Jim Sterne

Web Metrics: ProvenMethods for Measuring

Web Site Success

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Jim Sterne

Web Metrics: ProvenMethods for Measuring

Web Site Success

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Publisher: Robert IpsenDevelopmental Editor: Scott AmermanAssociate Managing Editor: Penny LinskeyNew Media Editor: Brian SnappText Design & Composition: John Wiley Composition Services

Designations used by companies to distinguish their products are often claimed astrademarks. In all instances where John Wiley & Sons, Inc., is aware of a claim, theproduct names appear in Initial Capital or ALL CAPITAL LETTERS. Readers, however,should contact the appropriate companies for more complete information regard-ing trademarks and registration.

This book is printed on acid-free paper.

Copyright © 2002 by Jim Sterne. All rights reserved.

Published by John Wiley & Sons, Inc.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system or transmittedin any form or by any means, electronic, mechanical, photocopying, recording, scanning orotherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copy-right Act, without either the prior written permission of the Publisher, or authorizationthrough payment of the appropriate per-copy fee to the Copyright Clearance Center, 222Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 750-4744. Requests to thePublisher for permission should be addressed to the Permissions Department, John Wiley& Sons, Inc., 605 Third Avenue, New York, NY 10158-0012, (212) 850-6011, fax (212) 850-6008, E-Mail: PERMREQ @ WILEY.COM.

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Library of Congress Cataloging-in-Publication Data:

ISBN: 0-471-22072-8

Printed in the United States of America.

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This book is dedicated to Colleen.

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Acknowledgments xv

About the Author xvii

Chapter 1 The Web Is Great: Get Over It, Get On with It 1The Thrill Is Gone 2What Are You Measuring? 2It Is Time for an Accounting 3What Kind of a Book Is This? 4

This Book Is Not about Statistical Analysis 4This Book Is Not about Technology 4This Book Is Not about the Size of the Web 4This Book Is Not about Accounting 4This Book Is Not about Internal Operations or Procurement 5This Book Is about Measuring Your Success with Customers 5

The Catalyst: Why Another Book? 6Who Is This Book For? 8The Web Metrics Continuum 9

No Logs—Flying Blind 9Occasional Log File Report—Map in Hand, Window Open 9Log File Analysis—Radio Beacon Navigation 10Cookies—Tracking with Radar 10Web Analytics—Instrument Rated Flying 10Web Information Integration—Auto Pilot 10Web Information Distribution 10Web Information Comprehension 11Web Information Incorporation 11

What Do You Measure? 11Web Site Deconstruction: Measuring Bit by Bit 11Different Expectations for Different Sites 12

Contents

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Where Do You Start? 12Step One: Self-Assessment 12Step Two: The Vision Thing 13Step Three: The Numbers You Need 13Step Four: Low-Hanging Fruit 13Step Five: Prioritize 14Step Six: Find the Money 14Step Seven: The Master Plan 14

How This Book Is Organized 14Ways to Measure 14How to Get Funding 14Setting the Standard 16Log Files: Love ‘Em or Hate ‘Em 16Step into My Parlor 16Never Promise More Than You Can Perform: Publius Syrus (42 B.C.) 16Content Conundrum 17Helping Visitors Blaze a Trail 17Making the Sale 17Getting Personal 17Customer Self-Service and Beyond 18Life in the Real World 18The Big Finish 19

Chapter 2 Measuring Measurement 21Income and Expense: The Usual Suspects 22A Wealth of Measurement Methods 22

Return on Investment (ROI) 23Return on Assets (ROA) 23Return on Equity (ROE) 23Online Relationship Improvement (ORI) 24Measuring the Value of Technology 24

Method to the Madness 26Design Your Web Site with Measurement In Mind 27

Building Better Sites 27Manage Your Approach to Measurement 27

What, Exactly, Do You Want to Know? 29Summary 30

Chapter 3 Raising the Flag, Convincing the Boss 31Aligning Web Goals with Corporate Goals 32

Synchronous Goals 32Bend Your Goals to Their Will 33Get Real 33

Setting Specific Goals 34What’s the ROI of Measuring ROI? 37Appeal to Their Wallets: Centralization 38

