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eBiz News: Smarter Key Analytics Metrics
By Michelle Megna

April 19, 2007


Making headlines this week in e-commerce news is research outlining three key performance indicators (KPI) critical for successful Web analytics, an upgrade of Infopia's e-commerce platform, a partnership between Bazaarvoice and ATG and a spike in eBay earnings.

Forrester Research, Inc. analyst Craig Menzies issued a report, "Three Winning Web Analytics KPIs" that debunks some common practices when it comes to analyzing site data. He contends that unique visitors, click stream analysis and conversion rates, while informative, are not the metrics that should take priority when studying traffic at your site.

Rather, he recommends using what he calls "single access ratios," internal search data and segmented conversion rates. "Web analysts can then focus the site on the visitors that really matter, and save on expensive pay-per-click campaigns," said Menzies.

In regard to unique visitors, the report states that "the weakness in simply tracking raw traffic to the site is that it only measures who showed up, not how they felt about their experience during or after their visit. It is not an actionable metric."

And, while knowing what links are popular might help with some design decisions, the study says, "Ultimately, any judgment made on a series of clicks or actions is, at best, an inference. For example, thousands of customers might be clicking on a navigation link because they are unable to find what they needed on your home page, or are pogo-sticking between categories because the site doesn't have a proper task flow."

In regard to the Holy Grail — conversion rates — Menzies says that in terms of Web analytics, "it is seriously flawed in that it does not lead directly to any kind of tangible improvement in a Web site's customer experience. It's too ambiguous — it's either "up" or "down" — to be directly relevant." Instead he points to segmented conversion rates (SCR), in which you define visitor groups, for example, those who arrived from shopping comparison sites, "gain insight into what high-value customers are doing, and improve the site for those that really matter."

Smarter Metrics Make More Money
So, what are the metrics an e-tailer should harness for increased sales, and what's to be done once you have the data? Here are the three that Menzies outlines in the report:
  1. Utilize single access ratio (SAR). Measure the "bounce rate" or "percent exit," a metric that tells how many visitors arriving at the site leave again immediately without seeing more than a single page. Menzies cites one extreme case in which a major online retailer discovered that "97 percent of its home page traffic was single access ratio and that it was paying for a great deal of that 'junk traffic' through its pay-per-click campaigns."

    He recommends that: "You look at the SAR for areas of your site with high entry rates, and then cross-reference these entry points against known online advertising campaigns. You will almost certainly find a correlation between high levels of "junk traffic," a high SAR and an online advertising campaign that is not aimed at the right audience. Work on two areas: 1) reduce SAR by redesigning entry point pages to better address customer requirements, and 2) redesign or scrap marketing campaigns that produce excessive junk traffic."

  2. Maximize internal search data. In terms of internal search, the report suggests that you act quickly to capitalize on merchandising opportunities. For instance, if you notice that lots of your customers are searching for a product that you don't sell or they can't easily find an item that you do sell, dedicate staff and time to promptly address the issues.

  3. Incorporate segmented conversion rates (SCR). "Establish 'segments' in your Web analytics tool - in some cases, Web analysts set these up at implementation, or adjust the page tags, " says Menzies, "and create 'funnels' that track visitors as they progress through a Web site process that you define, for instance, from home page, to checkout process, to the completion of an order."

Spring is in the Air at Infopia
In other news, Infopia yesterday launched Marketplace Manager Spring '07. New and enhanced capabilities now available fall into three key areas. Highlights of these capabilities, according to the company, include the following:

  1. Enhanced, time-saving features. New context-sensitive, online help throughout the application, a redesigned user interface for quicker access to vital stats and increased automation for managing inventory, listings, and orders. Additional enhancements to the integration with salesforce.com provide even more options for servicing customers and optimizing marketing opportunities.
  2. Expanded online marketplace functionality. Through integration with the eBay Giving Works Program, merchants can easily engage in "cause marketing" directly from the Infopia platform. Enhanced capabilities for eBay and Amazon Seller Central provide merchants with added functionality to optimize automated pricing and inventory features on those sites. Newly designed marketplace templates provide options to customize HTML content and change color settings.
  3. Web site optimization capabilities. Utilizing search engine optimization tools has been simplified with built-in site maps and easy-to-use features that control page titles, meta tags and image alt tags. New storefront templates expand branding options for the look and feel of storefronts that can be changed instantly.

Bazaarvoice Buzz
On the social commerce front, Bazaarvoice and ATG (Art Technology Group, Inc.) announced a partnership to help e-tailers use social commerce to further personalize the online shopping experience, which the companies say will increase sales.

ATG clients can now enhance their consumers' shopping experience through the integration of Bazaarvoice's ratings and reviews solution into the Commerce Suite, available in both an on demand (software-as-a-service) model and traditional licensed model. Joint clients can now implement social commerce features in less than two weeks to let shoppers share their personal experiences to help others make more informed and rewarding purchase decisions.

Fee Hikes and Overseas Sales Net eBay Gains
Finally, eBay's first-quarter profit climbed 52 percent as it raised fees and held more auctions overseas. Net income surged to $377.2 million, or 27 cents a share, according to a statement issued by eBay. Excluding some expenses, it earned 33 cents, 3 cents more than analysts' estimates. Revenue rose 27 percent to $1.77 billion. Revenue from PayPal payment surged 31 percent while sales at its Skype Internet phone unit more than doubled.

Auction revenue per listing rose 20 percent from a year earlier, helped by the fee increase, after a higher percentage of the site's visitors made purchases, according to eBay. The company will continue to cut clutter on the site to make it easier for buyers to find items, Chief Executive Officer Meg Whitman told financial analysts during a conference call, according to industry reports.

"We need to make changes to the site, but we have to be very careful how we introduce those changes," Whitman told analysts. "We can't risk alienating the huge base of users we have." Hopefully this will mean no more fee hikes anytime soon.

Michelle Megna is managing editor of ECommerce-Guide.com.

Do you have a comment or question about this article or other e-commerce topics in general? Speak out in the SmallBusinessComputing.com E-Commerce Forum. Join the discussion today!

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