Intro
In this techno-advanced world we live in, today, more and
more consumers are reaching for their mouse, rather than their car keys to go
shopping. From toilet paper, to wedding rings, consumers today enjoy the
convenience, and often lower prices that can be found by shopping online.
Shopping online allows consumers to quickly compare products and prices, and
read reviews posted online by fellow online shoppers. Due to the growing
popularity of online shopping, it’s more important than ever for online
retailers, or e-tailers, to know all about the people visiting their site, such
as how they found their site, how long they were on their site, why the left
their site, and in many cases why they didn’t make a purchase on their site.
Consumer analytics allows e-tailers to better understand their visitors, and
with this understanding, find ways to improve their website appearance and
functionality, and more effectively reach out and advertise to the people most
likely to make purchases on their site.
What are Consumer
Analytics?
Consumer analytics providers are typically B2B software
companies that develop and market software to any company that has a website,
and wants to understand the habits of its users. The analytics software does
this by giving e-tailers visibility about their website’s traffic. The
information that can be retrieved with the software includes information about
each user, such as the physical location of the online user, the cyber location
(website) the user came from, the time of day the user visited the website, the
products the user looked at, and a click stream of each user on the website.
Analytics packages also allow e-tailers to study information at a group level
such as volume, and peak times. Looking at the information on a group level
allows e-tailers to study demographics, and segment their customer base.
So Much Information,
No Significance
Actually, when used properly, analysts can use the
information provided to them by their analytics software to make important
business decisions. The software allows analysts to track attrition, improve
their website to be more functional, make sales forecasts, and identify
low-profit customers. Once they have this information, they can make
adjustments to their operations to optimize their websites and maximize
profitability. E-tailing giants such as Amazon.com and Overstock.com use
consumer analytics every day to gather information so they can run tests, and
make adjustments to their websites to make their sites more user friendly, and increase
profitability.
Legal Issues
In recent years there have been privacy issues surrounding
the world of web analytics. As the science of consumer analytics continues to
develop, e-tailers learn more and more about their customers. Some online
consumers get uneasy when they think about all the information online businesses
know about them. Congress has signed bills to protect consumer privacy such as
the Commercial Privacy Bill of Rights Act of 2011, and the Stearns Consumer
Privacy Protection act of 2011. These bills protect the privacy of consumers by
limiting what information websites can gather, retain, and sell to other
websites.
Key Players
According to TopSEOs.com, the top three web analytic
providers in January 2013 are Coremetrics, Unica, and Omniture. All three of
these companies have been around for over a decade, providing business
solutions to businesses on the web. Google Anlytics is also an up and coming
analytics provider. Coming into the analytics scene in 2005 when Google bought
Urchin Software Corp, Google Analytics is a free, and powerful analytics tool
e-tailers can use to optimize their website. There are also research
institutions involved in the development and advancement of consumer analytics.
For instantance, Wharton Consumer Analytics Initiative, WCAI, is a research
group at University of Pennsylvania who prides itself as the world’s leading
research center in consumer analytics. Focusing on matching academic knowledge
with industry applications, WCAI is a huge player on the scene, having an
enormous impact on leading executives when it comes to data-driven decision
making.
What direction is the
Industry Going?
As data becomes more refined and readily available,
technology becomes better, and the science behind data-driven decision making
continues to develop, consumer analytics will enable e-tailers to make faster,
better decisions. Going forward, unless legislation prevents this, e-tailers
will know more about us, and our shopping habits. They will then be able to
exploit this information to tailor their advertising to get the most bang for
their marketing buck.
References
http://www.babsonknowledge.org/analytics.pdf
http://www.digitalanalyticsassociation.org/?page=privacy
Great high level post on consumer analytics. In particular, I like how you point out that not only do "traditional" companies like Google use consumer analytics, but also many of the retailers we purchase from on a daily basis.
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