The Impact of Web Analytics on E-Commerce from Management, Technology, and Organisational Perspectives - Literature review Example

THE IMPACT OF WEB ANALYTICS ON E-COMMERCE FROM EACH OF THE FOLLOWING PERSPECTIVES: MANAGEMENT, TECHNOLOGY, AND ORGANISATIONAL Student’s Name Course Tutor Date THE IMPACT OF WEB ANALYTICS ON E-COMMERCE FROM EACH OF THE FOLLOWING PERSPECTIVES: MANAGEMENT, TECHNOLOGY, AND ORGANISATIONAL Abstract Websites provide the least expensive way of interacting with customers, irrespective of the organization. They offer a lot of utility in terms of the provision of information, promotion, market research and marketing activity. Web analytics relates to studying the impact that a website has on the users that access it. Its software is normally applied in the measurement of concrete details about the visitors to a site, the number of visitors that may be categorized as unique, how they managed to get to the site, the keywords that they put into the search engine, the duration for which they stayed on the site, the links that they clicked and the time when they got out of the site (Panian, 2010). As a process, web analytics has a considerable impact on management, technology and organization. This paper discusses web analytics and its role in e-commerce. Introduction Relevance of Web Analytics Web analytics is more than just a tool used in the measurement of website traffic as it can also be used in market research and business research. It can further be utilized in as a means of determining and improving on a web site’s effectiveness when well carried out. Its applications have the ability to enable companies in measuring the results gathered from the traditional form of advertising campaigns. It also helps in estimating how the traffic to a website might change upon the start of a new advertising campaign (Burby & Atchison, 2008). According to Oz (2009), getting a visitor to stop at a business website is only 10% of success. The task that underlies everything is that of making them do something that may be reported as a reason why the site exists. This could for instance be the signing up for some newsletter, offering feedback or decision to purchase something that is offered at the site. A visitor who takes such action is then converted into a customer. The goal of the process is therefore the maximization of conversion rates. A large number of website owners assume wrongly that there is no much that they can do in order to raise the conversion rate, and as a result they concentrate on maximizing the number of hits on their site. Visitors who eventually get recorded as having used the site end up being gawkers rather than customers. Web analytics offers information on the visitor numbers to the website and the quantity of page views that are attributed to every link. It helps in gauging the available popularity and traffic trends, and these are instrumental in market research. It qualifies to be a sort of Business intelligence (BI). This refers to computer-based techniques that are used in the identification, extraction and analysis of business data for instance the sales revenues of products and departments or basing on associated incomes and costs. BI technologies will offer predictive, historical and current views with regard to business operations. By extension, it constitutes part of the competitive intelligence of the firm (Davenport & Harris, 2007). Burby & Atchison (2008) explain that while it is not an old innovation, web analytics has grown to be a highly effective and popular tactic for web site optimization that is used by e-commerce sites. Through the provision of insight about visitor traffic and behaviour, web analytics tools enable the improvement of a site’s usability and in the process enhancement of sales. Ultimately, the main objective of any enterprise is to create a website in which visitors will want to stay on and purchase what is available. Because of the internet’s power of creating virtual communities, a corporate website owner has to study the way in which visitors respond to the information that is availed on the websites. If a business makes its customers unhappy within the physical world, they are likely to tell some friends (Sponder, 2011). Mortensen (2009) observes that if the customer is made unhappy while online, it is possible to tell thousands of friends by simply sending one message to some newsgroup. This will also happen if they are extremely pleased with what they find on the website. Because of this, the role of making sure that a business’ online presence does not lead to losses in profit, market share or other objectives is left with the owner. Management Web analytics is one of the most important aspects in the boosting of returns on investment through effective decision-making. This is because it enables the identification of the referral sources that result in the most, customers, products, revenue or for the business. These may be newsletter sponsorships, search engines, affiliates, email campaigns or print advertisements. It further identifies the sources that show the most potential in overall revenue and browse-to buy ratios (Meier & Stormer, 2009). According to Panian (2010), the actionable information which results from the process makes it possible to make timely decisions for instance on the continuation of successful marketing strategies or terminating campaigns that prove to be headed nowhere. It leads to a measure-respond-measure setting in which the business checks if an online channel is keeping up with and maintaining the organization’s overall goals and the amount of e-sales volumes and visitor traffic will act as a justification for the resources that are set aside for the channels. Web analytics suggest the best ways of targeting marketing efforts. It will determine the visitor groups that have a higher chance of converting into subscribers, customers or members through defining them along the content which