Companies that have built successful e-commerce sites have usually adopted the mantra: “The customer is always right.” That’s because, if business-to-consumer enterprises have learned one lesson in the past year, it’s that Web sites must offer superior customer service to capture and keep their buyers’ attention.
Today, the same philosophy is true in the business-to-business arena, where executives and analysts say truly innovative e-businesses are learning that each partner’s business goals are unique. As a result-now more than ever-customer service options must be personalized to meet those goals. Because what’s at stake, experts say, is not just a company’s ability to retain its hard-won customers but also to attract new business partners in the increasingly competitive B2B marketplace.
“We’re now seeing the adoption within B2B of practices that were spawned in the consumer world,” said Jim Monastero, an analyst with KPMG International, in McLean, Va. These include loyalty-building programs, one-to-one marketing plans and customer retention initiatives, as well as allowing business partners to access and manage account information on personalized portal sites, Monastero said.
“The customer expects the vendor to know all about them, and the bar gets raised higher,” he said.
Although business customers are usually the ones demanding more personalized attention on B2B sites, the result can be beneficial to both buyers and sellers. In today’s Internet economy, where companies must compete in real time, dot-coms and established brick-and-mortar businesses alike are finding that a personalized B2B portal can standardize buying patterns to eliminate redundancy, save money and enable both partners to react quickly to ever-changing business conditions.
That business partners now expect more individual pampering is clear to San Francisco-based Unexplored Travel Network, a 9-month-old adventure travel e-business. The company helps users plan high-end vacations to exotic spots across the globe through its Unexplored.com Web site. The site uses a software suite from Luna Information Systems, of Oakland, Calif., to help it link its B2B partners-which range from hotels and restaurants to fly fishing gear makers-with each other as well as with consumers.
The site’s value proposition to consumers is that it functions as a one-stop travel planner for exotic vacations, UTN officials said. To retain this edge, it’s critical for the site’s operators to effectively manage relationships among their B2B partners.
The Unexplored.com site “builds a bridge between ‘one-off’ destination service provider companies,” such as those running exclusive cruise vacations, and consumers researching such vacations, explained J.P. Thieriot, UTN’s CEO.
The bridge that Thieriot refers to is Luna’s eRelationship suite, one of a new breed of customizable CRM (customer relationship management) solutions for managing B2B relationships. UTN deployed the Luna product to help track its wide variety of unique relationships.
“Our business partners are heterogeneous,” said Sebastian Atucha, UTN’s chief operating officer. “A guy running a bed and breakfast in Vermont is not looking for the same kind of services from us that a safari company is looking for.”
However, one thing those business partners have in common is the need for “affinity group marketing” services, such as providing an online forum to swap ideas with others in the travel industry, Atucha said.
So when providers of value-added travel services-such as companies that run white-water rafting trips or rent mopeds-need to link with travelers booking vacations on UTN’s site, Luna’s software presents cross-selling opportunities, Atucha explained. For example, when a consumer books a week at a bed and breakfast a mile down the road from a company that runs canoe trips, the eRelationship system will present the canoe trip as an add-on option.
Deploying B2B portals such as eRelationship means investing more time and money into CRM. But companies are finding the return worth every penny. For instance, another Luna customer, FedEx Corp., saved $7 million in yearly expenses by using eRelationship to let B2B customers view, download and print customized rate books featuring real-time pricing, according to a March 29 report on Luna’s technology by Forrester Research Inc.
In the report, Varda Lief, an analyst with Forrester, of Cambridge, Mass., said the eRelationship software captures contract terms and conditions as business rules, letting B2B companies apply those rules to data from applications such as inventory and general ledger to bring about greater efficiencies. The application also maintains tailored user profiles that streamline order processing and promote “self- service CRM” by enabling customers to find a variety of information without going through account representatives, as in the case of FedEx.
In another example, Datastream Systems Inc., a Greenville, S.C., maker of tools for procurement of main tenance parts by companies in industries such as manufacturing, aerospace, automotive, pharmaceuticals, chemicals, health care and telecommunications, is preparing to launch in September personalized customer portals on its iProcure online industrial parts supply marketplace.
In this initiative, iProcure is attempting to reach out to its disparate customers on a more extensive basis, said John Sterling, president of Data stream’s iProcure division.
