Data mining holds valuable gems

Enterprises using data mining techniques are finding out quickly where they have erred regarding their customers. While integration hassles may be a barrier to adoption, inertia may be an even bigger obstacle.
Written by Lisa Greim Everitt, Contributor and  Dana Coffield, Contributor
Only about 20 percent of companies actually use the data they collect from online interactions to improve how they serve their customers.

"Most companies are missing the opportunity," says Dave Daniels, a Jupiter Media Metrix analyst and author of a recent survey examining the business-to-business customer service. He says that integration hassles represent the biggest barrier, but he also suspects that inertia is to blame.

Complacent providers are missing not just the opportunity to serve customers better, but the opportunity to sell them more stuff as well.

Tools that tally Web traffic are OK for managing server loads, but not much else. In these hypervigilent economic times, enterprises need - and are willing to pay for - analytical tools that mine customer behavior, crunch the data and serve it up in ways that allow businesses to rethink their online presence for maximum return on investment. Researchers at Aberdeen Group estimate that the market for outsourced analytics will reach $500 million by 2003, up from $50 million last December.

"The Web is no longer a novelty," says Jay McCarthy, vice president of strategic services of HitBox. "You can't just have a site because everyone else has one. You have one because you're trying to achieve a business objective."

Men in Pinstriped Suits

Hitbox, a division of Websidestory in San Diego, has a reporting tool that correlates clicks to spending. Enterprises embed a few lines of JavaScript on each page of their site, and the HitBox software goes to work, determining where the visitors came from, where they clicked on the page and how many of those visits were converted to cash.

When Brooks Brothers began beta testing HitBox Enterprise, the old-line retailer quickly learned that its online sales were coming from unexpected places.

"We knew we were getting a lot of traffic from a certain search engine, but we didn't know what percentage was actually shopping," explains Nelson Sanchez, Brooks Brothers' director of e-commerce marketing. It turns out they weren't buying much at all, but AOL users were. "We always thought AOL would have a lower conversion rate because the users are younger, or maybe not as savvy on the Web," Sanchez says. "But those assumptions were wrong."

Another big surprise was the number of Japanese Web surfers making purchases at the site.

Based on the metric collected by HitBox, Brooks Brothers is mulling changes to its site - such as lightening up on the graphics for people connecting with slow speeds - and is looking for ways to better interact with users, such as sending e-mail in Japanese, adding a store locator for Japan, or even creating a translator site.

Today, the Web accounts for 30 percent of the sales outside Brooks Brothers' 150 domestic and 67 Japanese retail outlets, and that figure is growing within both the "channel" and the total organization. "Using something like this tool is important to make that 10 percent [of overall sales] grow to 11 [percent] or 12 percent," Sanchez says.

Not Just Sales

But measurement and psychographics aren't just for retailers looking to better marry their Web sites with their stores.

"We are taking the clickstream data that's available, and layering on top of that information about interactivity, so we can watch not only what people are clicking on, but what they're doing with it," says John Girard, CEO of Clickability.

Although Clickability's Interactivity Tools and Interactivity Reports are primarily in use by online publishers, enterprise clients are beginning to report to the table, Girard says. The same programs that allow online publishers such as CNN.com to know who their most popular columnists are and how readers are saving, printing or passing on their work helps companies with vast amounts of online product information determine if the data is reaching clients in a meaningful way.

Deploy the Interactive Tools on a Sun Microsystems minisite used for customer support, and tech managers may be able to see what customers are having the most trouble with. "That kind of information could be invaluable to a team, allowing them to identify the biggest problems with a product," Girard says.

Amazing as it may seem, few wireless companies track or proactively contact customers whose service contracts are about to expire, says Eve Kowtko, vice president of customer-managed relationship services of Netonomy. By identifying the characteristics of customers who are about to churn, "they can present them with a really compelling offer."

Collecting, processing and making use of enormous streams of network data is the goal for customers of Openet Telecom in Dublin, Ireland. Its FusionWorks "convergent mediation platform" pulls customer usage patterns from wireline, IP and wireless networks, and provides them to users who work in areas from billing to operations management. Mediation correlates the data into information that can be used to roll out new ser-vices in time frames driven by customer needs.

"It takes the back office out of the equation to implement new services," says Mike Saunders, vice president of marketing of Openet in North America.

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