Centralization and Economies of Scale 38Centralization: Forward, into the Past 40The Ability to Centralize 40The Trouble with Centralization 41

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Value of Best Practices/Best Processes 41Getting the Most out of Centralization 42

Managing for Metrics 43Nonfinancial Value 44

Customer Satisfaction 44The View from on High 45

What Are Web Managers Sending Up the Chain? 45What Executives Need 46What Executives Want: The Dashboard 46Trends Are Your Friends 48

The Balanced Scorecard Approach 49Lead by Example 51Follow the Leaders 51

Chapter 4 Web Measurement Standards 53The Need for Standards 53The Broadest of Standards 55

Who’s Going Where? 56How Did They Get There? 59

Benchmarking 60Benchmarking Specifics 62

Competitive Analysis 63Classic Business Intelligence 63Change Notification 64

The Nitty Gritty 65A Call to Arms 65

Chapter 5 Sawing Logs 67The Gartner Levels of Ambition 67Your Server Log: Up Close And Personal 68Number Crunching: It Takes a Lot of Horsepower 70Number Crumbling: Easy as Falling Off a Log File 70

Cache Files Cause Undercounting 70Robots Run Up the Numbers 71How Many People on a Computer? 72How Many People on a Web Site? 73

Where Did They Come From? 73Which Page Had the Link? 73

What Were They Looking For? 74Did They Stick Around? 74Know the Code 76Error Analysis: Fault Intolerance 76What to Look for in a Log Sawing Tool 77

Who Is the Software For? 78Flexibility 78Archiving 78Output 78Scalability 78Auditability 79Speed 79

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What to Look Out for in a Tool 79No Communicative Reports 79No Overnight Success 81No Guarantees 81No Instant Gratification 82

What You Can Learn from Log Analysis: The Basics 82WebTrends 82

Record Only What You Need 87How to Get the Best Site Traffic Numbers 87

Chapter 6 How Good Are You at Making Noise? 89Tending Your Brand 89

Media Relations 91Measuring Public Opinion 94

Reputation Management 98Reputation Sites 98YourCompanySucks Sites 100

Visibility 102Search Engine 102

PositionAgent 105WebPosition 105

Overall Visibility Rating 105

Chapter 7 How Good Are You at Buying Noise? 107Web Site Advertising 107

Awareness and Branding 108Reach 109Duration 110Frequency 111

Ad Components 111The Offer 111Types of Ads 112The Placement 112The Creative 114

Ad Interactions 120Mouseovers 120Intra-Ad Clicks 120Intra-Ad Purchases 120Clickthroughs 120

How Ads Are Purchased 121CPM 121Clickthroughs 122Mixing It Up 122Sessions 123Leads 123Sales: Show Me the Money 123

How Ads Are Valued 124Acquisition Cost 125Channel Preference 125

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Automating TIMITI 126Advertising Audit Services 126Principals of Online Media Audience Measurement 129Brand-New Standards 130

Email Promotions 134Emails Sent 134Emails Opened 135Emails Bounced 137Emails Unsubscribed 137Emails with Clickthrough Response 138Emails with Good Timing 140Tracking Viral Email 140Email Auditing 141

Valuing Visitors 141Visitor 142Unique Visitor 143Return Visitor 144Qualified Visitor 144Stale Visitor 145User 145Churn 145Customer 146Acquisition Costs and Conversion Rates 146

In Practice 149

Chapter 8 Measuring Web Site Performance: The Need for Speed 153Latency and Throughput 154Availability 156Web Site Performance 157

Pushing Pages 157Clickstream Scenario 158Application Processing 158

Death by Success 159Speed Matters 160

Chapter 9 Calculating the Caliber of Content 161Multiple Content: Multiple Costs 162Computing Content Value 163

Too Much of a Good Thing? 163Is It Good Content? 165Payback Calculations: Savings versus Income 167

Let Content Interaction Be Your Guide 169Stickiness, the Roosevelt Reckoning 169Number of Downloads 172Comparative Popularity of Content 172Content as an Inter-Web Traffic Driver 173Freshness Factor 174Cost of Content Creation and Correction 176

