Analytics use in the Internet Retailer 500: Interesting Findings

by Jim Cain

Like any fast growth company, we use cold calling at Napkyn as a way to start off long term relationships (and sometimes get hung up on). We take pains to follow the number one rule of cold calling: Never waste anyone’s time. The best way to follow this golden rule is to do some homework on a company before you call them.

Which leads to today’s blog post. After this recent article profiling the impact we have had at Scentiments (#384 on the IR 500) we have been signing up new customers across the IR 500 who want to better understand their data and grow their sales.

So we are reaching out to companies with under $75 million revenue (#s 315 to 500) on the Internet Retailer 500. In the interest of making every sales call useful for us and the companies we’ll be calling I have been profiling analytics tools usage.

I was so intrigued with the results I did some rough analysis to share with readers of this blog. Feel free to ping me with agreement or hate-mail on my findings.

Interesting Finding 1: Freedom Reigns in eCommerce

On one hand this report didn’t shock me. I know that free tools represent the vast majority of analytics deployments, and that the free tool vendors are quickly adding high value enterprise features.

On the other hand, if I was running a multi-million dollar a year business, I might care enough about my mission critical sales data to make some kind of financial commitment to the best possible tool for my needs.

So what can we take from this?

The free tools meet 100% of the business requirements of an eCommerce decisionmaker.

OR

Why would an eCommerce firm pay for a full-featured tool if they aren’t going to use it?

I think that the real answer is somewhere in the middle. Your average eCommerce executive isn’t taking advantage of their analytics data because they don’t have an analyst. Its amazing the number of $25M+ companies that we talk to every week that can’t seem to get their hands on or in some cases keep an above average analyst at a reasonable cost. Well I guess its not all that surprising. After all web analytics as a profession is relatively new and most of the top people are either scooped up by the big boys (i.e. Amazon) or hang out a shingle and find themselves on the “charge a high fee” side of the supply-demand curve.

Interesting Finding 2: Analytics double dipping is prevalent.

Exactly one quarter of the IR500 firms examined are using multiple web analytics tools. The majority of these were Google/Omniture deployments, with Google/Yahoo deployments in second place. There were some interesting pairings as well, including one Coremetrics/Omniture deployment (who will win there?). Please note that I only counted pure analytics tools. Products like Test and Target don’t count.

To me, there is only one reason that a company should utilize two analytics solutions: they are evaluating one to replace the other. Having two instances of an business critical solution makes no sense, it’s like having two CRM systems at once, or two inventory management systems.

That said there is a different reason that we are seeing so many eCommerce websites using a paid solution and a free one: the paid one has not been deployed properly. There are two reasons that a tool as important to eCommerce as web analytics hasn’t been deployed properly.

There are no business best practices aligned to the deployment: If you don’t set up your WA tool based on the questions management wants answered, it won’t work properly. That’s when you find Google analytics deployed to provide reports coverage over the areas that the paid solution wasn’t set up for (i.e. “Yes, we paid a boatload of money for Ominiture. But we also needed GA to track paid and natural search.”). As an aside, this is a terrible way to run an information driven decision-making initiative…but I digress.

OR

The executive who owns the eCommerce website doesn’t care about the data: Most eCommerce websites still have decentralized reports, with one specialized report coming from the SEO guy, a different report coming from the email tool … the executive only really uses the WA solution for traffic and conversion rate. This means that none of the reports will line up, proper segmentation is impossible, and optimization initiatives will create, at best, nebulous reports.

Either way, both of these findings (Lack of Analyst + Lack of Tool Deployment/Lack of Respect for Data) point to a somewhat scary conclusion: businesses that generate tens of millions of dollars a year in online sales don’t use their web analytics data to run their decision-making process.

Cheers,

Jim

Jim Cain

Founder and CEO, Napkyn Analytics

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