making web data personal

IBM Software

Thought Leadership White Paper

July 2011

From web analytics to customeranalytics: Making web data personal

2 From web analytics to customer analytics: Making web data personal

IntroductionIf you are like most marketers, you’re facing an enormous head-wind: you must increase marketing returns, but conventionalmarketing techniques are rapidly becoming ineffective. What’smore, you’re seeing unmistakable signs that even some onlinetactics are beginning to suffer from many of the same problemsas traditional marketing tactics.

To improve returns, many marketers are focused on makingtheir communications more timely and relevant to recipients. Todo that, they must build communications around the interestsand preferences of each individual customer or prospect. Webanalytics, if made personal, can fuel this process by providingspecific behavioral insights about each individual.

Learn about the gold mine that is available through use of personal-level web analytics. We’ll help you identify the specificnuggets to mine for, and apply them to increase marketingreturns at every stage of the customer life cycle, both online andoff line.

The fight against declining marketingresultsFor years, marketers have struggled with the growing ineffec-tiveness of conventional off line marketing techniques. Onlinemarketers took comfort in the rapid growth and eager accept-ance and ownership of the “new” media niche. But online is no

longer “new,” and online marketers are beginning to face manyof the same challenges as their colleagues. They’re encounteringsymptoms like:

● Dwindling email open rates● Growing competition for search keywords that has driven up

costs● Lower online retail margins, caused by comparison-shopping

engines● The failure of innovations such as “buy online” and “pick

up in store,” to guarantee success (as witnessed by the recent bankruptcy of leading “clicks-and-mortar” advocateCircuit City)

Marketers recognize that increasing the relevance and timelinessof their marketing messages can help fight these trends.Whether you call it “personalization” or “behavioral targeting,”the underlying idea is the same: when you present the right message to the right person at the right time through the rightchannel, it’s far more likely to be heard, and acted upon.

It’s a great vision. But how can marketers learn enough aboutindividual customers to predict which messages are perceived as most relevant and when customers perceive the messages as important? Web analytics provides an unparalleled, newopportunity to help. Leading innovators are already using webanalytics to uncover a gold mine of insights about the interests oftheir prospects’ and customers’ current interests, as revealed bytheir individual behavior on the web. These innovators areincreasing margins and profits by making web analytics personal.

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Two uses of web analytics: aggregateand individual-level insightsConventionally, marketers use web analytics at an aggregatelevel. They seek to report on the performance of their websitesand online advertising, so they can adjust their efforts to improvethe results. Web analytics are a worthwhile application that candeliver excellent return on investment (ROI).

However, marketers may be squandering a huge opportunity if they do not also leverage web analytics as a rich source ofbehavioral insights on individual prospects and customers. Used this way, web analytics can play a far more direct role inengaging customers, improving customer experiences, andincreasing sales, by enabling companies to deeply personalizetheir communications and interactions.

Individual web analytics: a gold mine forincreasing marketing valueIndividualized web analytics isn’t mere theory: many companiesare already applying it to improve their marketing performanceand profitability. Amazon, which has long leveraged web

behavioral data to make product recommendations, is one of thebest-known examples, but many other firms are also effectivelyleveraging individual web data to personalize interactions.

● A leading online marketplace provides personalized sugges-tions of available items that traders may also be interested in,based on their recent searches, bids, and purchases. This fea-ture has led to substantial increases in click-through rates.

● A leading travel provider links web visitor insights with cus-tomer demographics to deliver marketing messages in inboundand outbound channels. By basing communications on all ofits knowledge about individual customers, it has achieved a10 percent increase in the number of leads sourced from itswebsite. The company’s flagship onboarding email programsnow perform at 30 percent greater than industry average forboth open rates and click-throughs.

● A leading online bank uses advanced web analytics to identifycustomers that abandon an application process and delivers amulti-wave campaign that recaptures and converts a significantnumber of leads. The strategy leverages event triggers thatstart a communication stream when the online application isabandoned. It draws upon email, direct mail, and even callsfrom relationship managers with whom a relationship exists.By eliminating communication overlap and reducing contactfatigue, the tool has both boosted conversion rates andenhanced customer loyalty.

● A leading auto manufacturer has improved the way it priori-tizes leads that originate on its websites. To prioritize leadsmore effectively, the auto manufacturer profiles the prospect’sinterests based on-site behavior and scores the prospect’spropensity for making a purchase. Leads marked as “hot” aretwice as likely to close as “average” leads, and are six timeslikelier to close than “colder” leads. Using this data, dealerscan now focus on their best opportunities to drive sales whenthey’re needed most.