The Investor Relations Perspective on Content 176

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Chapter 10 Well-Marked Trails: Measuring Web Site Navigation 179First Impressions 180

Where Do They Land? 181The Home Page 181The Splash Page 183The Landing Page 185The Beam-Me-Up-Scotty Page 185

What Does Their Browser Show? 186What Do They Really See? 187

How Much Do They Remember? 187Eye Tracking Studies 188Cognitive Impact 189

Doing the Splits: Cookies Required 190Cookies Required 192

Computing the Best Path 193Site Path Maps 193The Optimal Site Path 198Pogo-Sticking 199Slipperiness 199

Navigation Page 199Data Entry Page 200Content Page 200Participation Page 200

Migration Rate 200Focus 201

Usability Studies 202Jakob Nielsen 203

The Usefulness of Usability Studies 207Scenario Design Testing 208

Deciphering Searches 210Search as a Measure of Navigation 210Search as a Measure of Promotion 211Search as a Measure of Temperament 211

In the End, Everything Is a Compromise 211Different Strokes for Different Folks 212

Chapter 11 Calculating Conversion 213Qualification Process 213

Conversion Benchmarks 214Transaction Phases 216

Navigation and Search Impact Conversion 217Duration 218

Selling Stuff 219Complex Explanations 219

Depth 219Doing the Math 221

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Recency and Frequency 223Abandonment 229Conversion 232

Participation 232Registration 233Merchandizing 234

The Smoke-Filled Room 234Trial and Error 235Calculated Commerce 238

Seducible Moments 240The Checkout Line 241Cost of Conversions 242

Cost per Revenue 243Profits above All 245

Sales Rep Sales 248Lead Generation for the Sales Team 248National Semiconductor: Connecting the Dots 251

Channel Metrics 253The Customer Buy-Cycle: A View from the Other Side 256

Chapter 12 Maximizing Customer Information: The Personalization Continuum 259ROI Redux 260Segmentation 264

By Technographic 264By Interest 264By Demographic 266By Customer Knowledge 268By Industry and Job Function 268By Personality 270By Surfing Mode 271

Customization 275Personalization 278

Types of Customer Information 278Data Cleansing 280Personalization Quotient 280Personalization Index 282

Retention/Attrition 283Churn 285

Loyalty 285Recency 287Frequency 287Monetary Value 288Participation Analysis 291Community Participation 294Bringing It All Together 298

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Lifetime Value 300Measuring LTV 301

Buying Power Index (BPI) 305Viral Value 307

CRM 308CRM ROI 310

Chapter 13 Measuring the Value of Online Customer Service 311Customer Satisfaction Does Relate to Revenue 312Online Customer Service Checklist 313

How Many People Use It? 314How Much Does It Help? 314

Cost Avoidance 315Cost Comparison 317Opportunity Cost 318

Pain Avoidance 318Call Center Complaints as a Navigational Barometer 318

The Most Frequently Asked Questions 319Troubleshooting Guide 320Knowledge Base/Chatterbot 321

Human Metrics 323Call-Center Metrics 324Customer Influence 325

Measuring Customer Satisfaction 328How You Are Perceived 329Plus or Minus 330Pop-Up Surveys 330Ask Questions about Your Questions 332Synthesize Your Answers into Business Outcomes 333Go Straight to the Horse’s Mouth 334

Bringing It All Together 335Is It Worth the Effort? 336How Do You Really Know You’re Doing a

Good Job with Customer Service? 337

Chapter 14 Field Studies 339Caution: Problems in Mirror Are Closer Than They Appear 340

Top Down 340The Dashboard 340Good News/Bad News 341Project Funding Decisions 342How Much Do You Invest? 343Cost Savings 344Hands-On Metrics 345

From the Director’s Chair 345The Metrics Control Center 347

Keeping an Eye Peeled 347Keeping It Clean 348Explaining It Again 348

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Automating the Process 348Integration Indigestion 349Are Metrics Results Actionable? 350

