What’s Your Strategy for Web Analytics?

Generating pretty reports won’t help you better leverage an increasingly important online channel—at least not for long.

By Eric T. Peterson
Wednesday, September 9, 2009

Recently Forrester Research, in a white paper sponsored by Google, reported that 70 percent of U.S. companies with 1,000 or more employees had a “well-defined strategy for Web analytics.” My immediate reaction, as a long-time consultant who has worked with companies large and small to devise and execute on digital measurement efforts, was unprintable.

According to the 2004 census there were some 12,000 companies in the U.S. with more than 1,000 employees. Based on Forrester’s number this would mean that some 8,500 companies—or all of the U.S.-based customers for Omniture, WebTrends, Coremetrics, and Unica combined—would have a “well-defined” strategy for online measurement.

Not to criticize Forrester, but I don’t know 85 companies that have a well-defined strategy, much less 8,500.

Still, I’m always willing to be wrong and relish the opportunity to learn from my mistakes, so I went ahead and tested my unprintable response in my blog. Nearly 20 responses from around the world verified my assessment. Heck, even the report’s author at Forrester Research conceded that he didn’t disagree with my questioning of his data.

Given that the research surveyed mostly managers and executives responsible for their Web measurement efforts, and given that Forrester is known for their high-quality research, the only reasonable assumption is that these people actually believe they have a well-defined strategy for Web analytics. But what is a “well-defined” strategy when it comes to measuring the success of your Web site?

The Wikipedia currently defines strategy as “a plan of action designed to achieve a particular goal.” Based on this, a well-defined Web analytics strategy could be hiring a consultant (a plan) to install Google Analytics (an action) to generate some pretty reports (the goal). Easy!

Except, generating pretty reports won’t help you better leverage an increasingly important online channel, at least not for long.

There are any number of small plans, easy actions, and short-term goals that can be considered “well-defined strategies.” The problem is that small plans, easy actions, and short-term goals don’t get the job done and won’t help your online business take advantage of the rich tapestry of information your site visitors leave behind as they traverse your online properties.

A well-defined Web analytics strategy requires governance from senior management and a mandate to use Web data in the same way companies have long-used customer data to segment lists, design products, and expand into new markets. A well-defined Web analytics strategy depends on a team of individuals with specific talents—analysts, technicians, and managers—working in concert to produce reports and analysis designed to improve the whole company’s understanding of the online channel.

More importantly, a well-defined Web analytics strategy requires a willingness on the part of the entire company to embrace both the whiz-bang technology du jour (social commerce, anyone?) but also the measurement of that technology to confirm that the investment actually provides value back to your whole business.

• Marketers need to be willing to take the time to understand the numbers and change their own strategy when the data suggests things aren’t working as planned.
• Merchandisers need to be willing to evaluate product placement not based solely on inventory or market development funding and begin to consider cart rates and browse-to-buy ratios.
• Designers need to design less for awards and more for customer understanding and propensity to take action;
• Most importantly, management needs to be willing to eschew “data” in the form of basic measures and Excel spreadsheets and instead invest in an organization capable of translating data into information, information into insights, and insights into trusted recommendations. The ability to generate and act on data-driven recommendations is the best possible evidence of a well-defined Web analytics strategy.
Who has a well-defined strategy for Web analytics, you ask? A few examples:
• The New York Times, which adjusts print runs based on a statistical model that uses Web traffic data as a critical input.
• The Ford Motor Company, which uses Web data from car configuration tools to determine trim levels for floor models in different geographical regions.
• Best Buy, which is using product browsing data from BestBuy.com to inform store managers about regional opportunities.

While there are nowhere near the 8,500 examples that Forrester predicted, there are an increasing number of companies that have started to embrace the power of Web analytics to their competitive advantage. Are you ready to join them?

Eric T. Peterson is a recognized digital analytics thought-leader and found of Web analytics Demystified, Inc., a global measurement consulting group with offices in the U.S. and Europe. More information can be found at www.webanalyticsdemystified.com.