“There are going to be transaction-based parts of the portal along with custom content, including help-wanted ads and community features,” Sterling said. But most important, the portal will allow customers such as Toyota Motor Corp. and AMR Corp., parent company of American Airlines Inc., to get a better handle on their spending on MRO (maintenance, repair and operations) parts, eliminating redundancies and saving money, he said.
“For our customers, the advantage will be that salespeople can see what’s going on in the field” in terms of MRO purchases, Sterling said. “Ordering parts is a huge, time-consuming hassle, and they’re looking for a way to make their lives easier.”
Online retailers, while they may not face the kind of MRO expenses found in the manufacturing space, are still in need of a way to streamline the procurement process.
Take Bluefly Inc., producer of the Bluefly.com clothing and housewares site. Bluefly is teaming with partners that are helping keep a real- time view of inventory and order processing. The retailer uses the Total Order Transport System, produced by Marketing Out of the Box Inc., in Niles, Ill., to get continually updated order and inventory information as it moves through Bluefly’s Oracle Corp. enterprise resource planning system. The Java and Extensible Markup Language-based tool can be configured in a unique way by each user, explained Marketing Out of the Box CEO David Newberger.
“Each customer selects which information is most important” to track, and the software adjusts those parameters accordingly, Newberger said.
This, according to Forrester’s Lief and other observers, is where personalized CRM is headed because the vendor needs to understand who B2B customers are-and recognize their needs-while involving the individual partner in a community of common interests.
Such services will also help boost sales for both B2B and B2C customers. For instance, last month, Sun Micro systems Inc. contracted with e-business personalization software maker Blaze Software Inc., of Mountain View, Calif., in a deal aimed at helping Sun’s financial services customers, including Wells Fargo & Co., offer more customized services to its clients.
Sun, of Palo Alto, Calif., is using the Blaze Advisor Solutions Suite to apply the same business rules across its B2B financial service customers’ call centers, voice-response systems and electronic kiosks. As in UTN’s Luna implementation, where the company is using the back- end B2B bridge to help partners target customers, San Francisco-based Wells Fargo is using the Blaze tool to market new financial services to customers based on unique personal histories and real-time business conditions, said Sun officials.
The application makes much sense in the financial space. Regardless of the industry, however, every company will have to “get personal” with its partners to survive in e-business.
Benefits of personalized B2B
Promoting customer self-service When a B2B customer needs rapidly changing inventory, shipping and purchasing data in real time, it’s quicker, easier and more efficient for them to have access to it automatically on a personalized portal site than to have to ask a call center rep for the information.
Getting a three-dimensional view of B2B customer needs
Business partners typically play several roles, each of which generates different information needs. First, for example, your customers are part of a company that has contracts with other parties. Second, they are part of a functional group, such as finance or purchasing, within their enterprise. Third, they are individuals with different information preferences and permissions. By tracking these aspects simultaneously, leading B2B vendors can help tailor information and business processes.
Providing a basis for data analytics Companies in e-business networks will be able to customize trading systems for business partners based on the analyses of historical performance. A parts manufacturer, for example, could develop distributor-specific pricing strategies that consider payment record, order volume and customer service costs.
Service providers looking for better ways to slice and sell server space have new options from two vendors offering comprehensive hosting management tools.
Sphera Corp., an Israeli developer, this week plans to unveil its service automation package for ISPs (Internet service providers) and ASPs (application service providers). The HostingDirector software lets service providers create virtual dedicated servers and offer customers advanced service provisioning, software installation, billing, reporting and security.
Ensim Corp., a pioneer in end-to-end service automation tools for service providers, is taking its flagship product, ServerXchange, beyond Web hosting. The Sunnyvale, Calif., company is forging alliances with network service providers, caching and content tool vendors, DSL (digital subscriber line) carriers, and even OEMs to expand the role of its management and provisioning tools.
HostingDirector and ServerXchange are based on the concept of virtual private servers. By using the tools to build virtual copies of an operating system kernel, service providers can segment any number of customers on a single physical server, with each partition running independently.
The reduced hardware and rack space, along with the provisioning tools, lets the service providers offer more services-and make more money-than in traditional hosting arrangements.
“We’re trying not to decide for our customers how to run their businesses,” said Sphera CEO Tamar Naor in Tel Aviv. “Everybody is trying to get into more managed services.”
