It was in the mid-1990s when I had my first taste of actionable web analytics. I was working for a telecommunications company that offered a Voice over IP solution (VoIP) and I was part of the team that tracked banner placements on websites like Excite, Yahoo, and AltaVista. I will never forget the cartoonish banner that consistently beat out every other banner ever produced. It was counterintuitive, but that alone isn’t what excited me. Here we were in the mid-90s and this company’s web team was able to tell you exactly how many minutes of phone calls were made to Guatemala as a result of banners placed on a particular keyword. They were even able to predict how many people would call Russia after they downloaded the VoIP software from the sports pages on Yahoo. These were the metrics that drove the media buys and placement decisions week after week. This was my web analytics reality and so it set my expectations.

After that, I started working with a startup, a specialty retailer. When I began working with them, I was shocked at how little people were tracking. Not that they didn’t have metrics but they weren’t the type of metrics you could make decisions and take action on. This is still, sadly, the reality for far too many companies today. While today so many companies have sophisticated analytics installed to measure web activity, the organization and planning of their measurement is still poor and the ability to take action on that data is still minimal.

I would like to share just some of what just a handful of companies are doing with their insights today in the hope it will inspire you to analytics greatness.

One of the companies I know, a multi-channel retailer, provides regular reports to their physical store managers of the browsing history from visitors who are geographically located near the store. The reports are not so impressive; it’s the action they drive that impresses me. These store managers often rearrange in-store displays to promote the items visitors are viewing the most online.

You can do a similar thing even if you are an online-only retailer. You could easily change home page, search results, and category promotions based on geo-location data and visitor browsing history. Imagine you are a home goods and hardware retailer and you begin to see an increase in searches for shovels and snow blowers from the Boston area because the weather forecast shows a winter storm coming. If you were a multi-channel retailer, your Boston store would put shovels, melting salt, and snow blowers on prominent display, while your Miami store might still be showing garden hoses prominently. Online you can use segmentation and personalization tools like BTBuckets (which is free) to swap out your promotions for geo-targeted traffic from Boston to see your winter storm promotion. Enterprise tools like Monetate can even leverage built-in capabilities to target geo-location traffic based on local weather or weather forecasts.

Another similar multi-channel retailer collects and analyzes in-store scans of their product shelf tags by cellphones and uses that data to change end-cap displays based on scanning popularity. They can also take that same scanning data and change website promotions to mirror the popular products in those locations for website visitors.

I know several other companies that are monitoring product reviews and changing their local inventory based on how positive and negative reviews are. Again, you can use business rules to change your website behavior and target visitors based on all of these fantastic data points.

Another simple geo-personalization tactic you can use is custom messaging international visitors. It can be as simple as displaying the fact that you ship to the visitors’ countries to changing tag lines or promotions to be localized. Monetate has found that across its significant client base when it personalized experiences based on international visitors’ geo-location, it improved conversion rates by as much as 100 percent.

Are you already using geo-location data to your advantage? If you are, please share how you are using the data with our readers. If not, then can you afford not to take advantage of the geo-personalization opportunity?

The other day, I was reading an article on my iPad about a cool new gadget that allows your iPad to hang from your treadmill or exercise bike, a fit rail for the iPad. In the article, they had a link to the Scosche Fit Rail for the iPad on Amazon, so I clicked through. Cool enough, I added it to my wish list.

As soon as I added it, I wanted to share it with Jeffrey but I realized there was no easy way to send this item to him. I could click the back button twice to send him the article but what an opportunity for Amazon (in all that empty space) to offer an ability to share the item you added to your wish list to FaceBook, Twitter or even just to email it to someone to notify them.

Would you have expected some sort of share ability on this wish list confirmation page or have I gotten share happy?

Update: Did you know they have a great share widget on their order confirmation page?

I was recently discussing online retail with a colleague  and the challenge online retailers face in proving their value to their traditional brick-and-mortar counterparts. It made me wonder why no ecommerce platform (that I know of) has added the ability to send a shopping cart to someone’s mobile phone.

Imagine you are on the Nordstrom website and you are looking at a number of outfits but you don’t want to commit to purchasing them until you can touch and feel them or even try them on. You click on a button on the website, provide them with your email address or mobile phone number and the ecommerce platform sends you a QR code with the contents of your cart. Maybe they can even schedule when they can come in to try the outfits and they could be all ready for them if not then they can just stop by one of the retail locations, walk up to a staff member to have the QR code scanned and then they could bring you the outfits you selected. This allows you to close the loop from online to offline. You could even offer them incentives to show up to a store at a particular time or day.