Access the

individuals behind

each funnel step

Example: A web analytics funnel report,

and the list of individuals in each funnel

step, where some individuals are registered

and known while others are anonymous

but cookie’d.

Figure 1: Two uses of web analytics: aggregate and individual-level insights


Identifying what nuggets to mine forIndividualized web analytics can reveal actionable insights intoindividual prospects and customers. For example:

● Individuals’ personal preferences and current product or content interests

● Where individuals stand within the buying or customer lifecycle

● When they are most susceptible to being persuaded, converted, or up-sold

● When timely action must be taken to retain them● Which offers are seen as most relevant and persuasive ● How much each individual is willing to spend

These insights can be transformed into targeted marketing initiatives at every stage of the customer life cycle (see Figure 2).

Life CycleStage

Suspects(anonymous

site visitors)

(registered

visitors)

AttractBehaviorally

Targeted Ads

On-Site

Behavioral Targeting

Lead Nurturing

& Re-Marketing

On-Boarding and Cross-,

Up- & Repeat Sales

Marketing

Engage

Convert

Value

Retain & Win Back Retention Marketing

Prospects

NewCustomers

High-GrowLifetime Value

Customers

At-Risk& Former

Customers

Marketer’s GoalInitiatives Driven byBehavioral Analysis

Figure2: Mapping life cycle stages and business goals to initiatives that can

be driven by personal web analytics

The channels through which these initiatives can be executed(website, email, off line, and so on) depend on the level of eachsite visitor’s registration, ranging from anonymous browsers toregistered, known customers (see Figure 3).

What website events do marketers look for that trigger the mar-keting initiatives shown in the life cycle mapping graphic? Thetable on the next page lists typical website session events towatch for in various industries.

As an example, a fashion retailer can use web analytics to profilecustomers based on the price categories and clothing stylesthey’re browsing. Marketers can then use these insights to personalize emails with items that match these price levels and styles. Similarly, marketers can leverage these insights inother outbound communications or in inbound channels. Forexample, if a customer calls into the call center to inquire abouta shipment, the company’s IVR or CRM systems could suggestpromotions that fit the same profile.

Target across online and offline, inbound and outbound

channels depending on available contact details

Target via web site, e-mail, SMS, depending on

available contact information

On-Site Behavioral Targeting

Identifiedcross-channel

customers

Registered onlinecustomers and prospects

Anonymous visitors(tracked through their cookie, typically)

Figure 3: Various, actionable levels of visitor identification

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Typical customer/visitor-level web analytics triggers (by industry)

Retail Finance Telco Publishing B2B

On-site behavioraltargeting

Remarketing

On-boarding

Cross- and up-sell

Retentionmarketing

Product categories or

features studied; for

example, clothes

colors, styles,

and price levels

selected on a fashion

retailer’s site

Contents of

abandoned shopping

carts

Bad review rating

given after completed

product purchase; or

failed site searches

for accessories

performed

Products viewed

frequently together

Fewer product

categories viewed, or

less frequent visits

Products and

educational content

studied, such as IRA

calculators

Abandoned online

forms for quotes or

opening accounts

Missing or failed

events, such as no or

unsuccessful online

registration, or failed

site searches

Account options

studied but not yet

owned

Repeated reviews of

loan payoff amounts

Service details

studied; for example,

regional coverage

maps

Cross-sell offers

received by email or

on the site, yet not

clicked

Same as Finance.

Also, missing click-

throughs from

marketing emails

Available service

features studied on

the site, such as

email access

Review of contract

duration period, or

click-throughs from

sites that compare

competitors

Content categories

preferred; for

example, types

of sports

Subscription options

studied but not

purchased

After registration,

visitors don’t return to

site, or read few

content categories

Articles read in a

category that the

reader doesn’t

normally use

Fewer content

categories read, or

less frequent visits

Products and

educational content

studied, such as web

pages covering

technical details

versus business

benefits

When online lead

form is abandoned,

capture company

name through IP

address, and target

by mail or phone

sales

Unsuccessful

searches in the

self-help knowledge

base, or keywords

used that indicate

issues with using the

purchased product

Products studied

that customer does

not yet own

Reduced frequency

of self-service logins

to the customer

support area, or

searches performed

in knowledge base

with no results found


Five steps to successMany organizations, however, struggle to capture, organize, andeffectively leverage individual web data to drive marketing pro-grams. Here is a five-step path to help marketers progressivelymature their capabilities and expand the use of web analyticsfrom aggregate-level reporting to leveraging individual-levelinsights to fuel interactive marketing.

Stage 1: Site analysis

Example: Registered customers and theirproduct and spending preferences as exhibited on the website

Figure 4: Web Analytics can provide detailed information about registered

customers.

