By: Avery J. Cohen -- Principal, Metrist Partners

Nearly a decade after the dawn of the World Wide Web as we know it, companies are methodically using the interactive nature of the Web to enhance their ability to create new customers, and to provide ever-higher levels of customer service. A diverse mix of software vendors, consultants, analysts and e-business managers and marketers attended the first E-Metrics Summit, June 26-27, 2002, in Santa Barbara, Calif. They met to identify and discuss the state of the art in Internet usage, measuring customer interactions, and creating improvements based on those measurements.

The format -- a mix of speakers and working group sessions, with breaks for informal networking -- gave participants ample opportunities to share experiences. Their stories focused on successes, such as extending their web site?s reach through e-mail campaigns and on-line promotions; enhancing sales through better targeting web site content, lowering technical and design support costs, and measuring and improving customer satisfaction.

The biggest and most common obstacle participants identified was defining and communicating their business objectives so that the company could clearly commit to a return on investment (ROI) and obtain funding to make improvements. Presenters reiterated the importance of a clearly stated objective and well defined cost parameters for managing the metrics analysis project.

One particular topic was subject to a wide range of approach and opinion: how to measure customer satisfaction. The conference buzz phrases became dialog marketing and dialog sales, whichrefer to using online media to interact with customers by providing information and service, thereby building loyalty.

Rivals and Colleagues Alike Attend; A Community Emerges

More than 50 attendees from around the world attended the E-Metrics Summit. Chicago firms attending included Motorola, SPSS CustomerCentric (formerly NetGenesis), and Metrist Partners. International participants came from Finland (Nokia), Canada, and Australia.

An interesting coincidence was the appearance of managers from similar businesses (and business units). In addition to the expected software and services vendors, a large number of business "pairs" joined the Summit, such as HP/Compaq and Dell; DuPont and Monsanto; Motorola and Nokia; and Fannie Mae and Freddie Mac. Each pair had their unique take on what was important to their customers and business strategy. The attendance of potential rivals didn?t appear to inhibit conversation; rather, the interaction inspired attendees to see what was possible for their organizations.

Speaker Highlights

The event was hosted by Jim Sterne, a consultant and author who celebrated the release of his latest book Web Metrics: Proven Methods for Web Site Success at the conference. He spoke about the brief history of e-metrics and the kinds of things that people can measure and why. He also briefly addressed some of the newer technologies used to capture session data that go beyond web logs.

Sterne spoke about what session tracking can reveal about a company's market environment and position. He discussed the need to address web site costs and effectiveness in terms of Recency, Frequency, and Abandonment. His survey of the uses of web metrics included identifying how companies crave classic customer classification, available through examining web sessions in conjunction with user interaction. He identified measurements that contribute to customer classification:

• time (duration) in minutes,
• page views,
• depth or level of detail,
• purchases per visit,
• items per purchase, and
• dollar value per purchase.

He looked toward the future of e-metrics, describing Genetic Software that might determine behavior similarities between various sessions and identify the components and messages that drive higher measurements.

Sterne also spoke about the importance of e-metrics in supporting the sales cycle. He described how e-metrics relate to the sales funnel approach to client interaction, and how e-metrics consultants and their client companies can create an on-line sales funnel model to guide site improvement. This idea sparked a discussion about measuring interaction with the customer. Participants identified e-metrics as the heart to recognizing value from CRM, creating a driver for better sales, and gathering feedback on products and processes in order to generate corporate improvement and measure and support customer loyalty.

Hurol Inan, author of the book, Measuring the Success of Your Website, presented a framework for applying measurement, analysis, and feedback to create continuous improvement on a web site. In his presentation Email Influence and Multiple Metrics Integration Inan described a framework for measuring and improving email campaigns. He urged company's to establish measurement points, such as campaign-specific landing pages, and recommended companies try small batches of emails at the beginning of a campaign so that the email and web site content can be fine-tuned based on actual response and usage.

Seth Romanow is Director of Research and Metrics, World Wide E-Business for Hewlett Packard. Formerly a director with Compaq, Romanow presented on "Understanding and Measuring the Customer Experience Online." He demonstrated how HP has clear goals for their e-business, and a clear focus on areas of research. The techniquesHPA uses correspond to the phases of a customer's relationship with the company: Marketing, Sales, and Support.
Each phase has a goal: increase traffic to and through the site, increase conversion rates, and decrease service costs.

Romanow described HP's methodology for site development and continual improvement. He presented three case studies: 1) Improving site design for the handheld computers area of Compaq.com, 2) Optimizing lead generation to increase click-through for online advertising, and 3) Optimizing merchandising on National Accounts public stores measuring what clicked and what sold. By applying measurement to these campaigns, Compaq doubled conversion rates.