QR code use is growing and this may make it grow even further.

Do you know anyone trying this yet? Are you willing to be the first?

P.S. Feel free to scan in the QR code in this post

Is your corporate metabolism a bit sluggish? Are you dragged down by the weight of meeting-itis? Do you need more energy and resources to respond to the ever-increasing demands of your customers?

Well I wish I could tell you about the next magical black box, with the persuasive infomercial that promises you miraculous gains without any of the hard work required. If you bought any of these gimmicks before and are tired of their sugar-coated promises and lackluster results, then maybe you are ready to get on the marketing optimization fitness plan.

Here are four exercises that should help you on your way. Don’t worry if you don’t execute perfectly on the first try; the key to this plan is to continuously improve day after day.

Exercise 1: Tweet VP

In 140 characters or less, tell me the value of doing business with you. What makes you different than your competitor? This is like writing your unique value proposition or unique campaign proposition, but you are limited to the number of characters, as if you were going to post it on Twitter. If you do a good job of this, you could lower your bounce rates by putting this on every landing page.

You should revisit this regularly and try to improve the power behind each word.

Exercise 2: Reflexive Response Time

Choose one of the following:

A.) If you are an e-commerce retailer, take 10 mystery shoppers and time how long it takes from customer order to fulfillment. Then have each of them contact customer service via e-mail, phone, and Twitter/FaceBook and time how long it takes for them to get a resolution. How did you perform? Were there any breakdowns in operations? Did each channel respond equally? How can you improve? How did you compare to your competitors?

B.) If you are a lead generation business, take 10 mystery shoppers and have them complete your lead generation forms. How long until they got their first real response – not an automated one from an e-mail auto-responder? Keep in mind that a lead loses its effectiveness by six times in the first hour. Now have these “leads” well-prepared to respond to a sales person’s questions. How long does it take for them to get a real price for your product or service? Then have these leads break into groups and ask tough questions by phone, e-mail, and Twitter or Facebook. How did you perform? Were there any breakdowns in operations? Did each channel respond equally? How can you improve? How did you compare to your competitors?

C.) If you are a publisher – pick a unique story line. How long does it take for your article to be researched and published? How long does it take until they get promoted and socialized on each of the social sites that you participate on? Have some pretty specific new information or corrected information to the article ready and ask your team to revise their article. How long does it take for it to be revised? Have “subscribers” ask a question each by phone, e-mail, and Twitter/Facebook. How long did it take to respond? How did you perform? Were there any breakdowns in operations? Did each channel respond equally? How can you improve? How did you compare to your competitors?

Exercise 3: 25 Interesting Things About You/Your Customers

You may have seen this pass-along on Facebook a while back as people started to list 25 interesting things about themselves. Do the same thing for your business and have several people involved in your business do the same. Then find the most interesting ones and use them on your about us page. This will enhance your credibility by adding transparency into your company.

Exercise 4: Metrics Madness

Have each of your team leads in a meeting room with you as you open up your marketing dashboard with your KPIs (key performance indicators). Go through each one and ask them what the team’s plan and role is as each one of those metrics changes by 20 percent up and by 20 percent down. Do they have clear action items? How long would it take for them to respond? Do you have too many KPIs or are your KPIs not clear enough? Can they prioritize these changes effectively?

There are plenty of other exercises you could perform on your way to becoming a marketing optimization fitness fan. Living the lifestyle that performs under pressure, responds to changes rapidly, and serves your customers and business in real-time fashion is just one way to improve your corporate metabolism fitness levels.

What else are you doing to stay fit?

Confused about conversion optimization? You should be with all the experts sharing their opinions. After all, everyone is entitled to their own spin on the measure, test, analyze, and repeat optimization cycle.

When Jeffrey Eisenberg, my brother and business partner, recently spoke at a WAA conference, he said that you should be able to predict the direction of your tests better than 50 percent of the time. Imagine that, we’ve arrived at the point where we believe that conversion optimization should be less predictive than a coin toss – how sad!

With all the noise, the signal is hard to detect; oversimplification and overcomplication are leaving businesses confused about how to take optimization past the first few tests. The conversion optimization process is simple but not easy; the devil is in the details. The details involve a continuous improvement process that takes into account the realities of your organization and those of the real-time marketplace.

