eCommerce Analytics

I am a bit discouraged today. I am surprised that we have not had more takers on our free customer scorecard application. Granted we have not unleashed the Social Media channel on the tool but I figured that after a week of availability we would have 10% more customers. The customers that have used it are overwhelmingly surprised of the results but I still wonder if the tool’s purpose is clear.

One of the leading, and might I say insightful, retail marketing professionals, Kelly Mooney, recently posted a blog titled: “Myths about online Retail Marketing”. In the blog she does a great job of providing an analysis of several marketing myths and there are a couple of takeaways that directly support how we perceive our tools to add value.

Read How Predictive Analytics Optimizes Frugal Environments »

I’ve been reading a lot recently about the current squeeze on baby boomers and how this is affecting the traditional targeting methods used by many retailers. Noreen O’Leary over at AdWeek had a pretty good article last week on how the recession is weighing on the minds of boomers getting ready to retire – so much so that many have already curbed spending and are starting to discard brands that now seem too expensive or luxurious.  This is a huge problem for many retailers – baby boomers are the heart of many businesses and represent the best and most profitable segments. So what’s a retailer to do?

Read Appealing to Baby Boomers through Enhanced Cluster Analysis »

With so many reports out there talking about why retailers are going to be taking such a hit this year, I thought it might be worthwhile to focus on the positive. The down economy has opened up several opportunities for retailers to try out new and interesting ways of reaching their customers.  I wanted to share a few of these with you.

• Read Surviving the Holidays: 5 Marketing Tips for Retailers »

With today’s news peppered with articles about the possible demise of Circuit City, the sinking Dow, and the continued decline in consumer spending, many companies are concerned about how their customers are going to respond to the tough times ahead. Several online retailers are already going down the discount path to try and get customers to spend their money early– well before their credit dries up. I’m sure many of you have already been hit up like I have with numerous discounts from shops that don’t typically give discounts – I’ve been surprised by the recent emails I’ve received from the likes of JCrew, a company that never seems to discount their merchandise.

Read Finding Customers Who Will Weather This Storm: Customer Segmentation in a Down Economy »

I was reading up on analytics technology today and ran across an interesting article at TDWI (The Data Warehousing Institute) which surprised me.  It was surprising due to the fact that it was a year old but was reporting the same results as today:  predicitve analytics solutions are still novel to many companies and unknown to even more.  Even after dozens, if not hundreds, of successful case studies show how predictive analytics are a low-effort, high ROI solution to help a company achieve strategic goals:

[P]redictive analytics can yield a substantial ROI. Predictive analytics can help companies optimize existing processes, better understand customer behavior, identify unexpected opportunities, and anticipate problems before they happen,” Eckerson writes. For six years running, he points out, a majority of TDWI’s annual Leadership Award winners have used predictive analytic solutions to achieve noteworthy business results.

Before we created our predictive analytics solution for email marketing we knew the benefits of predictive analytics solutions and we realized that marketing has many metrics and data points as well as a very strong set of historical data which we can and do use to build solid, accurate models of customer behavior and desire.   Why are users of predictive analytics still considered Early Adopters?

Read Predictive Analytics Provide Big Payouts For Early Adopters »

Though Kevin Hillstrom believes that the low variable cost is the real factor in the “killer ROI” that email affords multi-channel retailers, I would also mention that it’s low variable cost also contributes to the low amount of effort that retailers put into their email marketing. That is, retailers don’t put the money they should behind email because they view the low variable cost - and low marginal cost - as a license to spam. The way this manifests itself in the marketplace is that spending on email optimization technology trudges behind other technological spending like, say, search engine optimization (SE0).

Read Targeted Email Campaigns Only Way to Recapture Email ROI »

I will be the first to admit that our industry, predictive analytics to support retail marketing strategies, is dense with technical words, phrases and methodologies all wrapped up into various umbrella groups or plans such as “Market Segmentation Analysis”, “Customer Analysis”, “Predictive Marketing”, “Retail Pricing Strategy” etc. Although each sounds a bit different all of these approaches strive to reach the same outcome:

• Use available data to describe customers and understand their needs, wants and actions

and each takes a different approach but all the approaches are based on well established principles of computer science and statistics.

Read Market Segmentation Research: Science Fiction or Non-Fiction »

Earlier this month Tim Parry argued the merits of micro-segmentation in a Multichannel Merchant article called Divide and Conquer.  The gist is that the more you can sub-divide your segments, the better you can target your message to each group resulting in higher response rates.

Read How many Customer Segments are Too Many? »

Last week, I presented some recent survey results compiled by InternetRetailer.com and eMarketer (Better than average?) that may help online retailers gauge how they compare to the “typical” online retailer. As part of my blog entry, I talked about increased competition in email marketing and the challenge of staying in front of customers as the inbox gets more crowded. InternetRetailer.com just followed up on their survey with an article detailing the steps email marketers should take to better reach their customers. I think they make some really good points, so wanted to share the article (Survey: Too much and not enough) and talk about their findings.

Read Segmentation Analysis: The First Step To Surviving Increased Competition »

I wanted to briefly build upon Doug’s posts about customer analytics over the past few days (see Customer Analytics: A Guide To Getting Started). I try to keep abreast of the latest research about customer analytics that gets published and, just this week, came across the new Aberdeen Group’s report on the subject (Customer Analytics: Segmentation Beyond Demographics). While I encourage you to read the whole report, I wanted to point out some of the info and metrics in the article that I found most compelling.

First, and most impressive, companies with full customer analytics implementations saw incredible gains across the board, including:

• 43% year over year increase in annual revenue
• 42% year over year increase in customer profitability
• 35% year over year increase in average order value
• 25% year over year increase in market share growth

And lest you think that only those companies that completely overhauled their systems saw improvements, companies that have started down the customer analytics path saw, on average, a 7% year over year increase in annual revenue and a 3% year over year increase in customer profitability. While these might seem like modest gains, companies without a customer analytics system in place actually saw a decrease in customer profitability year over year.

Second, best in class organizations are using a wider range of data in more ways than other organizations. What do I mean by this? Well, to begin with, they’re collecting more data about their customers -demographic and behavioral information from web analytics, crm, email marketing, and customer feedback tools, all of it stored in one easily accessible place. And, they’re making better use of this data through the creation of enhanced segmentation (meaning segmentation that uses more than just behavioral or demographic info to assign customer to groups) and more relevant indicator metrics (i.e. CLV) that better inform sales and marketing staff about their customers.

Lastly, the report highlights how important it is to invest in customer analytics now. With over half of all the companies the Aberdeen Group talked to for this report planning on increasing their spending budget for customer analytics in the next year (that number goes up to 60% for companies that are considered best in class), if you haven’t made an investment in a customer analytics yet, you simply can’t wait any longer or you’ll soon find yourself far behind competitors.

Luckily, Doug’s posts can walk you through the basics on getting started, but I wanted to make sure to point out some of the most recent information on how important it is to get up and running now.