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Mobile Customers Data Complicating Retailers’ Use of Metrics

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Editor’s note: A recent study by the e-tailing group reveals that customer interaction on mobile devices is causing many merchants to struggle with maintaining the right metrics for wise decision making to drive their business. I spoke with the study author, Lauren Freedman, president of e-tailing group, and Dan Darnell, vice president of marketing at Baynote, which sponsored the study, about the mobile phenomenon and other significant findings in the study (“Metrics Therapy — Details, Dashboards and Diligence”). The study included the 2012 Merchant Survey (147 participants) as well as telephone interviews of merchants.

SandHill.com: How important has mobile become to the retail industry?

Lauren Freedman: The adoption of mobile has been aggressive and, surprisingly, it is already generating significant revenue. Our survey asked merchants what percent of their traffic comes via mobile browsers or mobile applications. For 43 percent of the merchants that responded to the survey, five percent of their traffic comes from mobile. For 16 percent of the merchants, 10 percent or more of their traffic comes from mobile. This aligns with my discussions with retailers; some of them reported that 10-20 percent of their traffic already comes from mobile devices.

More importantly, when we asked what percentage of their revenue comes via mobile browsers and mobile applications, more than one-third (35 percent) of the respondents were already at three percent of their revenue coming from mobile. Most of them alluded to the fact that they were surprised. They expected some revenue but not to that degree in such a short period of time.

An interesting aspect of this is the impact of tablets. The merchant survey findings paralleled with what I heard from retailers — conversion is so strong from tablets that they are now thinking about ways to really go after this customer base. They realize this is a powerful audience — good customers who are spending a lot of money.

SandHill.com: How is the mobile aspect complicating the metrics picture for retailers?

Lauren Freedman: Many companies are seeking a holistic, 360-degree view of their customers. Who are they? How are they functioning? Now that customers are shopping via mobile, it complicates matters. One minute they’re on their mobile phones, the next minute, they’re on their tablets, then they’re on their PCs, and 20 minutes later they’re driving to Target. The dynamics of the customer base today are very complex. Smart merchants are really going after trying to get that full picture as this is having profound impact on KPIs such as conversion.

SandHill.com: Did you find there are retailers that are not yet ready to deal with the mobile aspect because it grew so quickly?

Lauren Freedman: In my interviews, there were a maybe a handful of people who weren’t dealing with it yet but definitely had it on their radar screen for this year. Another one-third commented that they are not optimized to the degree that they realize they should be. Most were in the fray, recognizing they really need to evolve it this year.

SandHill.com: From reading your report, the “Metrics Therapy” white paper, it’s clear that many retailers are not monitoring customer data as quickly, frequently and effectively as they should. Is that because they don’t have the right tools?

Dan Darnell: Things are moving fairly quickly for a lot of merchants, and the technology that they need to have to measure metrics is moving a little faster than they can move right now. They still have a lot of challenges with existing metrics and measurement tools, much less catching up with metrics and technology for smartphone and tablet users.

Lauren Freedman: I think the number-one reason that people aren’t doing what they should be doing is a lack of people to handle it. And when they get into the analysis, there’s so much they could do, so much that could be looked at. There are some retailers who struggle with access to information, or the digestibility of it is not in a format that they can use. All struggle with making it actionable.

SandHill.com: You commented that sometimes the data is not digestible in a form that they can use. Is that a weakness in the technology, or is it due to some other factor? And if so, what is the message to software vendors?

Lauren Freedman: I think it is partially a weakness in the technology. And part of it is how sophisticated the operator is. Five different merchants may use the same technology but use it to a different degree. Another issue is that senior management might ask a question but the company hasn’t set up a report for that information. There is also a difference in dashboards. Some people have built more sophisticated dashboards; they’ve learned over time these are the metrics that really drive their business. Others may be playing catch-up in getting effective dashboards in place.

Dan Darnell: Another factor is the vendor perspective. Many technology vendors outside of the analytics space focus on analytics that prove the value they drive for their clients. Since every vendor’s data is pushed into a single system, it ends up creating a lot of different reports that someone has to look at in order to get the full picture across their business.

Lauren Freedman: I interviewed a number of merchants that talked about the attribution factor Dan mentioned. They might pick up metrics from vendor A, vendor B, vendor C, and then maybe their overarching analytics vendor shows other results. So they have to match those up and make sure the data is consistent. Since the merchants make inventory and website functionality decisions based on the metrics, it’s important that they have as clear and accurate a view as possible. As a result, some merchants are taking the plunge and investing in data warehouses to get more sophisticated with the metrics they have and the tools to manipulate them.

SandHill.com: Does end-user adoption play into this situation? Are the retailers able to use the technology and understand how best to meet their needs with it?