Only the most basic testing is about what variation(s) beat the control, because then all you know is what won. Testing needs to be about why something won. In order to learn, duplicate, and evolve, you need to understand your customers within their context and become more efficient at the real-time marketing tactics that today’s competitive marketplace demands.

Let’s start by better-defining conversion rate so that you’ll realize why the typical two to 10 tests in a month are not good enough and why you should be running dozens of tests a month.

Conversion rate = The number of people who take the action you want them to take divided by the total number of potential people who could have intended to take that action.

Not everyone will convert. Nevertheless, with the exception of bad traffic, everyone has some intention to convert. Our job is to offer every visitor an experience that fulfills their needs and leaves us a measurable conversion, even if it’s not a macro-conversion.

Please follow these steps:

Step 1 – Let’s Understand “Number of People”

Your conversion rate is influenced by how effective you are at attracting the right traffic and then helping them engage with your “funnel” to convert.

How are you bringing these “number of people” to your website? Do they all come by directly typing your URL in their browser? Do some search for your brand? Do some search for your category? Do some search for your products? Do some of those people come from organic search; paid search; e-mails; affiliates? Do these people come from different websites: Google? Bing? YouTube? Wikipedia? Twitter? Facebook?

Who are these people? Are they all the same? Do they have different characteristics, needs, questions? Do all these people have the same amount of product/service knowledge that you do? Are they all at the same stage in their buying process? Do they know you already? Or have they never heard of you before? Do you know your customer segments?

Do you launch new marketing efforts regularly? Are the efforts last week different than this week? Last month versus this month? Is there an important calendar event occurring (Christmas if you’re a retailer; Fourth of July if you’re a seller of flags; Mother’s Day if you sell flowers; etc.)? All of which may induce a “spike” in traffic that is different than usual.

There is no such thing as an “average” person. There is also no “average” marketing campaign. That’s why your average conversion rate is a rough indicator but also virtually worthless as a way to focus your conversion optimization.

You have lots of segments who come to your website. They differ by demographics, psychographics, behavior, or because they came in through very different marketing efforts. You can calculate a conversion rate for each one of these segments/marketing efforts and you should prioritize each one based on impact and value.

Step 2 – Let’s Understand the “Action You Want Them to Take”

If you are in retail, you want them to purchase a product.

If you are in lead generation, you want them to become a lead.

Are there no other actions that are valuable and contribute to the bottom line?

In retail, even in they don’t convert now, would it at least be more valuable to know if they added an item to your wish list, or subscribed to your newsletter, or looked up your retail store hours, or added items to their cart versus just bouncing off the site right away? What are you doing to turn that one-time customer into a repeat customer? Do they only need one product you sell or might they need different ones over the course of time?

In lead generation, if they don’t give you all their information and request to be contacted by sales, is it valuable to have them sign up for a whitepaper, or a demo, or your newsletter? Is it better to download specification sheets, engage in calculators, or print or forward pages rather than just bouncing off the website? These are all steps that move people through their buying process.

These are just some of your macro-actions. What happens when someone comes from one of your ads and gets to a landing page? Sometimes the action is one of those listed above, but what if that page is only meant to help your visitors to choose the right product or service and they still need to actuallyclick on the right one for them? What do you do to help them take that action and not bounce away? These are the micro-actions that need to happen from step to step in the potential customer’s journey.

All of these are actions we need to optimize. You can calculate a conversion rate for each one of these macro- and micro-actions, and you should.

Step 3 – Let’s understand “Total Number of Potential People Who Could Have Taken That Action”

What happened to the majority of visitors who didn’t convert? Have you asked and answered why they didn’t?

Did they land on your site incorrectly? For example, they typed in “shingles” into a search engine and they were looking for roof repair and not a skin condition related to chicken pox. This is obviously a disqualified visitor. Did they try to purchase from your website and something went wrong? Did they have problems accessing the information? Could they not figure out how to take action on your website? Did they not trust you? Did they leave with questions that were not answered? Did you answer their questions, but they weren’t ready to buy? Did you not instill a sense of urgency or desire in them? Did you not make them a great offer?

First , you need to optimize your website experience for these potential buyers through the hierarchy of optimization.

There are thousands of potential improvements to choose from. You need to prioritize these based on the level of impact that improvement can have and the resources available to execute them. If you don’t have a copywriter available at the moment, you shouldn’t focus on copy changes, even if it would be the most impactful. That may sound like common sense, but whenever I say it, it seems to catch many companies like a deer in headlights.

