InformationWeek
Defining The Business Value Of Technology
January 3, 2000
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Advanced analytics can help E-businesses land customers
By Barbara Depompa Reimers
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or many, online personalization means offering individually targeted advertising to Web surfers or suggesting additional products based on a consumer's buying habits. But personalization software is quickly evolving into something much more powerful this year and beyond.Personalization products--which incorporate a range of data mining and correlative-filtering technologies--are increasingly used to analyze clickstream data, improve customer service, and even track down potential customers based on information collected about current "best customers."
President and chief operating officer Randy Jo Wilcox says that with what she knows now, she would never have launched the successful BuyItNow.com Web site without the personalization software that was added this past summer. Launched in September 1998, BuyItNow.com is an online shopping mall featuring hundreds of consumer products housed in about 15 online stores. The site is designed to let shoppers buy a range of products with a single, simple check out.
The online retailer added net.Genesis Corp.'s net.Analysis software in June and saw sales increase from $100,000 per month during the first half of 1999 to $600,000 per month in July. By the fall, sales grew to $2 million per month, and the company expects them to more than double again during the holiday season.
Wilcox uses the software to help find new customers with similar demographic characteristics to its best customers and targets those potential customers through ads and E-mail. "Those sales increases also come from our growing ability to understand customer behavior online, make our products easier to find, and from tracking staffing requirements to save money in our call centers," Wilcox says.
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Because personalization encompasses several technologies, it's been difficult to measure its size and growth. Many people equate personalization with customer-relationship management. But some observers say personalization goes beyond CRM.
"Firms that are truly customer-driven will build one-to-one technologies into every corner of their firm and will link their networks to many other networks," says Bruce Kasanoff, CEO of Accelerating1to1 Inc., a spin-off of the Peppers and Rogers Group, consultants who specialize in personalization marketing.
CRM focuses on automating the front office--marketing, sales and customer support. "But true one-to-one relationships are based on changes that occur throughout an enterprise, not just in the front office," Kasanoff says. And Forrester Research says that by 2003, as many as half of all companies may shift from organizing around products to organizing around customers.
Whatever the definition, personalization strikes a chord. The technologies used--including data mining, collaborative filtering, artificial intelligence, and neural networks--can help make the online buying experience easier and more intuitive for customers and let E-businesses find ways to attract and retain valuable buyers.
Before implementing net.Analysis, Wilcox says, "we were unable to track orders, and customers were spending an average of 30 minutes or more searching through a navigational nightmare to find products, moving in and out of multiple categories."
BuyItNow.com is now able to analyze the behavior of online visitors to deliver a more personalized shopping experience, changing ads as customers shop, and effectively targeting prospects who most resemble their best customers.
The results of such research can be eye-opening. Cozone.com Inc., for example, discovered that consumers use different shopping styles at different times. The wholly owned Internet subsidiary of CompUSA Inc. sells PCs and other digital products on its site, which was launched Oct. 18. The site features content, ease of use, and automated order-status information and is fast. But it was also built to fulfill varying moods and demands.
"One day a customer may need advice and have the time to cull through it, while on another day that same customer may be in a hurry and need immediate satisfaction from his online store," says Iang Jeon, VP for business devel-opment strategy at Cozone.com.
Cozone.com is using software from Insite Marketing Technologies, which was acquired last fall by Silknet Software Inc., to create a virtual sales associate online. "It's actually one of three paths a customer can take when they enter our site in search of a notebook computer," Jeon says.
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