Simple Tools Help Owners Sift Data for Eager Customers

originally appeared in The New York Times:

Velvet Palate sells artisanal wines that are made in small quantities around the world and typically not stocked in stores. Selling online, according to the co-founder, has allowed the company to zero in on a niche of geographically diverse customers.

Before helping to start Velvet Palate in New York in January, the owner worked for an online media company that analyzed how effectively subscription offers and other marketing tools attracted new customers.

We could see which Web sites people were coming from when they arrived on our Web pages, what they clicked, where they abandoned the process, she said. And that allowed us to constantly tweak and improve what we were offering and how we were communicating.

In her new venture, Velvet Palate's co-founder said her goal had been to use online data collection and Web analytics to cater to customers’ tastes.

There is nothing new, of course, about paying attention to customer needs and desires, but there is now far more data available — far less expensively — through Web analytics and customer-loyalty programs. Using basic e-commerce software along with free tools like Google Analytics and Bing Webmaster Tools, small businesses can perform sophisticated data collection and analysis that can help them compete with companies that have far greater resources.

Based on the experiences of business owners, this guide offers suggestions on how both Web-based businesses and traditional retailers can use data.


CAPTURE PREFERENCES
Velvet Palate offers highly rated wines along with information about how the wines are made and what foods they might best be paired with. Ms. Kooren asks customers who register with the site to fill out a questionnaire that helps her direct them to the right types of wines.

We can only offer a limited number of wines, she said. So we offer choices that are geared toward their preferences.

Velvet Palate’s e-commerce software, Magento Enterprise, tracks sales, but it also identifies tiers of customers, including those who have bought repeatedly, those who have bought once but not returned, and those who have visited the Web site but not made any purchases. This allows the co-founder to target each group in different ways.

To entice one-time buyers to come back, for example, she might offer free shipping for a limited time.  I try different ideas and see what kind of response I get, she said.

This kind of analysis can increase sales, according to a professor of marketing at the University of Pennsylvania’s Wharton School and author of “Customer Centricity,” because it allows companies to adjust their offerings and even to design products to meet the needs of their customers. Businesses can more accurately predict which customers will visit again, what products will interest them and which special offers will appeal to them.

RESPOND QUICKLY
The founder of SimplySoles in Washington, sells women’s shoes both online and through a catalog. Like many retailers, she has found that some customers routinely go through the steps of browsing her site and putting an item in a virtual shopping cart — but then leave before completing the purchase. They may have gotten distracted, or they weren’t sure about buying the shoes, she said.

Those shoppers, she said, are more likely to make a purchase than a visitor who spends time on the site without selecting a product. To try to encourage them to complete a purchase, she has set up a proprietary system — created for her by a Web development company, the Richard Group — that automatically asks the customers by e-mail if they would like to complete the purchases they started. About 15 percent of them do so.

The SimplySoles founder, who has an agreement to sell her business this week, also uses a Google Analytics dashboard that reports Web traffic information, like where her visitors come from. Even before the social networking site Pinterest became popular, she saw that many of her customers were coming from the pinboard site. That data told us we needed to have a presence on Pinterest and start to monitor it, she said.

There are other tools that help small businesses generate and manage customer data.

Using Bing Webmaster search engine optimization tools, the SimplySoles founder gets advice on how to improve her ranking in search results, such as adding a descriptive image tag to an untagged photo. She can also watch what is happening live on her site by using an app called Chartbeat. When she noticed visitors viewing a Web page that described a wine that had recently sold out, she bought more.

The founder of Blogilates, which includes the oGorgeous shopping site and the Blogilates blog, offers exercise videos, healthy menus and advice. She also designs and sells a line of workout clothes and accessories. When the founder e-mails a newsletter to her 70,000 subscribers, she tracks how many click on links to view new offerings and products on sale.

Because fashion moves quickly, she said, getting immediate feedback helps keep her site fresh. The dashboard of her e-commerce software, Highwire, shows how many purchases have been made of, say, a recently offered neon hoodie and how many she has left in inventory.

Colors are very important, she said, and if we see one is selling very quickly, we can adapt right away and put in an additional order with our supplier.

LISTEN TO THE CHATTER
Customer opinions that used to require formal market research to discern are now readily available through feedback forms and discussion forums. When a frequent customer posted a note to other Velvet Palate members that Spanish Rose was a great summer wine for entertaining, SimplySoles' founder used that idea in a marketing message.