Segmentation Battle Station 351Goal Orientation: The Secret of Success 352

Command Center 353Economies of Scale 353Roles and Responsibilities 354Regular Reporting 354Promotion Detection 354Content Contentment 355Navigation Satisfaction 355Customer Satisfaction 355Total Customer Visibility 356Conversion Conclusions 356Tools and Techniques 357Automated Inventory Reduction 357

Trickle Up 358Visionary on Board 358

Fingers on the Pulse 358Dollars per Day 359Integration in All Things 359Closed-Loop Data Sharing 360Data-Driven Web Development 361The Hard Part: OPEX 361

Social Psychologist 361Getting Visitors to Speak for Themselves 362Competitive Knowledge 363Competitive Brand Awareness 364Flash Is Trash 365Design to Where the Visitor Is Going to Be 365Learning from Searching 365The Fun Part 366Bottom Line 366

Customer Intelligence 366Deep Data 367Prioritizing the Seven Fruits 3671. Optimize Lead Generation 3682. Tune Our Pages 3703. Optimize Our Navigation 3714. Enhance Our Search 3725. Optimize Our Merchandising 3736. Tune Our Entry Points 3737. Analyze Our Sales Funnel 374Measuring for Major Improvements 374The Basic Rules 374The Fun Part/The Hard Part 375

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Chapter 15 Making It Work by Bringing It All Together 377Data, Data Everywhere, but Not a Thought to Think 377

Data Deluge 378Data Diving 379

Web Site Critique 380Web Site Score Card 380Mapping the Web Genome 381Expert Critics 384Measuring Credibility 386

The Online/Offline, Cross-Channel, Multichannel, Multivariate Migraine 387

Between Two Worlds 387Driving Store Traffic 388Event Marketing 390Multicommunication Channel 391The Multidepartmental Data Dance 391Intra-Industry Data Model 393Across Industries 394

Connect the Dots 394Capture and Use Data One Step at a Time 395Publish Easy-to-Absorb Results 396

The Tragedy of the Feedback Loop Gap 397Customer Success 401Tomorrowland 402

Appendix How Interactive Ads Are Delivered and Measurement Implication 407

Index 415

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I’d like to thank

Alanna Coyne for her untiring assistanceMatt Culter of Customer Centric for turning me on to Web analyticsMark Gibbs for his wit, intelligence, and friendshipMellanie Hills for her shining exampleAnne Holland for her excellent work with MarketingSherpaJakob Neilson at Useit.com for doing what he does so I don’t have toKarl Sterne, my father, for his encouragement and editorial skillsKristin Zhivago for her insight and friendship

My thanks also go to people like Phil Gibson at National Semiconductor, SethRomanow at Compaq, Rob Sherrell at Delta Airlines, and the dozens of professionalswho spent the time to tell me about how they measure their Web site success.

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Acknowledgments

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Jim Sterne (Santa Barbara, CA) is a pioneering expert on Internet marketing. He spe-cializes in Internet marketing strategies for business. Sterne produced the world’s firstseminar series on Internet marketing in 1994 and is an internationally recognizedspeaker. Information about his company, Target Marketing of Santa Barbara, can befound at www.targeting.com.

About the Author

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1

C H A P T E R

1

How about a World Wide Web simulator? Just submit your Web site design and imple-mentation plans to this rule-based, artificially intelligent, neural-networked interpre-tation of 513,410,000 surfing people; it thinks about it for a while, and out comes a3-year analysis. Will your site get lots of traffic or be a ghost town? Generate sales orcause very unpleasant PR? All the anguish and nail-biting done away with. Everythingfully automatic, with no risk of public humiliation.

Why do we want such a tool? Because we’re clueless.Our Web sites were created in a volcanic eruption of bombastic enthusiasm and

visionary expectation in an era when all things were possible and we just made it up aswe went along. Was it worth it? Of course. Are we grateful for the Era of Experimenta-tion and Learning? Absolutely. How do we take our sites to the next level? Will thechanges we propose have a positive or negative impact? There are several popularmethods for answering those questions:

Wait and see

Trial and error

Give it a shot

Presumption, supposition, hypothesis

Wild conjecture

Reading tea leaves

The Web Is Great: Get Over It, Get On with It

“Not everything that can be counted counts, and not everything that counts can be counted.”

