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.

New Mining Techniques Probe Deeper Into Consumer Data

Wall Street Journal

Behind the scenes of a recent online shopping trip, Blue Kai , a startup company that collects Internet user data, was tracking when a Web surfer browsed for electronics on eBay, searched for cruises and checked out snowboards. It also tracked when a Web surfer researched Chevrolet sport utility vehicles on auto site Autobytel and priced flights to Durham, N.C., at travel site Expedia.

After collecting that kind of information, Blue Kai groups Web visits into categories of consumers. It then immediately auctions off the data from some of the sites to marketers and Internet companies, which in turn use it for consumer research and ad personalization.

The Web companies make money for selling the data about visitors to their sites, and Blue Kai takes a cut. The advertiser gets its coveted targeting.

While the idea of target marketing has been around a long time, marketers until recently have had a hard time buying on enough Web sites to make the targeting truly effective.

Blue Kai, like data-mining firm eXelate Media and others, are striking deals with thousands of Web sites to collect and sell data on their visitors that will be used for consumer research or ad targeting. Marketers, in turn, are using the information they buy to make better choices when buying ad space. It is a process that's proving especially useful when buying through ad exchanges, which are new systems that allow advertisers to bid directly on the ad space available on a large group of Web sites.

Buying such data would let a hotel chain, for instance, show ads featuring discounts in North Carolina to a person who recently shopped for a flight to Durham—and not just on the travel site, but on any of a number of sites across the Web.

Some Web sites are hesitant to sell data about the consumers visiting them to outside firms. Historically, the only way a marketer could buy ads on a Web site was through striking a deal with that site directly. Now, buying ads based on the data about visitors, rather than the content published on the site, could drastically change how media companies do business.

The data is becoming the most important component for marketers and Web sites. It tells them who their audience is

Refining digital ad buying practices could bring some steam back to the market for online display ads—those with text and pictures that border a Web page—a market estimated at $20.8 billion in 2009, down from $23 billion in 2008, analysts say. U.S. online ad spending on targeted ads will reach $1.1 billion this year, up from $775 million in 2008, according to research firm eMarketer.

"These companies are adding tremendous value to the whole advertising ecosystem," says Ross Sandler, an Internet analyst with RBC Capital Markets.

Tapping such data gives marketers a way to buy ads according to specific groups of consumers who are likeliest to be interested in a given product, says Curt Hecht. Mr. Hecht is president of Vivaki Nerve Center, a unit of Publicis Groupe that buys hundreds of millions of dollars of online ad space a year for companies such as Procter & Gamble and Wal-Mart Stores.

For instance, a credit card company can buy ads targeted to small business owners it knows are in the market for a new card, instead of buying ads on business-related Web sites.

Neither Blue Kai nor eXelate discloses specific Web sites that they buy and sell data from, citing agreements with those Web sites. In their privacy policies, some Web sites reveal that they sell data to third parties, but often do not list the particular company. EBay says in its privacy policy that it works with Blue Kai but doesn't allow the company to collect any personal information about consumers.

Travel sites Expedia and Kayak say they both sell consumer data in Blue Kai's auction, noting that the information is anonymous and not tied to the specific Web site.

The data brokers have different formulas for collecting and selling information on millions of Internet users across thousands of Web sites, from top retail and travel sites to social networks. Blue Kai, a Seattle company launched in September 2008, regularly records information on more than 160 million unique U.S. monthly visitors shopping on retail, travel and auto sites across the Web.

"The data is becoming the most important component for marketers and Web sites. It tells them who their audience is," says Omar Tawakol, chief executive at Blue Kai.

Some lawmakers, concerned about Internet privacy, are preparing legislation to make more transparent Web sites' tactics for collecting information on their users. In an effort to fend off legislation, data brokers say, they abide by industry standards and do not collect any personally identifiable information and sensitive data, such as health information. They also tout efforts to make their business practices more transparent to consumers.

Both Blue Kai and eXelate, for instance, feature sections on their Web sites to show consumers what information the company tracks and giving consumers the option not to be tracked.

Not all Web sites where Blue Kai tracks information sell data to outsiders. Some use the information to personalize their sites for individual users or for their own advertising purposes.

Some publishers fear that their competitors could buy data about the consumers visiting their sites and use it to steal customers.

IAC/InterActive, for instance, is testing the sale of consumer data tied to its e-commerce site Pronto through eXelate. "If we sell that data, it allows another sales team to sell our audience and compete against us," says Greg Stevens, president of IAC Advertising. "But if it is worth millions and millions and millions of dollars, then hey, maybe the paradigm has turned upside down."

Meet Bob the Blogger

Two or three times a month, Elise Martin checks in on a colorful character online who is always meeting up with real celebrities in faraway places and offers tips on hot industry trends.
His name is Bob Archer, and he blogs at www.meetbobarcher. com. But he's not real.
He's the creation of Archer Group, a small Web-marketing agency in Wilmington, Del. The blog helps Archer stay in touch with clients and get them tolhink about ways to use the Weband the firm's services.
Each post puts the mythical Bob in an interesting place, with an interesting person, talking about an online-marketing concept. A recent entry had him schmoozing with Danny DeVito at the actor's restaurant DeVito South Beach in Miami.
Here are edited excerpts from an interview with Archer cofounder Lee Mikles:

WSJ.COM: How did Bob's blog get started?
Mr. Mikles: Bob's story goes back to when we founded the coJv.pany. We wanted a name that sounded like it had been around for a while but wasn't pretentious, so we called it the Archer Group. It was kind of an inside joke that there was this person Bob Archer.
When [Archer decided to do a blog, it wanted] to stand out and offer something [people] were actually going to read. So we decided to bring Bob Archer to life.

WSJ.COM: Why use celebrities?
Mr. Mikles: They're people we can ,connect with, and it also adds to the perceived stature of Bob Archer.

WSJ.COM: What are the biggest challenges?
Mr. Mikles: Coming up with something interesting. I try to dedicate an hour or two a week. Everybody in the office feeds me ideas.

WSJ.COM: What's readership like?
Mr. Mikles: We're getting between 40 and 60 visitors a day. We have an active client list of about 50 firms.

Read more of the interview with Archer's Mr. Mikles online, at WSJ.com/SmallBusinessLink.