Spy on your customers (they want you to)

Paul Briggs doesn't have a lot of time to score points with Travelocity.com customers. Using specialised software, the No. 1 travel Web site--which is barely ahead of Expedia.com in traffic, according to Nielsen//Net Ratings--tracks the lowest airfares for more than 290,000 routes worldwide, looking for evidence of a fare war. The minute Travelocity's software senses a US$25 drop in ticket price--and a similar response by the airline's competitors--the clock starts ticking.

Knowing that half of all online travel shoppers turn to Travelocity for rock-bottom fares, Briggs wants the online travel site to be the first to inform its customers of a pending fare war; but only as long as it has permission to do so. Briggs, who oversees customer relationship management (CRM), has a powerful weapon at his disposal: When his staff gets wind of a fare war, they immediately query Travelocity's system to identify customers interested in those destinations. And thanks to Teradata, software developed by NCR, Briggs relies on more than geographical data and purchasing habits: He can also look at flights people considered taking, but failed to book, on past visits to the site.

Within about a day Travelocity sends thousands of email messages alerting customers to the new low fares, including a direct link to book the tickets. Teradata, which costs $1 million plus around $150,000 in annual maintenance fees, delivers impressive results: Travelocity converts those targeted email recipients to shoppers at a rate twice as high as its nontargeted mass email offers. The software also speeds things up. Where it used to take almost 24 hours to upload and sift through customer information, the same process is dispatched in less than three hours.

This kind of Internet surveillance--with customers' permission and the goal of extending timely offers at the exact moment consumers are ready to buy--isn't new. But companies are getting smarter about how they use it. "It might not be putting a man on the moon, but it's very complex, very relevant, and we get a very high response rate," Briggs says. "As far as privacy goes, we increasingly hear consumers saying, 'Why not send airfares that are relevant to me?' That's what we're trying to do."

Despite the success that Travelocity and other companies have had with customer tracking technology, it seems that many e-commerce outfits could sooner put a man on the moon than create a personalised shopping experience. Most e-commerce companies still lack any real insight about their customers, mainly because the CRM software they use can't analyse the data it collects from the Web.

In a recent Jupiter Media Metrix survey, 43 percent of Web site executives said they couldn't integrate tracking data with specific customer profiles. Meanwhile, 23 percent said they don't conduct any behavioural analysis. Only 20 percent know if their customers abandon the shopping process at critical points for reasons that could be easily fixed. Furthermore, 10 percent said they simply collect too much data to analyze it all. According to David Daniels, an analyst with Jupiter, sites like Travelocity are an exception to the rule. "Certainly the Internet allows merchants to collect vast amounts of data (and they do) but very few sites use that data," he says. "Those that are (acting on the collected information) are really improving results and lowering costs."

Customer tracking and Web personalisation technology isn't perfect. Nor is it cheap. But it can go a long way toward helping you understand information you collect about buyers' habits and preferences--and take it one step further. And in an emerging industry where business smarts are earned on the fly, such investments can mean the difference between surviving and thriving.

Contents

1.   Intro      2.   Tap into the data mine      3.   What's in your spy kit?      4.   Through your customer's eyes      5.   Personal touch

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