Albert Einstein

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But my 11-year-old son likes it

The Magic 8-Ball

We’re clueless.

The Thrill Is Gone

“Get online or go out of business” was a line I never used. I heard it enough timesbetween 1994 and 2001 to convince me that the world didn’t need to hear it yet again,so I focused on the practical side.

Was the Web going to change the way we live, work, communicate, shop, pay, andplay? Sure. But I took those truths to be self-evident. Every other keynote speaker atthe sometimes three-per-week conferences I was ping-ponging between shook therafters with threats of “Dot Com or Be Gone!”, “Be Digital or Be Toast!”, “Get Web orBe Dead!” You remember the rhetoric. I figured they could have the spotlight callingfor the new millennium while I plowed away in the background helping companiesfigure out how to get some actual value out of all this Internet stuff.

Oh sure, I was on the advisory boards of numerous Internet-only startups (still am,in fact—it keeps me young). But I’m of an age where I never forgot the value of rigidsystems (stagnant business models) and the wisdom of defined processes (bureau-cracy), so I decided early on to focus my efforts on helping large firms figure out howto use the Internet to best advantage.

While the venture capitalists were busy pouring kerosene on anything that lookedeven slightly incendiary, I stuck with my white shirt and rep tie and charged off topreach to the multinationals. That, as Willie Sutton would have said, was where themoney was, is, and ever shall be.

I consulted. I gave workshops. I wrote books. I advised, presented, and publishedabout advertising on the Internet, marketing online, and customer service in a wiredworld. The Web was on a roll and I was keeping pace.

But come the new millennium, a hush fell over the Internet landscape. The voicesextolling the new economy and e-everything were quieted by those muttering, “Showme the money.” Now that we’re actually airborne, the question is whether we’re flyingin the right direction and doing it in a fuel-efficient manner.

What Are You Measuring?

One of the wonders of the Internet is instant gratification. I just experienced this at TheBenchmarking Exchange (TBE) site (www.industrymetrics.com), which offers an impres-sive range of business surveys that let you see the results as soon as you’re finished takingwhichever quiz captures your fancy. There are surveys about procedures management,supplier management, crisis management, call center employee training, customer ser-vice information systems, human resources, vacation policy, and a bunch more.

The E-business Strategy survey on the Benchmarking Exchange site, originallysponsored by General Management Technologies, caught my eye. Today, “this survey is now a part of the permanent and ongoing Surveyor Library on TBE and

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everyone is encouraged to participate. As more responses are collected, richer resultswill be realized.” From 579 responses (as of January 2002), question 10 about the suc-cess of the respondents’ sites created a pretty typical bell curve, leaning just a littletoward the not convinced, but it was question 11 that really caught my attention (see Figure 1.1).

When asked how companies measure their Web sites, most people selected twochoices from the list of six options. It comes as no surprise that the vast majority chose“Meeting subjective goals and objectives.” This answer is pretty much close to the lastone on the list, “We do not/have not measured e-business initiative success.” In otherwords, we squint at it every now and then, lick a finger and hold it up in the breeze tofigure out if it’s okay, and then go on about our business.

Some look at sales, some look at savings, and at least some look at profitability.Thank heavens.

It Is Time for an Accounting

We’ve enjoyed experimenting—now it’s time to face the facts. PricewaterhouseCoopers talked to 78 large companies across most industries to find

out enough to publish their “Electronic Business Outlook for the New Millennium”white paper, and the results were a bit alarming. Among the five top barriers to thedevelopment of e-business was a lack of key standards. While they were lamenting theabsence of outside criteria, 44 percent of those firms had no specific, internal measuresin place of their own.

We know it is time to face facts. The problem is that we’re not sure which facts toface. The dot-com bubble has burst and we’re grateful to those with the arrows in theirbacks, but it’s time to get serious. It’s time to get to work. We know there’s valuethere—but where exactly do we find it? What exactly do we measure?

Figure 1.1 Most of those surveyed at Industrymetrics.com felt their sites were less thansuccessful, and more than one-quarter measure nothing.

