Analytics Help Retailers, Marketers Chart Consumer Habits

CU360
March 3, 2009 | COMMENTS

As the financial meltdown gained momentum last fall, spending habits changed quickly. Many consumers stopped spending altogether. Those who were still spending were spending less. Retailers responded by investing in a new breed of analytics software that helps them maximize their share of the dwindling pool of dollars consumers are spending, reports BusinessWeek.com.

Best Buy, for example, noticed the number of customers signing up for financing on big-ticket purchases surged, while the number of shoppers spending $1,000 or more per trip plummeted. In response, Best Buy began offering free financing for entire shopping carts full of items—rather than on one product at a time. That left just one question: At what dollar amount should they offer the free financing?

To find its answer, Best Buy turned to software from analytics company Omniture. In trials, Best Buy offered financing at different levels: $499, $699, or $999. Every time a customer signed up for payments, Omniture tracked purchase details and arrived at its answer: $499.

This type of software helps retailers track customers' behavior and buying patterns. "A lot of retailers are looking for small, but promising, technology investments, and analytics is one of those investments," Gartner IT Researcher Hung LeHong tells BusinessWeek.com. Growth in spending on analytics software has accelerated as drastic changes in shopper behavior sent many retailers racing to adapt, says Janet Sherlock, research director of retail for AMR Research.

Retail sales aren't the only focus for Omniture. The firm has installed its software on the computers of other major corporations, including Microsoft, Wal-Mart, Hyatt, and Toyota . Its desktop readouts monitor the velocity of Web marketing tools such as e-mails, search engine keywords, and display advertising.

With more advertising dollars shifting to the Web from traditional media, Omniture has emerged as a key player in the digital economy. Its Web site includes an array of options including web analytics, channel analysis, behavioral targeting and testing, search marketing, and marketing integration.

Omniture is now only one among a growing field of companies offering Web analytics. The competition ranges from start-up firms to Google, which offers a simple analytics program that has the advantage of being free.

Analytics software might not be able to save a failing retailer, but it could help with the tough decisions that accompany a downsizing. Rather than just closing stores that have the worst sales, companies can analyze data obtained from customer loyalty cards and other programs to determine which stores are being most affected by customer behaviors. From there, the stores can make better decisions about how to tailor sales, coupons, and other promotions.