Your average conversion rate is the aggregated conversion rate of how well your website performs for each of your customer segments, and each of your marketing efforts for each of the actions you want them to take. You optimize your conversion rate by first focusing in on the elements that impact as many of these as you can, and then you have to work on these “micro-funnels.”

While you work on conversions, market conditions, competitive forces, and ad copy, your customers’ needs are changing. This is why you need to continuously optimize your marketing efforts. You can’t afford to have a “set it and forget it” mentality to your marketing.

If you only focus on improving a few landing pages here and there, testing a few variations here and there, and tweaking creative here and there, you will never reach your highest potential conversion rate!

Don’t worry, your customers won’t go unsatisfied. I guarantee that sooner or later your competitors will figure out how to satisfy your visitors’ needs. Hopefully that will motivate you to start getting your conversion goals on target by investing in a true continuous improvement process that asks “Why?” as much as “What?”

In December, Amazon (AMZN) invested $175M in LivingSocial. Like Groupon, LivingSocial capitalizes on local advertising by having deals of the day that offer discounts to people who opt in to certain deals. But today, they are offering a $20 Amazon.com gift card for just $10 (get yours today). Brilliant!

It is rare to see 100% redemption for any offer for these companies, but this is a great way for them to add several hundred thousand to a million+ new names to their database as the word of mouth of this great offer gets out. Dozens of my friends have already promoted it on Twitter, Facebook, etc. And even if 100% redeemed it, there could be some breakage in terms of not all the money being spent and of course Amazon has a profit on those purchases as well. So total cost is less than $10 a customer. Can you come up with some creative way to acquire customers that benefit all three parties involved: benefit You, benefit the customer and benefit the company you are offering something from? Please let us know.

When my brother Jeffrey and I wrote “Waiting for Your Cat to Bark?” we explained how in the evolution of sales and marketing history, the trend towards the reduction of friction for the customer is impacted by three factors: transportation, communications, and payment technologies. In my last column, while describing the Future Shopper, I illustrated one of the trends; how communication technology will affect the way that people buy.

The other two facets of change are concurrent evolutions in transportation systems (i.e., superb logistics and virtual delivery) and payment systems (security, alternate currencies, and micro-payments). This past week at the Shop.org conference in Dallas, I caught up with Scott Silverman, the former director of the association who recently left to co-found IfeelGoods.com. It’s a fascinating move but this company truly has the potential to change the way payments are made using Facebook credits.

The impact on reach and traffic patterns that Facebook and its Like button plug-ins have had are evident. The facts that Target is beginning to sell Facebook credits in-store and how quickly the social gaming world is growing show that we are on the verge of seeing a wider adoption and use of these credits. If enough people begin to accept and use a currency because it represents stored value to them then it can become universally accepted. This is not unrealistic, as TechCrunch recently wrote how Facebook can become bigger than Google:

If PayPal’s 2009 revenue was $2.8 billion with 87 million active accounts, it’s not a stretch to predict that five years from now Facebook too will have 100 million to 150 million active Credits accounts (at least!) bringing in $5 billion in revenue from this business unit alone.

Many in the industry have been waiting to see if anyone would solve the micro-payment issue and Ifeelgoods.com is one solution that would easily integrate into retailers websites to offer Facebook credits for incentivizing positive actions, thus providing a viable micro-payment option.

We might offer our customers some virtual goods, such as a tractor for FarmVille or a machine gun for Mafia Wars as the virtual goods market is exploding to prompt them to take action. According to The New York Times:

The Inside Network, a research firm that tracks social media trends, said Tuesday that the market for virtual goods in the United States was expected to grow to $2.1 billion in 2011, up from $1.6 billion in 2010.

Facebook has been pushing all its game developers to use its credits system as the virtual currency of choice, as it gets 30 percent of all transactions processed with credits.

With over 500 million users globally and with 42 percent of them actively using social gaming, which will make them comfortable trading Facebook credits, will it be long before we see it as another payment option that we are offered as consumers?

In fact, my good friend and CEO of ClickEquations, Lucinda Holt just returned from a trip to China where she describes how we should possibly look to e-commerce trends there because they may become popular here in the U.S. Lucinda shares:

“Because of the enormous difference in China – in culture, payment and delivery infrastructure, Internet penetration and maturity, and many other attributes – the Internet is developing very differently there than it has in the U.S. Things that we assume here just aren’t true there. For example, search isn’t the universal onramp to the Internet. Social commerce is much older and entrenched. Gaming leads in online activity and spending. And payments aren’t dominated by credit cards; services like Alipay and Tenpay are pushing beyond micro-payments in games to become standard payment mechanisms for ecommerce transactions.”

