond what hits can tell them."
QuickStudy: Measuring Web Site Traffic http://www.computerworld.com/managementtopics/ebusiness/story/ 0,10801,71989,00.html. Like the title states, a quick overview about tracking site traffic. June 17, 2002 - Compuertworld Log File Lowdown http://hotwired.lycos.com/webmonkey/01/24/index4a.html?tw=e-business. Takes a closer look at exactly what to look for in log files. June 15, 2001 - HotWired Why Your Site Traffic Numbers Are Out of Whack http://www.business2.com/articles/mag/0,1640,9319,FF.html. A good, in-depth account of what to look for and how to process website stats. March 2001 - Business 2.0 ROI Online gift site Red Envelope cut its shopping cart abandonment from 81 percent to 63 percent, reduced site-related calls to the customer service center by 45 percent and increased sales revenue by 95 percent. How did the company do it? According to Vividence, which collects and analyzes data on company websites from panels of users, Red Envelope was able to prove this impressive ROI after using the vendor's services. So far, however, few companies have calculated such clear-cut ROIs from the use of website metrics or analytics software or services.
In fact, some companies have spent far too much on Web analytics software. According to a recent Jupiter report, one "highly trafficked" content site spent a total of just under $1 million in licenses and professional services for an eight-month fiasco that produced "wildly inaccurate and completely nonactionable reports." The package was eventually shelved for an ASP.
The lesson? Comparison shop carefully when looking for a Web metrics and analytics package. And you will be shopping because top management will want proof that you have a way to measure your website's success.
"It's very hard to prove ROI for a measurement strategy," says Randy Souza, an analyst at Forrester Research. The real value of these tools, however, is that you won't have to go into a site redesign totally blind, Souza adds. Instead of spending $100,000 on a complete redesign, for example, you can spend $10,000 to $15,000 on focused design fixes.
Mondays account for 15 percent of Internet traffic for the week worldwide. Saturday generates just 13.47 percent of the week's traffic.
Traffic to the most popular search engines in the United States grew between 16 percent and 54 percent over the past six months. The overall search category drew 92.3 million users, marking an 11 percent increase. Google sites grew 54 percent with 34.2 million unique visitors over the past three months, while Yahoo climbed 20 percent to 38.4 million unique visitors. MSN search added 16 percent, growing to 42.4 million unique users.
SOURCE: Jupiter Media Metrix
Dr. Howard A. Rubin, Professor Emeritus of Computer Science at Hunter College of the City University of New York and board member and executive vice president of the META Group, answered questions about Web metrics.
Question: Are there any studies that address establishing metrics for web design?
Answer: Not much out there -- metrics and the 'net are somewhat of an uncharted space -- even design-side metrics for traditional software has been widely neglected.
Now let's move on to what you can be/should be measuring about the Internet within your organization. Change rates are extremely important in all dimensions because the numbers are changing underneath the numbers that you can actually capture.
First consider the perspectives from which your organization needs to measure the Internet excluding site development and support for a moment. From a business side there are two basic areas to be monitored:
- Electronic Commerce Activity -- this focuses on the business aspect of the Internet. These metrics address the questions relating to the business volume attributed to the Web.
- Website Statistics -- this focuses on the level of activity of the website. These metrics address everything from how many "hits" your organization gets on its website to where people are spending their time.
In monitoring these areas, it is critical that all data be tracked as long-term trends. Data should be collected over periods that span multi-year periods to enable better decisions to be made over time.
However, there are other views of the Internet that should be considered to yield a complete picture for your organization. In the book, Metrics Handiguide for the Internet and Information Technology by M. Victor Janulaitis (published by Positive Support Review Inc.), four other categories are mentioned:
- User Penetration -- these focus on internal Internet/Intranet usage in your company itself.
- E-mail traffic -- these focus on e-mail specific measures need to manage it as a resource.
- USENET Traffic -- these focus on the measures for USENET activity including file sizes and volumes. - Volume Users -- this category segments user demographics into cohort groups depending on overall activity level across other categories. You should start to build charts of accounts in all these areas so that you can capture information about Internet use and turn the data into insights to guide your Internet activity in the future.
Metrics about Internet Development
This is an area where I am constantly asked for benchmark times and costs. This is also an area where traditional metrics of size (function points, lines of code) and quality (defect density), do not apply. Moving into Web development is moving into a world of change and development agility. Although the metrics are not established in this area, the needs are there and the directions are clear. While there isn't a standard chart of accounts, here are some tentative categories:
- Cycle time measures: mean time to develop a site, page, applet, make a change to a page. - Quality measures: easy of navigation, ease of use, error arrival rate, defect threshold, mean time to repair - Cost measures : cost per page to develop, cost per site to maintain/own/operate - Business affinity: incremental cost to attract more consumers; incremental cost to increase business volume.
Not the end
The information in this article is changing so rapidly and in many cases is so tentative that it is impossible to end with a single conclusion. Basically, the only conclusion that can be drawn is that knowledge of the Internet and its interaction with the business environment in terms of business value is critical. Knowledge can be developed from insights and the cornerstone of insight development is data about actions and outcomes. The message is therefore clear, start your venture metrics now and be prepared to learn more about the Internet and how you measure it... it will pass the 0 percent mark soon.