they read, what they do afterwards and the URL that they use (Sponder, 2011). Meier & Stormer (2009) add that web analytics have the effect of optimizing conversions. It does so because its click-path tracking maximizes the rates at which the site’s visitors can turn into subscribers, members or customers and adjustment of the navigation and content in the site as a response to the reports that are generated. An effective web analytics strategy pinpoints the available revenue-enhancing opportunities online. This is because of its clickstream behaviour, or the page-by-page paths that visitors take in the site. E-commerce intelligence ties up clickstream behaviour with the purchasing activities that are eventually undertaken in order to show key shopping trends and patterns in the target markets. In addition, there is the identification of areas such as the most effective traffic sources, product cross-sells and the search engines, promotions or key words which will be able to drive the most volumes of sales (Burby & Atchison, 2008). Panian (2010) argues that from web analytics, management is able to determine if there are any downward or upward trends within any one product and the product that will work best as a loss-leader so as to attract possible customers. Web analytics further provides management with a way of saving on customer support services. Improvements in the efficiency levels of online support will have a definite impact on the reduction of offline costs as answers to a large number of queries will be sourced from the site. Web analytics enables management to help the customers in helping themselves. Through path analysis, there is the indication of whether or not the site’s visitors are able to find the information which they require within. Further, the early detection systems that are set in place enable identification of possible problems, while real-time analysis of the visitors’ interactions with the web site may prompt changes that will ensure that all products provided are able to satisfy the customers’ needs while uncovering possibly larger issues in support before they grow into a bother for management and the business as a whole (Davenport & Harris, 2007). Mortensen (2009) explains that in e-commerce, marketing campaigns are carried out in search engines. Here, the investment can and should be broken down so that it reaches the most basic level so as to be measured and for results to be maximized. There is also need to know the amount of information that every keyword generates for the website both in terms of Return on Investments (ROI) and traffic from pay-per-click programs and optimization of the search engine. It is only when this is achieved that the marketing campaign team can reach highly informed decisions relating to changes that may have to be made to maximize the returns. In advertising, web analytics enable the understanding of where people are trying to go, where they are coming from, where they tend to drop out and ways through which they might be converted. A company will be able to deliver email campaigns that are more relevant and targeted for instance through the measurement of opening, clickthrough and unsubscription rates. A search marketer can be able to optimize and monitor any marketing campaign in real time while deleting or adding keywords with time (Chaffey, 2008). Technology Web analytics results are tallied, charted and organized so as to act as detailed information which describes the site's traffic. The duration of each visit, the visitors’ origin, server and search engine, usage of keywords and frequently checked pages are often part of the analysis. Visitor exits are also often be tracked, bounce rate percentages calculated and even in some cases, email updates and results are generated if needed (Mortensen, 2009). Chaffey (2008) explains that as a process, web analytics analyzes visitor behaviour on a website in order to enable modification, enhancement and introduction of new content and features to the site so that it continues offering the desired results. Just like any form of technology, web analytics seeks to improve efficiency, and this is achieved to a great extent. It leads to greater accuracy. Web server logging has for long been a standard source for data used in traffic analysis and web analytics. However, with time, there has been a greater embracement of page tags due to their raised speed in data reporting, enhanced accuracy, lesser upfront costs and flexibility in data collection. Web analytics ensures greater accuracy as applications used in data collection from the client side are generally more accurate when compared to Web-server Log Files. Client-side data is generally acquired from end-users directly, enhancing its accuracy above the web server logs. In addition, the measures used in client-side data collection monitor the use of ‘forward’ and ‘back’ buttons in relation to code activation (Davenport & Harris, 2007). According to Oz (2009), there is greater speed in data reporting. Client-side technologies are able to generate data faster as there is never the need parse data later. This makes it possible for the data collectors on the client side to parse such information into data structures whenever the data can be found. The real-time parsing in many instances avails information through sending a report a few minutes after the page has been viewed. There is the enhancement of flexibility in data collection. A client-side system for data collection will often allow for the collection of more variables that may be taken from one web page. A majority of the technologies need variables that define page content and name, content group and also allows for a visitor segment, campaign ID, brand, product and price, depending on the type of page and application that contains the tags. In addition, web analytics leads to reduced upfront costs. The upfront costs that are often associated with the available solutions