Are you accepting or using Facebook credits yet? Are your customers? What impact will the wide acceptance of Facebook credits have on your business?

This cartoon from The Oatmeal blog really summarizes people’s behavior about buying expensive mobile devices but balking at paying $0.99 for an application. Human beings involved in a marketplace are both unpredictably predictable and predictably irrational, which leaves plenty of room for intelligent optimization efforts. Yet much of the research about applications shows people love adding applications to their devices and following the common trend in software they are gravitating toward free.

Another evolving trend is that the nature of what apps are downloaded changes as the available devices change. Also, what people feel comfortable doing on these devices will change. You can already see a big difference between iPhone/iPod touch users and iPad users.

There are great opportunities ahead for app developers and many have already started to figure out what it takes to be successful. Last week, I was presenting at Benchmark Capital’s offices in Tel Aviv, Israel, when one of its portfolio company’s new apps, Lyric Legend, got approval from the Apple App Store that morning. I watched as it climbed the charts from new application to number two free music game in the iTunes App Store over just two and a half days! I love this app both for what it does as a game and what its potential is as a business model. The game is rather simple – tap on the correct words from the lyrics as they are sung. Get really good at a song, and you become a lyric legend and then go buy more songs. What a great way to get people to buy more music! I love that as a mashup concept to music discovery. But seeing all this underscores several limitations that all app stores have and the challenges for developers seeking to sell more effectively through them.

5 Challenges Facing Application Developers Today

Application Discovery

Finding apps that meet users’ needs is still an overwhelming issue with most app stores including Android and iTunes marketplaces. The experience still sucks! That’s a reason why applications like Appstream from Appsfire have had huge success helping people find new apps and why posts like top 10 iPad apps for travelers keep hitting the top of websites like Digg. Unless you know exactly the name of the app you want, or can find it based on the top apps list or top of a category list, finding one of the over 250,000 apps in the iTunes marketplace is a horror. Of course, sharing with friends, and social discovery (like Ping will hopefully provide) is one helpful feature, but allowing people to tag applications or allowing people to find apps by the tasks they help you accomplish can be another way to help people discover new apps.

Persuasive Descriptions, Analytics, and Testing

A limiting factor is the way the app stores allow developers to present their applications. A text description and a few screenshots. Certainly, video demos would be helpful for a lot of the applications; providing developers with an easy way to measure, test, and update their descriptions would be another. Right now, developers have very little insight into an application’s page views, conversion rate, or even accurate downloads, or more specifically what marketing efforts are helping to get those visitors to download apps.

The company behind Appstream has developed a service for application analytics that works really simply for the developer without any requirement of adding code. They created a service that tracks conversion to purchase in the app store and provides real-time analytics on referrals, geography, clicks, and purchases. But the application stores need to work closer with developers to make their marketing efforts more effective and not tied up in their app store black box; the stores must provide access to advanced download and usage metrics. I can almost understand Apple not offering this capacity today, but in Google’s Android store, there is no excuse for not finding a way to tie in Google Analytics.

Try Before You Buy

Why not offer the ability to have seven or 30-day trials of an application, so that people can really see its ability before they commit to purchasing it? Limited trials are just that, limited, and don’t always show off the key benefit a user is looking for from an app. This is common for other software applications and needs to be common for mobile applications as well.

App User Targeting

Application stores must provide developers with efforts to target users from within applications (free apps with ads to support it) and from within the store experience. Just like Amazon offers publishers the ability to target readers of similar books or books by the same author, the app stores should provide this functionality. They should also offer an advanced advertising targeting system that would allow developers to target people by geography, by current application use profiles, etc. That would allow me to target all New York iPad users who use their iPad for presentations, for example. They could also allow the ability to purchase placement of ads on the app store home page or other pages as well.

Integration and Evolution of Business Models

Just like Lyric Legend is a great music discovery tool, imagine it as a business model that sits on top of this digital content marketplace, where as you master new songs, based on your preferences and current iTunes music collection it offers you new songs to add to your iTunes collection and the ability to challenge friends who play Lyric Legend at who can do best with the new song. What will this do as the nature of online videos, movies, e-books, and apps evolve? What business models will exist in the future based on the integration? What advertising possibilities will be created?