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The singular goal of this book is to give you the broad scope of Web metrics possi-bilities. It’s intended to be a guide through the labyrinth of viable measurement meth-ods so that you can determine what you wish to measure, and what you aretechnically, economically, and politically able to measure.

What Kind of a Book Is This?

Good question. Let’s start with what this book is not.

This Book Is Not about Statistical AnalysisGranted, you’re going to need some statistical analysis smarts before you tackle half ofthis stuff, but you’re not going to get pummeled with it here. There are plenty of placesto learn the fine and mystical arts of higher mathematics and how they apply to theWeb. This is not one of them. If that’s your thing, take a look at The Laws of the Web byBernardo A. Huberman (MIT Press, 2001).

This Book Is Not about TechnologyI’ve written a slew of books about the Internet and I do my best to steer clear of whichproducts are the most robust and which platforms offer the most features. That’s amoving target, and this is a printed book after all.

While I will cover the basics in layman’s terms, I will not be investigating the intri-cate inner workings of various servers, applications, databases, or networking soft-ware any more than necessary.

This Book Is Not about the Size of the WebThere are plenty of companies like Nua.com (www.nua.com) stretching the limits oftheir ability to keep track of how many people are online at this very moment. Thereare many ways to measure what people find interesting on the Web, such as the BuzzIndex Weekly from Yahoo! (see Figure 1.2).

If you’re looking for your next advertising promotion to cater to the statisticalYahoo! user, then the Buzz Report is the right place. This book is not.

This Book Is Not about AccountingThere are many prestigious halls of academe that would be delighted to enthrall youwith the rigors and rewards of standard accepted accounting practices. Sadly, theyhave a little trouble when you start asking about page dwell time per order by visitorwith a recency factor greater than once a week.

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Figure 1.2 Yahoo!’s Buzz Index keeps track of what people are searching for week afterweek.

This Book Is Not about Internal Operations or ProcurementThe Internet can save astonishing amounts of money by being a tool for internal communications, communications with suppliers, and generally running a company.Descriptions of the best ways to measure your intranet for maximum effectiveness oryour acquisition systems for best value are not to be found in these pages.

Okay, so what is this book about? Another good question. Keep this up and we’ll get along just fine.

This Book Is about Measuring Your Success with CustomersThis book looks at the Web as a business tool for communicating with your customers.

I have been in sales and marketing for 20 years and have been an online marketingand customer service consultant for the past 9 of them. Therefore, this book is aboutmeasuring those places where the customer and the company come together:

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Advertising: Raise awareness

Marketing: Educate and persuade

Sales: Complete the transaction

Customer Service: Answer questions and solve problems

This is a business book for business people. This book takes a commonsense approachto what can be measured and a business perspective about what should be measured.

The Catalyst: Why Another Book?

Few practice what they preach. Matt Cutler, cofounder of NetGenesis (purchased in2002 by SPSS, the 30-year-old business analytics company), preaches what he practicesand is a top-notch public speaker. I had heard him present at an Internet World confer-ence in New York back in 1995 and was immediately impressed.

Later, we met up in the speaker’s lounge. Jack Powers, Internet World’s conferencechair and majordomo at the time (and another whose presentation skills I hungrilystudy), found the two of us talking and congratulated both of us for being tapped forthe upcoming Internet World conference in Sydney.

These were Matt’s salad days. NetGenesis was only a couple of years old and still afew years from going public. So I was happy to pick up the tab for our dinner at one ofthose very nice restaurants at The Rocks, overlooking the Circular Cove in SydneyHarbor.

Matt described the purpose of NetGenesis and I was hooked. He was creating soft-ware and services that reached into the recorded history of a Web site’s activity andshaped the raw data into valuable meaning. Earlier Web log analysis software was outthere but hobbled. NetGenesis took off where the others stopped. “Why settle for whatyou can get out of the logs when there are a bunch of other tools you can put in placeto watch what happens on your site?” he asked. “Why not use data from cookies andpacket sniffers and transaction servers?”

I was offering advice on how to improve the value of a Web site to those who werespending great gobbets of money floundering around in the primordial TCP/IP soup,and Matt was offering proof, validation, and documentation.

