Every dot worth its com these days is in the market for more analytic intelligence about its customers. The fundamental questions: Who are these people, and what do they want?
The ability to answer those questions quickly and accurately is becoming mission-critical. Success can mean a more precise and profitable view of customers, resulting in a Web site that delivers personalized content and attracts business.
The alternative?
"Failure as an e-commerce company" is how Brett Lauter, director of CRM (customer relationship management) at high-tech e-tailer Outpost.com, put it.
So Outpost.com, a division of Cyberian Outpost Inc., in Kent, Conn., and dot-coms like it are turning to a new crop of tools for e-business intelligence, or Webhousing, that enables businesses to access, analyze and share e-commerce data in order to build loyalty among suppliers and fickle customers and drive profit.
"People heavily invested in e-business are frantically scrambling to fill in an understanding of what's been happening through data analytics," said Douglas Hackney, president of Enterprise Group Ltd., a consultancy in Hudson, Wis. "The focus has been on getting the operational systems up—what they haven't had is the why."
No magic bullet
Even with this new generation of tools, though, getting to the why—or capturing, analyzing and acting on the behavior of online customers—isn't easy. Among the challenges: terabyte-size clickstream data quantities that must be parsed and kneaded into manageable volume and form as well as the inherent messiness of clickstream data. Dot-coms embracing business intelligence tools and techniques will also need to be sure they've developed policies that adequately protect the privacy of online customers.
For traditional companies developing online markets, the challenge is twofold: analyze Web data and then blend it with back- and front-office data for a holistic view of customers and suppliers.
"There are difficulties in doing this and no magic bullet to solve it," said Joe Whitehurst, president of Atlanta-based consultancy Whitehurst Associates Inc. "It takes a lot of hard work and a lot of attention to detail. Demand for it is very large, especially for Internet-based e-commerce companies—startups in particular."
Indeed, e-business intelligence is among the key drivers in what experts see as a continued boom in data warehousing (see chart, Page 20).
For business-to-consumer and business-to-business operations with the proper tools and business resolve, the ROI (return on investment) can be significant.
Take Outpost.com. The company was growing quickly, with year-over-year revenues up 84 percent for its quarter ended Nov. 30, to $43.2 million, and more than 500,000 customers. The Web site was racking up 4 million visitors each month. But, as of last fall, managers were still in the dark about customer behavior. They could not say, for example, who their most profitable or most frequent customers were.
Outpost.com turned to SAS Institute Inc., a well-established data analysis provider in Cary, N.C., that will ship this month an e-business analytics package code-named e-Discovery. In November, Outpost.com rolled out several tools that will be included in e-Discovery, including SAS' Enterprise Miner data mining tool; SAS/MDDB, a data analysis engine; and an array of associated software for hard-core profiling and segmentation of e-customers.
An early result was that Outpost.com was able to segment its customers into three groups: active customers, semiactive customers and customers who appeared dangerously inactive. In January, Outpost.com ran a test of direct marketing e-mail pitches to see if it could teach its old customers some new clicks.
The results were astounding, Outpost's Lauter said. Some 25 percent of targeted customers in the dangerously inactive group returned to make a purchase.
"I'm very pleased with the ROI," Lauter said. "We have seen great results ... great improvement. It's ultraimportant to do this, to build a trusted and valued relationship with your customer—that to me is heaven on earth."
Vendors zero in
Traditional players in the business intelligence and data warehousing industries have the opportunity dead in their sights. IBM, Oracle Corp., SAS, Microsoft Corp. and Hyperion Solutions Corp. have recently hoisted flags for e-business intelligence, with new products, partnerships and marketing messages being delivered at the speed of, well, e-business.
These old-line business intelligence and data warehousing providers already have competition in the form of companies such as Accrue Software Inc. and WebTrends Corp., which specialize in clickstream data analysis. By providing platforms, tools and applications that reach beyond the clickstream into back- and front-office systems, traditional players are attempting to leapfrog the upstarts.
In some cases, partnerships are emerging. Hyperion announced last week it has teamed with WebTrends to offer an integrated analytics package. That came days after a similar Hyperion partnership with online marketing solutions provider Engage Technologies Inc.
And an array of application service providers has emerged, offering outsourced data analysis services aimed at e-business.
The marketing rhetoric from many of these vendors is lofty. Some tout a technological Holy Grail in which clickstream data integrates with back- and front-office systems and third-party demo graphic data to allow customer profiling and one-to-one personalized marketing—seamlessly and in near-real time.
Some vendors are also beginning to integrate clickstream analytic tools with tools for personalizing Web sites. That would, at least theoretically, allow them to analyze customer behavior and customize Web content, all in real time (see Tech Analysis, Page 18).
All of that may be achievable, according to some in the trenches, but not without much pain and expense.
"I think there's a fair amount of smoke and mirrors out there," said Tim Catlin, senior vice president of research and development at NetCentives Inc., of San Francisco, a 4 million-member provider of consumer loyalty and rewards programs for online merchants.
"I think the reality will show it's not quite as rosy as they say," Catlin said.
Ready, aim, launch
More product announcements are in the pipeline. Early next quarter, warehousing titan NCR Corp., of Dayton, Ohio, plans to deliver a suite called Data Warehouse for E-Business, which couples NCR's Teradata database with new applications for analysis of e-business and traditional data.
NCR's high-end offering will include a logical data model specific to clickstream data as well as prebuilt reports for customer and preference analysis, purchasing behavior, advertising effectiveness assessment, and cross-sell/upsell analysis.
IBM, meanwhile, is readying a June delivery of a new analytic service offering that will blend clickstream with traditional data. Five modules will focus on such areas as customer profiling, Web site effectiveness and metrics, personalization, and multichannel analysis, according to IBM officials in Armonk, N.Y.
Despite all the buzz, practitioners say successful e-business intelligence doesn't differ appreciably from business intelligence aimed at traditional data.
"It's not really a new world—it's just sped up, and the data sources have changed," said Jay Stevens, a principal consultant with Whitehurst Associates.
While e-business initiatives are producing abundant business for software and storage vendors and systems integrators, Enterprise Group's Hackney and other experts characterize the state of full deployments as nascent. Even some household names have yet to dive fully into e-business intelligence, though it's blipping urgently on their radar screens.
Nissan North America Inc., for instance, is in the early stages of a rollout of software from E.piphany Inc. for sales reporting and analysis and cross-sell/upsell. Nissan plans to expand beyond its 30 initial internal users of the analytic tools to offer access to regional offices as it builds a customer-centric data system.
Already, the results are apparent, said Ted Ross, Nissan's manager of owner loyalty and CRM in Gardena, Calif. E-business intelligence analysis helped to disprove an assumption that the principal buying group of Nissan's new Extera sport utility vehicle was 25- to 34-year-olds; in fact, most Extera buyers are age 35 to 55, Ross said.
"It's basic customer analysis and profiling, which is the first time this company has had direct access to that. It's changing our thinking about who's actually buying the vehicles and how we buy media," Ross said. "Now we're able to look at thousands and thousands of customers with age and income and other things and really understand if we're hitting our target." cBY DENNIS FISHER AND