Services like Sentiment Metrics or Radian6 can help a company track how it is being discussed online. SimplySoles' founder uses Sentiment Metrics and is alerted when Velvet Palate or any of her specified search terms are mentioned. She can view totals or drill down to individual mentions to see how influential a poster might be, as judged, for example, by how many Twitter followers the person has.

BUILD RELATIONSHIPS
Even brick-and-mortar stores can use new data collection technology. The retailer who opened the Ben Franklin craft store 37 years ago in Monroe, Wash., added a customer-loyalty program to his point-of-sale software last year after an employee suggested that it was in keeping with the spirit of a country store that wanted to get to know its customers.

Store employees have signed up more than 20,000 customers since the BLoyal tracking and rewards system was installed. At first, the store owner used it to see which products and hobbies were popular, so he could adjust his orders. Then he started to reward frequent customers by e-mailing them sneak peeks at new merchandise, sales events and free classes. His tracking and rewards system identifies the store’s most valuable shoppers.

All types of businesses can benefit from utilizing a Google Analytics Consultant who can provide actionable information to help improve their online presence.

We used to have an idea who our best customers were because we’d see them often in the store, he said. But using BLoyal, we can identify people we may not have noticed and can make sure someone recognizes them when they visit to say thank you and point out new items they might be interested in.

In the past, combing through sales records and categorizing customers would have taken too much time, according to the owner, but now he cannot imagine doing business without that information.

Google Worries About New Data-Handling Privacy Laws

First appeared in USA Today

They may be battling each other tooth-and-nail to win over online advertisers. But Google and Facebook are on the same side when it comes to opposing new data-handling privacy laws fast-gelling in Europe and the U.S.

On Wednesday, the European Union formally proposed strict rules that could restrict much of the systematic tracking and profiling Google and Facebook routinely do of Internet users, as part of delivering targeted ads to them.

If Europe's new rules are implemented as expected in 2013, the tech rivals could face hefty fines, up to 2% of annual revenue, for any violations. In Google's case that translates into a maximum penalty of $800 million.

On Tuesday, Facebook Chief Operating Officer Sheryl Sandberg delivered a statistics-filled speech at a tech conference in Munich outlining how Europe's proposed rules are very likely to stymie the global economy.

Sandberg called for a "regulatory environment that promotes innovation and economic growth."

Google spokesman Chris Gaither echoed Sandberg's argument. He says the search giant "supports simplifying privacy rules in Europe to both protect consumers online and stimulate economic growth."

Meanwhile, refinements announced this week by Google and Facebook, about how each tracks and profiles Internet users, added heat to the domestic debate over the need for new data privacy rules here in the U.S.

Google signaled that it will begin cross-referencing user data compiled from its most popular services, including search, Google Apps, Gmail and YouTube. The stickler: Users won't be permitted to "opt out" of having their Google activities correlated.

"Google is taking that option away," says P.J. McNealy, analyst at Digital World Research. Younger Internet users may not care much, he says. But Google patrons who are "more cautious or conservative with their personal data" may "cringe," McNealy says.

Meanwhile, the non-profit group SafeGov, which monitors security issues for federal, state and local government agencies, is alarmed that Google's new policy could put workers who use Google Applications for Government, a paid service, at heightened risk.

"Google should not be data-mining information in e-mails, text messages, searches and documents that workers are putting into Google services," says Jeff Gould, SafeGov security analyst. "It's a matter of not making government workers unnecessarily exposed to hackers and to inadvertent disclosures of information."

Google Vice President Amit Singh says Google's new privacy policy for consumer data is superceded by data privacy provisions in contracts with government agencies and other organization who use the paid version of Google Apps.

"As always, Google will maintain our enterprise customers' data in compliance with the confidentiality and security obligations provided to their domain," says Singh.

But Gould checked the city of Los Angeles' contract with Google and found that the data-privacy provision referred back to Google's policy for consumers. "They didn't think through the consequences for government users," Gould says.

Meanwhile, Google is busy fielding inquiries from a handful of politicians who've proposed legislation that would restrict online tracking and establish rules for data privacy.

"Amazingly, we still don't have a law that sets the rules of the road for fair information practices that everyone collecting, using, and distributing people's personal information must adhere to," says John Kerry, D- Mass.

Kerry and Sen John McCain, R-Ariz., continue to work for passage of the Commercial Privacy Bill of Rights. "Until Congress acts, Google and the rest of its competitors will continue to set that standard themselves. "

Rep. Ed Markey, D-Mass., notes that "Googling is like breathing for millions of kids and teens - they can't live without it." Markey, who has also been critical of Facebook's tracking practices, is calling on the Federal Trade Commison to review Google's new no-opt-out policy.