Lauren Freedman: Yes, but there’s a little bit of a right-brain, left-brain thing going on. Somebody who’s very savvy about reading the numbers and piecing them together isn’t necessarily the same person who will come up with what the action plan is. Also, profitability has to be top of mind for the top executives, but not everybody is focused on that. Somebody who is a lot lower down in the organization may not focus on metrics from the perspective of the bottom line. So there are multiple sides to how they view the metrics.

SandHill.com: Another surprising aspect of the report is the findings about retailers’ use of personalization.

Dan Darnell: As a vendor in the space, we at Baynote tend to think that businesses are fairly far along in their maturity with regard to personalization. But the study revealed that even many name-brand retailers still have yet to tackle the automated technologies that are available for merchandising and personalization.

SandHill.com: Why are they struggling in this area?

Dan Darnell: Partly, it’s a matter of juggling priorities and resources and making decisions around investing in the right tools, technologies and partners. Some of them still believe that they can manually merchandise across what is an increasingly complex and dynamic catalog environment; they haven’t yet discovered that they need to automate merchandising and personalization in order to impact the bottom line.

It’s also partly due to the fact that they believe (and not incorrectly) that they’re doing a reasonable job in manually merchandising things. A merchant can do that manually pretty well with a few hundred products but not with larger more complex catalogs when they have 10,000 or 10 million products to manage.

SandHill.com: Were there any findings in the survey that surprised you?

Lauren Freedman: We asked a question in the merchant survey: “Please rate your top merchandising and navigational tactics for customer retention, with 5 being the most important and 1 being the least important.” I was pretty surprised that “analytics evaluation” was the number-one answer. Ninety-three percent of the respondents cited it as one of the top two tactics they use for customer retention — even above product assortment, free shipping or website redesign to make it easy to find products by search.

SandHill.com: Is there any difference in the use of mobile initiatives and metrics according to the size of the merchant?

Lauren Freedman: The larger companies have been more aggressive and are spending significantly more. Some are outsourcing and some are doing it internally. Many of them also have multiple channels. For example, if you’re at a Nordstrom’s you potentially could be checked out at a little mobile POS terminal, or you might work with someone in another retail environment in iPad to design a room. So there are investments in mobile activities across the board.

On the mobile front, 29 percent of the merchants are spending over $100,000, 17 percent are spending nothing, 41 percent are spending under $50,000, and 13 percent are between $51,000-$100,000.

A lot of the merchants I talked with handle mobile as an add-on to their existing platform, so they’re not going to allocate a large budget now. They’re just going to put themselves in a position where they’re mcommerce enabled and then decide how to evolve. It’s the same way people got involved in ecommerce.

SandHill.com: What is your advice for retailers who recognize they need to improve their use of metrics so they can make wise decisions?

Lauren Freedman: First and foremost, they need to pay attention to the metrics, be aware of them and ensure that they have a set of dashboards that they can work with. They also need to make sure that their goals are aligned internally. What are they trying to achieve? What’s important? What do they want to measure? Make sure there’s a “why” behind the “what” they measure.

I think it’s also important to have some discussions and dialog within the organization about what they find and evaluate it on a week-by-week basis. Then even if they can’t do a lot, they should at least take action with what they have. Look at the numbers, try to make sense of them and try to take some action.

Specifically as it relates to mobile, it’s important to follow some of the emerging metrics. What’s happening with mobile? Also what’s happening relative to social? What do you need to learn from that? What do you need to understand from that? How can you evolve your dashboards to keep track of that? When you see 20 percent of your traffic comes via mobile, you’d better make sure that you’re measuring it in a clear and precise way.

Dan Darnell: I think it was very interesting that the playbook of best practices at the end of the report that Lauren pulled together is a lot about blocking and tackling at this point (such as having meetings, agreeing on the right metrics and setting the right goals). Once a merchant has the tools for the metrics, success is about organizationally aligning to take advantage of the information from them.

Click here to listen to an on-demand replay of a webcast on the findings. As a supplement to the webcast, you’ll be able to download a free copy of the white paper, “Metrics Therapy — Details, Dashboards and Diligence.” For an infographic on the study findings, click here.

Lauren Freedman is a seasoned 16–year ecommerce veteran and author as well as a recognized and respected figure in the online retail industry. She has a passion for merchandising that she has parlayed as president of the e-tailing group, evangelists for merchandising and customer service best practices. The e-tailing group advises retailers on merchandising, strategy and customer experience best practices while simultaneously developing thought leadership and go-to-market strategies for top technology companies. Its annual shopping and merchant surveys provide a comprehensive overview of the state of ecommerce, setting industry standards.

Dan Darnell, vice president of marketing at Baynote, is an experienced software industry marketer with a strong background in marketing automation, online optimization, and analytics. Prior to Baynote, he was director of marketing for both Adchemy, a digital advertising technology company, and Interwoven Optimost, a multivariable testing and targeting platform, where he focused on product and company messaging, public relations, analyst relations and marketing programs.

Kathleen Goolsby is managing editor at SandHill.com

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