The synergy between us—our mutual enthusiasm, our mutual desire to get to thebottom of this wild, new Web phenomenon, and our mutual commitment to make adifference—led to an immediate personal bond and a periodic working relationship.We would meet at various conferences; I was invited to speak at a number of NetGenesis User Group Meetings, and we stayed in touch via email.

I stayed interested in Web metrics because it was an opportunity to get closer to thetruth. It was obvious that mere log file analysis wasn’t enough. We were just paving thecow paths. “Listen, we’ve got paths and we’ve got asphalt. Let’s put them bothtogether and the paths will be significantly better.” That may be true, but it only codi-fies an ad hoc means of getting from point A to point B.

If, instead, we look at where we want to go, we can devise a much better means ofgetting there. An interstate highway system beats the pants off of interconnected,paved cow paths every time.

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At the beginning of 1999, Matt invited me to help write a white paper for his com-pany about e-metrics. “We’ll talk to top Web sites and find out what they’re measuringand how,” Matt said. “We’ll tie it all together in a neat ‘best practices’ package and havesomething that will be more than just a marketing piece for NetGenesis—it’ll be aguidebook for Web sites everywhere.” I was intrigued.

Twenty-five interviews with the managers of major Web sites, dozens of phone calls, hundreds of emails, and countless revisions later, we published “E-Metrics: Business Metrics for the New Economy” (available at both www.netgen.com andwww.targeting.com).

Bottom line? Everybody was collecting huge volumes of information and nobodyhad a clue what to do with it. We learned that expectation and reality were not quite onspeaking terms.

Jump to 2001. Time to do another round of interviews to see if we’d learned any-thing. This time, I tackled them on my own and I was no longer interested in a formalstudy. I wanted to find out how people were feeling about Web metrics. How they werecoping with the problem.

Everybody I interviewed (fifty large companies, running multiple Web sites) was(and still is) begging for more information—not more data, but more usable informa-tion. Some of these people had been assigned the task or were self-selected. Some ofthem were clearly identified as the go-to people for the duty. Their job titles included:

■■ Head of Strategic Planning, Services, and Programs

■■ Director, E-marketing and User Experience E-business Systems, Global Business Solutions

■■ EVP, Chief Marketing Officer

■■ General Manager, E-business Development

■■ Manager, Interactive Marketing

■■ Manager, Online Communications Corporate Brand Office

■■ Performance Manager, E-business

■■ Group Vice President, E-business and Internet Operations

■■ Director of Information Services

■■ Vice President, E-business

■■ Senior Manager, E-business

■■ Director of Digital Marketing

■■ Vice President, Online Marketing

■■ Internet Content Manager

■■ E-commerce Marketing Specialist

■■ Manager, Measurement and Analysis E-marketing /Corporate Strategy andMarketing Group

I learned a lot from them.

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Who Is This Book For?

This book was written by talking to people whose titles look something like the above,but it was written for those who have to testify to the veracity of the value attributed totheir Web sites.

Whether you are part of a central Web team, a member of middle management, acorporate executive, or one of dozens of organizations offering services to them, thisbook is intended to help you understand what’s possible to measure, in order to figureout what you should do about it.

This book is for people like Terry Lund at Eastman Kodak, who won’t learn muchby reading it (he lives and breathes this stuff) but who will benefit greatly by handingit out to those who count on him and his people to keep Kodak.com working well. Itwill help him improve the services he can offer to the business by enlightening the con-sumers of those services. Lund knows that it’s only through education that he’ll be able to really help the company: “I’ve been kind of poking people a little bit saying weneed to figure out a way to assign a value to a visit, or assign a value to a clickstreamsegment. And my own opinion is that we are too bashful about assigning a dollar sign.

“A few years ago,” he says, “we tried something we called a ‘value creation model.’We tried to build one and we were embarrassed at the numbers because they were justtoo big, you know? We were trying to equate it to brand impressions. We were tryingto show that you could place a brand value on page views and take credit for it. But nomatter how you convert it into dollars—television eyeballs, or print media eyeballs—you go get these numbers and then cut them in half or cut them by a third, and you stillhave millions and millions of dollars in value.”