"Consumers - not corporations - should have control over their own personal information, especially for children and teens," says Markey.

Facebook is drawing more scrutiny too. It is making mandatory a new, glitzier user interface, called Timeline, that chronologically displays a member's preferences, contacts and online activities.

Facebook says Timeline does not present any new information nor alter any privacy settings.

Even so, SafeGov analyst Gould, for one, is concerned. "If you take the new Google policy and combine it with Facebook Timeline, the danger of hacking attacks for government users is multiplied by ten," he says.

More intensive tracking and profiling by the tech rivals puts richer data in cyberscammers' hands.

Gould worries about the all-too-common scenario where an intruder e-mails a government worker pretending to be an acquaintance. "They can put information in an e-mail which they can get from your Facebook Timeline, and trick you into downloading a piece of spyware," he says.

Heightened cross-referencing of an individual worker's Google Search Company, Gmail and YouTube activities poses similar risks, he says.

Google's results show slowing growth as online advertisers cut back

MercuryNews.com

As the toll of the financial collapse mounts, add one more victim: Google's go-go growth.

On Thursday, the search giant announced second-quarter revenue was essentially flat compared with the first quarter.

Profit rose, but that's because the Mountain View company slashed spending on computer technology and the giant data centers that power its business. And the company continued shedding jobs, after years of adding hundreds or even thousands of new Googlers every quarter.

Google's report adds to a mixed picture about the health of the technology industry. Earlier this week, Dell forecast that weak demand from big corporate customers would keep pressuring its profit, while Intel delivered a bullish report that led to a market rally Wednesday. And late Thursday, IBM delivered an especially upbeat assessment about the rest of the year.

CEO Eric Schmidt said Google's advertising business had stabilized. "We are not at the moment looking at the downward spiral we thought we might see six months ago," Schmidt told analysts in a conference call, noting that "a quarter ago, we had no idea where the bottom was."

But Schmidt could not identify signs of a recovery. The best news was that enough of Google's big advertisers have come back that the company was able to ring up $5.52 billion in revenue during the second quarter. That was $10 million better than the first quarter, when the company's revenue declined for the first time ever from the quarter before that and it looked like the economy was falling off a cliff. Advertisers, however, are spending less than they used to.

"For the first time, we saw a really big drop in revenue per search," said Jeffrey Lindsay of Bernstein Research. "We thought it wouldn't have deteriorated much for the first quarter, but obviously it has gotten worse." Revenue per search is a measure analysts watch. It goes down when advertisers pay less for ads or buy fewer ads.

The silver lining? The amount advertisers are willing to pay is "no longer declining now as a general rule across the board," said Jonathan Rosenberg, senior vice president for product management.

Google did manage to increase profit 18 percent as net income rose to $1.48 billion, or $4.66 a share, compared with $1.25 billion, or $3.92 a share, a year ago.

But that increase only came because of the cuts in hiring and technology spending, as well as an unusually low tax rate.

The number of employees at Google dropped by 378 to 19,786, marking a definitive end to a madcap hiring spree that characterized the company in the early years following its IPO.

Spending on capital projects plunged to $139 million. Two years ago, it was $575 million.

In an interview with the Mercury News, Chief Financial Officer Patrick Pichette praised employees for being frugal but said it would be wrong to assume that austerity had come to the Googleplex.

"We still have free food," he said. "We still have massages. There is still a doctor on site."

"It's mixed results," said Ron Gruia, an analyst with Frost & Sullivan who praised Google for its discipline. "It's the lowest growth rate since the company went public five years ago."

And if Google, one of the most profitable companies on the planet, is struggling, other smaller Internet companies are fighting for survival.

Schmidt and other executives described how Google has been pulling out the stops to turn YouTube into a profitable business and to begin selling meaningful amounts of display advertising — graphical ads that may soon increasingly replace the smaller, unobtrusive text ads that fueled Google's early growth.

"I think that is the next area where online advertising is going to shift and we are going to see tremendous growth," said Nikesh Arora, president of global sales. Arora said he was also pleased with the "trajectory of YouTube," which is selling more ads. "In the not long too distant future we see a profitable business," he said.

Google stock rose 1 percent to close at $442.60 in regular trading Thursday. But it fell as low as $427.67 in after-hours trading.