At most organizations, web analytics begins as a site analysissolution, intended to monitor site health, report on site activity,and prove ROI for the online channel. In this step, web analyticsanswers basic questions such as:

● How many visitors are coming to my site?● How are visitors using it?● How are visitors finding it?

Stage 2: Site & ad optimizationTo begin generating substantial business value, web analyticsmust evolve at least to stage 2: site and advertising optimization.In this stage, web analysts seek to identify bottlenecks, for example, web pages that aren’t performing well. Marketers runexperiments to identify and assess opportunities for overcomingthese bottlenecks, and consequently increase returns. Marketersare asking:

● How can we improve our site structure and content toincrease conversion rates?

● How can I reallocate online ad spend to attract more prof-itable customers?

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Stage 3: Segment targetingIn stage 3, marketers realize that there is no such thing as an“optimized page.” That’s because different groups of visitorscome to the same page with different goals in mind. Therefore,in stage 3, marketers use web analytics to define their most valu-able customer segments, and identify the dynamic content that’smost effective with each segment. You can deliver this content

on the site to anonymous website visitors through behavioral targeting. You can target registered online visitors via personal-ized email or SMS. Questions that can be answered include:

● What are the most valuable visitors segments for my business,grouped by common click behavior along with other informa-tion I possess about them?

● What content or promotional offers are best suited for target-ing each segment on the site?

● How can I begin leveraging what I learn on my site toimprove my other communications?

Stage 4: Interactive Marketing (onlineonly)While marketers who move to stage 3 are laying crucial ground-work for interactive, customer-centric marketing, they typicallyfind ROI temporarily flattening out. There are limits to theamount of value that can be generated through segmentation.Reigniting improvements in business value requires followingthe examples of innovators, such as the companies discussed earlier: businesses that have made their web data personal.

In stage 4, marketers refine targeting beyond the group level tothe level of individual site visitors. They use individualized webanalytics to fuel Interactive Marketing; that is, to build a dia-logue on each visitor’s past and current interactions. To achievethis goal, marketers ask and answer questions such as:

Stage 1:Site Analysis

Stage 2:Site & Ad Optimization

Stage 3:Segment Targeting

Stage 4:InteractiveMarketing(Online only)

Stage 5:Interactive Marketing

(Online + Offline)

Tactical Reporting Tool Strategic Visitor Insightsfor Interactive Marketing

Figure 5: Use the five step process to extend business value and gain

strategic visitor insights for interactive marketing


Figure 6: Use the five step process to extend business value and gain strategic visitor insights for interactive marketing

Example: Using insights gleaned from personal-level web analytics to drive interactive marketing across online and off linechannels

1. Tap into visitor-level detail

2. Automate business rules

3. Trigger site offers

Fine Wines

HistoricLisbon

4. Trigger e-mail, direct mail & more

5. Prioritize leads for direct sales

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Stage 5: Interactive Marketing (online + offline)Finally, in stage 5, marketers extend the Interactive Marketingdialogue with identified cross-channel customers to includeoff line and online channels. Supported by web analytics, off linecommunications build on all past and current customer behavior.One example occurs when a customer receives promotionaloffers delivered through a call center IVR system. In addition,insights from off line customer transactions are used to extendthe web or email content deemed most relevant to each customer.

Whether interactions are outbound or inbound, web analyticscan answer questions like:

● What is the best way for me to continue my ongoing sales dia-logue with this individual?

● Based on what I know from this individual’s prior interactionsand transactions across all channels, what is the best offer orcommunication I can make next?

● When is the best time to make that offer?

Climb the five-step growth pathHow do you move up the maturity model rapidly and cost-effectively? The table on page 10 defines the specific organizational know-how and technology requirements you’llneed at each stage.

You do not always need to build out these capabilities sequen-tially. Even if your company is now using web analytics foraggregate reporting, you may already have some of the capabili-ties you’ll need to gain the individualized insights you’re lookingfor. For example, companies using the IBM® Unica® marketingsuite may already have tools for delivering individualized contentand communications across online and off line channels.


