December 30, 2006

Thoughts About 2007: Web Analytics, Multichannel Marketing, and Route 66

Why not join in the fun, and offer your thoughts about 2007? Leave a comment at the end of this post.

Web Analytics

In my opinion, 2007 represents an inflection point, not in the software that we use for Web Analytics, but rather, for the people who analyze website behavior. God has smiled on you in ways you cannot imagine. You represent the future of multichannel retailing. It is you that should know more about how customers behave than anybody in your company. In the next five to ten years, you could have the experience necessary to run our multichannel businesses. This won't happen, however, unless you fundamentally change how you approach your job.
  1. Get out of your department, and start helping others. The fact that you should know more about customer behavior than anybody else means you have a responsibility to teach customer behavior to your organization. Start now, and in 2012, you'll be a leader who your company considers for advancement.
  2. Start telling a story. Outside of maybe your finance department and a few analytically gifted individuals, nobody in your company cares that a certain URL had a 3.19% conversion rate, along with a 64.9% exit rate and 49.5% shopping cart abandonment rate. Your co-workers, and especially your leaders, want to know what you can tell them that gives them a chance to be successful, earn a bigger bonus, and get promoted. Start telling them a story they can understand and use to make their lives better. Stop dazzling everybody with your numerical prowess. Your career depends upon it.
  3. Describe Customer Behavior Over Time. If your conversion rate decreased from 4.00% to 3.00%, and traffic increased from 100,000 visitors a month to 133,333 visitors a month, you may end up with the same amount of net sales. What if your customers now visit more often than they visited in the past, doing more shopping and less purchasing? Web Analytics individuals and the software they use must do a much better job of segmenting customers based on past behavior, and then use that information to describe customer behavior over time, not specifically within a "session". Tell your executive leaders that your best customers used to visit the website every twenty-seven days, and now visit every thirty-eight days. They can understand this. They can theorize why this might be happening. They can develop strategies to combat this problem, assuming it is a problem. They will include you in all of their meetings, and depend upon you for the analytical support of their hypotheses.
  4. Anticipate The Future. Nothing is more valuable to an executive than an individual who has a vision, an individual who sees potential problems, and identifies solutions before the problem surfaces. You can't anticipate the future by looking at funnel analyses. You need to step away from the metrics, and simply observe what is happening around you. Listen to people in other departments, and try to understand their issues. The future takes shape when you step back, observe, and listen.
All of you gifted individuals who currently support web analytics departments have an unprecedented opportunity. Do not repeat the mistakes of database marketers, who threw away the golden opportunity they had in the early 1990s by being too metric-driven, failing to become strategic. Do not repeat the mistakes of CRM marketers, who so badly mucked-up their opportunity of the mid 1990s that CRM became a "four letter word". Do not repeat the mistakes of the E-Mail marketers of the late 1990s, who completely ruined catalog's replacement by not having the analytical infrastructure in place to accurately measure the incremental benefit they offered the customer. Do not repeat the mistakes of "multichannel marketers", who during the first half of this decade were so tied to the catalog strategies of the past that they completely missed the future.

Multichannel Marketing

You know who you are. You are the ten year veteran of catalog marketing at a company like Garnet Hill, Cabellas, Oriental Trading Company, Crutchfield, Talbots, Orvis, Ross-Simons, Swiss Colony or PC Connection. In the 1990s, when your company launched an e-commerce enabled website, you were the one who still met with the CEO on a weekly or monthly basis. In 1999, you were the one who couldn't believe that your employees were leaving your company to work at some startup offering stock options. In 2001, you were the one who couldn't believe that a thirty-one year old online marketing whiz was promoted to a Vice President job. In 2003, you were the one defending the concept of "multichannel", proudly helping the DMA and print industry promote print as the key driver of online and/or retail sales. In 2005, you were the one being criticized for having twenty percent decreases in catalog volume, while the online marketing VP earned a gigantic bonus for driving thirty percent increases. In 2006, your CFO asked you to reduce page counts, in-home dates, or use any other tactic to decrease expense, at a time when the online channel leveraged the infrastructure you spend the 1990s building to achieve record profits.

Multichannel marketing is rapidly shifting toward "online + retail". Catalogs and contact centers are rapidly becoming support channels, line-items in a profit and loss statement.

Catalog professionals are like the person who owned the motel on Route 66, only to see I-40 built right next to Route 66. Within a few years, new businesses sprung up all along the new freeway. Customers transferred their dollars from the quaint little businesses along the highway, to the new businesses along the freeway. New communities sprang up near the interchanges. Tom's Diner went bankrupt. Olive Garden and Chili's thrived.

Catalogers, and the vendors who support them, have tried the argue that their services fuel the online/retail business model. They were like the "Business 40" signs you see --- highway signs that tell the traveler to exit the Interstate highway, go into town, and use the products and services offered by the town. History tells us that this did not save the businesses on the old highway.

Route 66 is a great example of re-invention. After being bypassed by the Interstate highway system, it adapted, it evolved itself into something relevant.

If you work in the catalog industry, you can adapt in at least two different ways. You can get busy with the second half of your career, and find work somewhere in the future of our industry. Or, you can get busy testing new concepts, concepts that will become the future of the catalog industry. 2007 is the year where you need to get busy doing one of these two things. Simply carrying the multichannel banner around the office isn't good enough anymore.

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