Lund can’t make a business case out of numbers that don’t seem real. They won’t bebelieved. So he’s been on a quest to find specific metrics that can be easily explainedand understood.

This book is for an executive (who will remain unnamed) who said, “Jim, I have a $4million budget and about twenty direct reports. They’re all working their tails offevery day and I can’t for the life of me figure out if they’re working on the right pro-jects. They’re all doing what they’re told, but who the heck knows what to tell them todo? How the heck do I determine whether more investor relations content is worthmore than a new product configuration system? How do I tell if a 20 percent increasein the banner ad budget is going to impact sales?”

This book is for the manager responsible for the success of one product line who isfaced with a company Web site run by people who have 5 years of Web experience butno business experience.

This book is for the woman looking to be just a little bit more prepared than theothers when it’s time to present budgets to the board for approval.

This book is for the Web site design team that just knows a new navigation systemcan improve the site’s effectiveness tenfold but needs hard numbers to prove it.

You already know that measuring things is important. This book is intended to helpyou choose what to measure, how to measure it, and what action to take based on theresults. If you find yourself drawn to the topic but I haven’t listed you here, send mean email at jsterne@targeting.com and straighten me out, because this book is for you.

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The Web Metrics Continuum

Not every company should or can measure everything. What you measure depends inpart on the goals of your Web site and the size of your budget. It also depends on whereyou are now and where you aspire to be on the Web Metrics Continuum (see Figure 1.3).

No Logs—Flying Blind“Oh, yeah, I’m sure we have server logs somewhere. I mean, every server makes a log,right? But our customers seem happy—most of them. You know, they tell us if any ofthe pages are broken, and so far it seems to be working fine.”

Occasional Log File Report—Map in Hand, Window Open“We’re getting daily reports that our hosting service sends. It shows . . . let’s see . . . oh,here it is. It shows us total hits, total files, total pages, total visits, total kbytes (whateverthat is), and some other stuff. We take a hard look at these about once a month to see ifthere’s anything going on we should know about.”

Figure 1.3 The Web Metrics Continuum.

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Log File Analysis—Radio Beacon Navigation“We have our logs crunched and we do a formal review every week. We know thatpeople come to our site more on Mondays and Tuesdays and traffic peaks at about10:00 A.M. We know which pages are the most popular, and we watch for changes inthat sort of traffic when we do special promotions.

“We know which pages people most often use as entry pages, and we know wherethey leave. We know where they’re coming from, although the majority are still comingfrom AOL, so I don’t know how useful that is, really. We know that we get the most traf-fic from Yahoo! and Google, and which search phrases they’re using to find us. But we’restill trying to figure out why so many find us by searching for ‘dancinghamsters.’ Weird.

“Once a month, we print out a huge color graph that shows our progress and pin itto the wall where everybody can see it. It’s really neat.”

Cookies—Tracking with Radar“We’re using cookies to track sessions and do path analysis. We’ve got a good pictureof how people navigate the site differently from one visit to the next. We’ve got a reg-istration page and determined that sales do, indeed, go up when we welcome peopleback to the site by name. We know which promotions are bringing in the most visitorsand which are bringing in the most repeat visitors.

“Those with direct Web responsibility depend on these reports, and upper manage-ment asks about our progress about once a month.”

Web Analytics—Instrument Rated Flying “Using a variety of tools, we’re tracking exactly which ads are turning into sales in theshort term and which are boosting loyalty in the long run. We know where to spendour time in order to either increase traffic to the site, increase visit duration, increasesales, or lower costs.

“There’s an executive committee every 2 weeks that looks over our progress andmakes recommendations.”

Web Information Integration—Auto Pilot“We’ve tied our analytics and e-commerce systems together with our offline order pro-cessing and inventory control systems and can clearly forecast how much stock we’llneed on hand to meet the needs of various promotions.

“Representatives in our customer service call center/email center can see whichpages callers have looked at and can advise them according to their particular level ofknowledge.”

Web Information Distribution“We make sure that the information we glean off our Web site and from our customerrelationship management systems is disbursed throughout the organization. Execu-tives and managers have access to near real-time numbers about what’s happening onour site.”

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