are generally lower when for instance compared to applicable software solutions (Meier & Stormer, 2009). According to Sponder (2011), web analytics leads to the optimization of a website. the information that is gathered through the process makes it possible to make more thoroughly thought-out decisions on ways of improving the site for instance streamlining its site navigation so as to help viewers in identifying what they are looking for faster, and also ways of improving the Search Engine Optimisation (SEO). It also contributes to the formulation of an effective e-marketing and sales plan. This is because the business is able to know the kinds of visitors that are likely to be dealt with and this information may be used in improvement of the e-marketing plan, writing of better structured advertisements and strengthening of online presence to the target groups. According to Mortensen (2009), the software can be used in monitoring if the pages of a site are working well or not. When the information is gathered, a web site administrator is enabled to determine the areas within the site that are popular and those that do not get much traffic. Web analytics will provide the publishers or site administrators with data that may be used in streamlining the website so as to ensure a more effective user experience. Organization Having a website is like having any other form of investment. This is because some resources have to be committed for it. A website owner therefore needs to know the level of effectiveness his website has and therefore strategize on it. A website generally carries the potential of generating greater awareness and as a result more transactions and business with the organization (Oz, 2009). According to Sponder (2011), website owners are only able to achieve the maximum benefit from online technologies if they are able to monitor and report on website usage. Because of this, web analytics makes it possible for enterprises to have a better understanding of the complex interactions that occur between offers made on the website and the actions of website visitors. This is in addition to the provision of leverage insight that guides the optimization of the site for greater sales and customer loyalty. Burby & Atchison (2008) explain that any prudent investor is under obligation to review the performance of resources that have gone into the investment. As a business, there is the need to understand the outcomes of any investment that is made in order to achieve goals that have been established for a website. These may be in the form of actual purchases online, requests for information or demo downloads of products. Web analytics plays the role of business intelligence for the organization and therefore improvement of organizational competitiveness. Web analytics tools and processes may be viewed as part of BI activity. While business intelligence applies to almost any kind of electronic data which is gathered or organized within the enterprise, tools for web analytics focus on information and data that is gathered from the website. According to Chaffey (2008), web analytics does not only work for the Information Technology or marketing departments of organizations any more. It instead has an overall impact on organizations regardless of departments through providing a barometer for research measurement. A successful business has to realize the significance of measurement and research, in addition to the ways through which data may be effectively used in plan for the future. In any level of planning, whether annual, quarterly or monthly, web analytics may be used well in turning the data into recommendations that are actionable in relation to company objectives and also raise the organization’s attention to necessary e-business insights and trends. The analogy of building a house can be used in understanding web analytics at the organizational level. If built without a strong and solid foundation, a house would end up unsupported, unstable and vulnerable to shifts of the earth. In the same way, in the absence of web analytics the business objectives of the firm will be vulnerable to the possible shifts in the customers' web surfing, purchasing and online preference behavioural trends. Web analytics is one of the foundations upon which information relating to strategic decisions is based and will be built up. For instance, a business can try and determine what may be considered as attainable in later times through the evaluation of past failures and successes. In addition, through the analysis of trends that exist in various parts of marketing channels, e-marketers can be able to learn and rate the best strategies by assessing the issues that have greatest impact on the targeted consumers. In so doing, they will be able to determine the areas of the organization that are thriving and those which will require improvement (Davenport & Harris, 2007). According to Oz (2009), every business organization eventually has a space for web analytics as it comprises of more than just data for its sake. Web analytics is a valuable tool that facilitates the shaping of the overall strategic objectives of the business. Mortensen (2009) adds that most businesses face a great challenge in surviving. They especially have to constantly grow their marketing returns. However, the usual marketing techniques are fast becoming less effective. In addition, decision-makers realize that even various online strategies are increasingly facing the challenges that have limited the traditional ones. In order to improve their returns, marketers seek to make their communications much more relevant and timely to their recipients. For this to happen, the decision-makers build communications which are in line with each individual prospect or customer. Web analytics can help to enhance this process if the intelligence gathered from it provides the exact behavioural insights about every individual. Panian (2010) argues