Typical customer/visitor-level web analytics triggers (by industry)

Stage 1 Stage 2 Stage 3 Stage 4 Stage 5

Requirements

Organizationalmaturity

Know-how andskills

Technology forcustomerawareness

Behavioraltargeting/decisioning technology

Technology forDelivering TargetedContent

Site analysis

Define site and

marketing goals

clearly, so they can

be translated into

web analytics Key

Performance

Indicators (KPIs)

Measure what

matters, instead of

attempting to

measure everything

Self-service access

to personalized

metrics for each role

in the organization

N/A

N/A

Site & ad optimization

Set improvement

goals, and manage

toward them;

prioritize testing

better than subjective

opinions

Design and run tests,

understand their

statistical

significance, and act

on the results by

adjusting websites or

ad spend allocation

accordingly

A/B analytics for

website and online

ads

Assign visitors

randomly to test

groups

A/B test automation

for site &

advertisements

Segment targeting

Identify key

segments relevant to

the business, and

see the

company/web site

through the eyes of

representatives from

each segments

Discover meaningful

behavioral segments

from click data and

visitor registration

information using

web analytics and

data mining

techniques

Segmentation

analytics (in web

analytics and data

mining solutions) for

both click data and

registered customer

data

Define business rules

for targeting

segments, and use

self-learning

mechanisms to refine

targeting

Deliver targeted

content to each

segment via site

advertisements,

recommended

content or products,

email, SMS, or other

means

Interactive Marketing

online only

Commit to

personalization and

relevancy as your

paradigm of doing

business online

(versus “spamming”)

Link site visitors to

their registered

customer information

and identify the life

cycle events that are

actionable for

marketing

Web data mart that

provides open,

secure access to

granular data on

each individual’s

website interaction

history

Select the most

effective content for

each individual online

customer in real time,

reflecting past and

current click data,

customer insights,

and business rules

Deliver targeted

content to each

individual using

personalized site

content, email, SMS,

or other means

Interactive Marketing

online+offline

Commit to a

customer-centric

business strategy

that encompasses

and integrates all

channels

Link the identity of

customers across

online and offline

channels and identify

the life cycle events

that are actionable

for marketing

Web data mart for

online interactions, as

well as access to

offline history of

transactions,

campaigns, and

responses

Choose the most

effective marketing

communication or

offer for each

customer, reflecting

past and current

interactions both

online and offline

Cater targeted

content to each

individual regardless

of the inbound or

outbound channel

each interaction

occurs in

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Bring together the marketing team youalready haveMany marketing organizations have virtually all the skills theyneed to begin applying web analytics for targeting personalizedonline and off line messages. However, these capabilities areoften spread across the enterprise in disconnected teams; forexample, separate teams for online versus relationship marketing.To succeed, marketing organizations must make it possible forthese siloed resources to work together. They must also over-come some widely held misconceptions about web analytics.

For example, some relationship marketers still hold beliefs aboutweb analytics that might have been accurate years ago, but nolonger are:

● “Web analytics is summary-level data; it isn’t useful for customer-centric marketing.” Today’s best web analytics solutions—notably IBM Enterprise Marketing Management’sweb analytics solutions—now provide behavioral profile data at the visitor/customer level in a readily accessible webdata mart.

● “Click data is too much of a ‘fire hose’: you can’t make senseof every click.” Successful marketers have learned how to focus on a subset of online events that are most likely to besignificant.

● “Web analytics is only interesting to the web team, not myteam.” Marketers that ignore web data about individual cus-tomers are disregarding an indispensable resource.

Online marketers also have their misconceptions:

● “Marketing is primarily about ‘acquire, convert, retain.’” This statement misses the urgent importance of growing eachcustomer’s Lifetime Value (LTV)—a concept that is onlyincompletely expressed by “retention,” and can only beachieved through a more customer-centric approach.

“I couldn’t possibly look at each individual visitor.” It can’t bedone manually. Your company’s relationship marketers needtools that can automate analysis and action at the level of indi-vidual customers—solutions such as those in IBM’s EnterpriseMarketing Management (EMM) suite.

IBM can help you take the next stepWith our Unica solutions, IBM has helped companies world-wide drive business value by optimizing their relationships witheach individual customer and prospect. Our leading EMM webanalytics and Interactive Marketing solutions give marketingorganizations the capability to capture individual-level webbehavioral data and then identify and act on insights to engagecustomers in a relevant dialogue. We know what works, and we know how to overcome the obstacles. We’d welcome anopportunity to share what we’ve learned—and help you trans-form web analytics from a mere aggregate-level reporting toolinto a powerful enabler of individualized, Interactive Marketing.

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For more informationTo learn more about IBM Unica solutions, please contact yourIBM marketing representative or IBM Business Partner, or visitthe following website: ibm.com/software/info/unica.

Smarter Commerce: An integratedapproachIBM Unica products are part of the IBM Smarter Commerceinitiative. Smarter Commerce is a unique approach that increases the value companies generate for their customers, partners and shareholders in a rapidly changing digital world. To learn more about Smarter Commerce, visitibm.com/smarterplanet/commerce.

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