Web analytics are a tremendously helpful
tool to better understand user habits and click patterns. By examining these
metrics closely and converting numbers into reports , marketers can identify
how consumers behave on the web and determine action items to improve that experience
and find ways to boost conversions. Although most, if not all, businesses can
find value in gathering and reviewing web analytics, online retailer may get
the most out of this effort than others. Forrester Research senior analyst Joe Stanhope argues e-commerce sites are still where the majority of transactions occur and that mobile and social commerce are still fairly nascent. Consumers still go to the Web to complete the majority of their transactions. Since so much money is passing through the web, it only makes
sense to optimize these channels. Incorporating analytics into the marketing
mix can help marketers provide better services and more targeted experiences to
customers.
E-Commerce
and Netflix Overview
According to a study from DMB Media, only 50% of e-commerce businesses track main conversion points. This prevents marketers from measuring website performance against business objectives (such as purchases or leads) as well as end-to-end campaign effectiveness…[Additionally],30% of websites have incorrect e-commerce tracking implementation. It is important for all e-commerce sites to have the right tools
in place and constantly monitor web traffic/habits to have a clearer
understanding of both their site’s successful features and pitfalls.
From Internet Retailer, Netflix is the
ninth most profitable online retail company today. With $3.2 billion in totalsales, the movie-rental giant continues to grow in both sales and popularity. Netflix has
a strategic approach to its website. They offer a free 30-day trial to try and
increase usage in hopes that users will fall in love with the product and stay
on after the month is up. In that approach, the main aspect of the company’s
homepage – looking more like a splash landing page than typical
information-based – centers around the free trial sign-up. Drilling through,
users only need to touch on a couple more pages before they are on their way to
a plethora of great streaming videos. By knowing this click path, Netflix
marketers can see where converted users originate and what specific pages might
be driving people away from the site.
Netflix’s
Recommendations
According to
KISSMetrics, using analytics, Netflix was able to determine that the average
lifetime value for one of their customers was $291.25. By realizing this
figure, they can understand how much money can be allocated to
marketing/promotional efforts while still seeing a positive ROI. Of course if a percentage of customers didn’t stay on, they couldn’t keep on offering affiliates $16 per signup. Or even spend $2 for every click from their Google AdWords campaign, but because they know their lifetime value metrics well –they can keep on dumping money into marketing. Every brand
should do this. Placing a specific value on a conversion transcends online
marketing from a guessing game to an actual measurable tactic. Netflix’s close
monitoring of these metrics help to have a better understanding of their
customers and how much can be spent to try and obtain that conversion.
Unlike some others in
the top 10 e-commerce list, Netflix thrives on the use of its recommendations
system. The way Netflix works is that users set aside movies or television
shows that they wish to view. However, most consumers do not always know what
they are in the mood for at that particular moment. So, Netflix uses the
consumer’s past viewing history and saved favorites to generate suggestions
based on that person’s taste. Other sites like Amazon and Pandora rely on
similar algorithms for their businesses. Streaming has not only changed the way our members interact with the service, but also the type of data available to use in [Netflix] algorithms…The company said it now realizes the prize’s objective—more accurate prediction of a customer’s movie’s rating—is just one of the many components of an effective recommendation system. Within this ecosystem comes analytics and monitoring. Understanding
user’s most popular searches, views, favorites, highest and lowest rated,
feedback, etc, Netflix can better target their users in marketing efforts and
make those tailored experiences much more enjoyable and worthwhile. If you can
predict what a user will purchase, or in this case stream, but he/she even
knows, you have a successful product on your hands.
Netflix
Platforms
Rob Smith at Smashing Magazine makes a
strong point about the purpose of e-commerce. The key to a good e-commerce strategy is customer insight and engagement. In other words, find out what people want, and give it to them (in an engaging way). Always be listening,asking questions and monitoring every facet of your website, business, industry and competition, and use whatever technology is appropriate to help you achieve your goals. As Netflix
takes in data from their website, mobile platforms, Xbox and PS3-based integrated
apps, etc they can learn a great deal about popular practices around their
products. Moreover, Netflix invests large amounts of money into their digital
ads. With such a tactic, they must heavily monitor the reward, or, the traffic
coming to the site through these means. This is a vital element to their web
analytic reports. There is no sense spending ad dollars if conversions are not
making the investment worthwhile. Likewise, Netflix has a strong social media
presence. If they are not doing so already, they should consider a tool to
monitor these conversations and track any lead generation from these sources.
Sprout Social or Ravel are a few good examples. It is critical that a brand as
visible on the web (and whose entire business model revolves around the web) is
able to track these social conversations and identify if those communications
are turning into results.
Conclusion
Tracking consumer behavior on the web
has become a necessity to help develop marketing strategy. E-commerce sites, in
particular, should pay close attention to these metrics. Not only can they
better identify where consumers are focusing on and/or where they are failing
to convert, but also realize the most popular products and how to best improve
that web experience. From Direct Marketing, multichannel retailers are measuring Web analytics to improve conversion rates among e-commerce shoppers,in addition to pursuing emerging opportunities in mobile and social commerce. The bottom line that remains most important to all
marketers is to increase conversions (which eventually leads to increased
sales). In order to do so, that online retail experience should be tailored to
customers. These companies, Netflix in particular, are able to take web
analytics and use the data to offer a better and more useful website.