that web analytics has the effect of creating new professional roles within the organization. it mainly raises the need for three kinds of roles and due to the fact that a lot of executives and managers are never sure of the differences, processes such as hiring are made more complicated and even finding the best candidates becomes a challenge. There is the role of implementation specialists. This usually has the responsibility of managing web analytics tool implementation and maintenance of ongoing changes so as to capture data which is relevant to the business. The expert will be involved evaluating tools, optimizing tags, Questions and Aswers and also change management during the development process. Every successful enterprise requires a set of goals and objectives that will enable it to progress. The challenge that arises however is the need to balance what the company actually desires and what can be realistically attained and come up with the appropriate planning strategy. E-commerce is shifting constantly and its consumers tend to get more of the information that they require online. The strategies that were effective in reaching customers in the past is not necessarily applicable today. Web analytics therefore plays a major role in the understanding of customers’ online behaviours and preferences (Meier & Stormer, 2009). Sponder (2011) suggests that for online marketing to be effective, there are three stages which will have to be comprehensively covered. These are the website’s design, its promotion and performance measurement. The measurement enables the business to carry out management of customer relationship through web analytics. Web Analytics make it possible to achieve greater customer-centrism. Web technologies are continuously producing a paradigm shift in business from a previous product-centrism to a more customer-centric orientation. The web’s considerable success has eased digitalisation of people’s behaviour. Digitalization provides a way of expressing more psychological and physical human activities and their channeling through websites. It amounts to the development of a unified language for expressing human behavior and allowing the examination of phenomena on a previously impossible scale using computers. Recommendations From the discussion, web analytics is a powerful and beneficial function in e-commerce. It is a good way of ensuring customer-centric business activity. Introduction of web analytics should therefore be a good way of enhancing performance. However, its implementation will first need management’s support. It leads to a lot of change especially now that there will be no more reliance on gut feeling for decision-making. Whatever is involved, the boss’ support will have to be sought. It would also be important to establish a data driven culture in the organization. This would be focused on seeking answers relating to business questions for instance profit margins, revenues, product mixes and profits. Analysis should also be emphasized at the expense of reporting. This is because although reports and charts are good, they do not reflect a continuously changing reality in the business. Depersonalization of decision-making will assist in enhancing business. The organization will need to discard politics of personality. Irrespective of who brought up an idea, what should be important has to be the data which should then drive decision making. The business will further need to be proactive rather than reactive. If a certain decision is believed to be the best option to be taken, the next stage would be to identify the kind of data that will support it. Decision makers will therefore have to learn how to identify any emerging patterns in data. Much importantly also, the adoption of web analytics will be likely to make the organization more data driven. All the people involved will therefore need to be empowered. Everybody should be able to act as a data analyst. If a member of the organization wants to do anything, he or she should be able to consult web analytics data to act as a guide. Three main elements should then guide day to day business. These are behaviour, outcomes and experience. Conclusion In conclusion, Web analytics involves collection, measuring and analysis of any user activity within a website. It is aimed at understanding the visitors and helping to reach the website’s intended objective. In case a website lacks analytics, it becomes almost useless as effectiveness is largely determined by the ability to track what happens in it. Its outcomes are crucial in the planning of marketing strategies, optimization of search engines and even in designing of websites. Through the understanding of the ways through which web analytics may report on key performance indicators of business, organizations are able to create a better balance between what is required by the company and what is realistically applicable in its context, bearing in mind that it has to be most effective and feasible for the specific audience. Bibliography Burby, J and Atchison, S, 2008, Actionable Web Analytics: Using Data to Make Smart Business Decisions, John Wiley & Sons: Hoboken Chaffey, D, 2008, E-business and e-commerce Management: Strategy, Implementation and Practice, Prentice Hall: Harlow Davenport, T and Harris, J, 2007, Competing on Analytics: the New Science of Winning, Harvard Business School Press: Boston Meier, A and Stormer, H, 2009, eBusiness & eCommerce: Managing the Digital Value Chain, Springer: Berlin Mortensen, D, 2009, Yahoo! Web Analytics: Tracking, Reporting, and Analyzing for Data-driven Insights, Wiley Publishers: Indianapolis Oz, E, 2009, Management Information Systems, Pan Books: London Panian, Z, 2010, The Path to Web Intelligence Maturity, World Academy of Science, Engineering and Technology, Vol. 66:1618-1624 Sponder, M, 2011, Social media Analytics: Effective Tools for Building, Intrepreting, and Using Metrics, McGraw-Hill: New York Read More