Philip Gibson of National Semiconductor described how he and his company designed and implemented a web site that truly supports their sales process. Their site won numerous awards, including kudos for its online software features and customer service innovations. They measured the costs of communications and implemented several initiatives to reduce those costs and improve the pace of the buying process, trimming weeks, and sometimes months, off that cycle.

In addition to showing the metrics that guided their online design-and-prototype development process, Gibson discussed how National Semiconductor is using a state-of-the-art email dialog management system to support their customer community.

Robert Mirani, Director of CRM Strategies at The Yankee Group, spoke about "The State of the Analytics and Marketing Automation Market." He observed that, "Analytics, and how it gets delivered, is being rethought." While the field of analytics is lower relative to the total CRM market than he and his colleagues had expected, marketing departments are under duress to be more accountable. This accountability is driving growth in interest and spending for analytics.

Mirani identified four characteristics of "Relatively Successful CRM Implementations" as:

1) Provides better information about the customer -AND the ability to act on it in a timely manner.

2) Strong internal IT management, well aligned with customer-facing businesses. (He said only about 10% of projects currently have this characteristic!)

3) Another IT-related characteristic: Not overly dependent on "Anchor Application," nor overly focused oninternal development.

4) Several cross-functional or "overdog" CRM champions with a good understanding of organizationaldynamics.

Mirani also shared characteristics of unsuccessful CRM implementations, including: over ambitious, technologyfocus roadmaps and difficulty in managing volumes of information about customers. The key question companies
need to ask is: Is it worth the money to evaluate customer behavior?" The answer: the company has to be ready and willing to accept and act on that information. Further, the tools and experience are rapidly coming available to
provide actionable information, but the market is searching for the right model for making it happen.

Dereth Lambka, President of Insights for Action, a marketing support consultancy, reminded the analysts and metrics-focused attendees that all metrics have a human face. Lambka's company performs one-on-one interviews with customers (including potential/target customers and former customers) to give companies a guide for what to listen to and what to measure. Her highly engaging, interactive presentation, "Listening to Your Customers" provided some guidelines for companies to engage and interact with their customers in the design and improvement of web sites along with company products and processes.

Jack Powers of the International Informatics Institute provided an entertaining and informative keynote address looking at current trends in technology and the Internet, and dazzling attendees with his predictions for the next three to five years of Internet-enabled technological innovation.

Success Stories and Lessons Learned
Group discussion sessions took up the two afternoons. There, attendees shared their success stories, and talked about challenges they face in the second half of this year. Topics ranged from business issues (such as "how do you determine your most valuable customers") to technology-focused topics (such as data collection and unique user identification issues).

A common theme of the group discussions echoed the observations of industry analyst Mirani. The most successful projects- and the challenge expressed the most- was getting people to understand the value of sharing data between departments and systems, and understanding the organization well enough to ensure that people get credit for sharing their data and for acting on the insights gained.

Meeting those challenges required 1) a clear definition of current business goals, 2) listening to customers through a combination of measurement and interviews, and 3) using continued measurement to acknowledge the successful
achievement of the identified business goals.

What's Next?
The E-Metrics Summit highlighted the benefits and challenges of using metrics to improve ROI from web sites and email marketing. Jim Stern has committed to organize another E-Metrics conference next year. Meanwhile, the attendees will be communicating via the internet to continue sharing their challenges and success stories.

Some of the issues on the horizon for this emerging field include setting standards, such as terminology for measurement and establishing clear benchmark expectations for web-based activities, perhaps along business profile or industry lines. Leaders in the field will demonstrate case studies on newer analytical techniques, like "sales funnel" analysis.

There is a growing focus on the discipline of E-Metrics, as marketing and information technology continue to converge. The E-Metrics Summit brought together leaders in this emerging area, and they have begun to build a community that will support the efforts of all to create the future of web sites and internet-based dialog betweencompanies and customers and other partners.

About the author
Avery J. Cohen is a Principal at Metrist Partners. Metrist Partners offers a robust suite of measurement and analysis services to help organizations - no matter their size or industry- maximize the power of their web sites. From strategic evaluations of the site's current navigation and architecture to detailed profiles showing how visitors use it, Metrist Partners provides leaders and managers with solid statistical tools and years of analytical expertise to improve web effectiveness (from e-learning outcomes to direct sales). Founded in 2000 by consultants with more than 40 years of marketing, data warehousing, project management, and statistical analysis experience, Metrist Partners is located in Chicago, IL. For more information, visit www.metrist.com.