HostingDirector’s features include user-deployed plug-ins for a variety of popular applications, such as bulletin boards, counters, e-mail forms and guest books.
The tool also automates billing and reporting and provides a firewall with each virtual server. “We did our best to cover all the major pains,” said Sphera’s CTO (chief technology officer), Raphael Salomon.
Features such as automated software upgrades, which will let Sphera push updates and patches to service providers, are set to begin beta testing in June.
“We’re looking to do hosting in a way that’s cost-effective but also that is on the leading edge of technology,” said Richard Fren kel, general manager for Web hosting at Bizness Online Inc., of Wall, N.J. Bizness Online is evaluating Sphera’s tools.
“We’re still in testing, but I like Sphera’s concept,” said Frenkel, adding that customer trials using HostingDirector are set to begin at Bizness later this year.
Another benefit of Hosting Director, Frenkel said, is that it’s largely open source, enabling service providers to alter the look and feel of the user interfaces.
Officials at Ensim, meanwhile, said the company is moving ServerXchange beyond simple hosting solutions in an effort to win over high-end ASPs offering bulky enterprise resource planning applications. Ensim is also making deals with network providers, such as Digital Island Inc., along with caching and content specialists, such as Inktomi Corp. and Akamai Technologies Inc.
The combination of content caching and on-the-fly virtual servers at the network edge will enhance performance of hosted applications and streaming media, among other things, Ensim officials said.
In addition, Ensim is negotiating with two hardware makers-officials would not specify which ones-to offer hosting appliances loaded with ServerXchange. The company also plans to market ServerXchange to DSL providers so they can offer outsourced intranet applications as an alternative to traditional-and expensive-dedicated servers with dedicated connections.
With ServerXchange and broadband access, the corporate applications “appear just as if they are in-house,” said Ensim’s CTO, Srinivasan Keshav. “This is unique. Nobody in the world can come close to it but us.”
Sphera charges service pro viders $4 per month per virtual server on their system. Ensim still offers its original pricing model of around $30 per virtual server per month, but the company is exploring revenue- sharing agreements as it grows, company officials said.
HostingDirector runs on Unix and Linux. Support for Windows NT and Windows 2000 is due later this year. ServerXchange is available for Linux and Solaris; support for NT and Windows 2000 is due in the third quarter.
Most web site security software is designed to stop theft of data or denial-of-service attacks, but Lockstep Systems Inc.’s new security application attempts to minimize the embarrassing (or worse) effects of attacks that alter or deface company Web pages.
WebAgain 1.0, which was released last month, is a relatively simple program that essentially acts as a staging server for Web content. All approved content for a site is published to the WebAgain server, which then compares that content to the content in the site directories. If Web Again detects that a page has been altered, it replaces that page with the content in the Web Again server.
WebAgain monitors Web site directories directly via FTP or a network share. It can effectively monitor sites using dynamic content because it detects changes only in the scripts and not in the content being pulled by the scripts.
Although in tests eWeek Labs found Web Again to be an effective program for minimizing the damage of Web site defacement, we believe sites can easily build similar protection themselves. For example, administrators at many of the federal agencies whose Web sites were defaced last year have implemented simple automated scripts that regularly update the live site files with a secure site copy in another directory, making it difficult for any site defacement to stick around.
Nevertheless, WebAgain passes two critical tests for any product that provides a service that businesses could implement themselves: It’s relatively simple to use; and, at $349, it’s inexpensive enough to make it worthwhile as a time- and cost-saver relative to creating and implementing scripts.
Businesses should implement some form of site defacement protection, whether they purchase a product or do it themselves. The government site defacements were as obvious as graffiti, but more insidious site alterations, such as a changed support phone number or an altered price in a release, can be easily missed and can cause greater damage.
However, companies should not expect these types of applications to provide full protection against changed or stolen content –two common attacks that involve techniques about which security administrators can do little. The recent hijacking of the Nike Web site involved one of these, a redirection technique that exploited poor e-mail-based management policies at the domain registration company. The second technique, mimicking a Web site, recently caused major confusion at several high-profile sites, even though it was obvious the content wasn’t located at the actual company’s Web site.
The WebAgain server runs on Windows NT but can monitor any Web site that has FTP or directory access. Because WebAgain uses its own FTP server for regular, everyday Web site additions and edits, it should be installed on a system without an FTP server, or the port number used by one of the servers must be changed.
Initial installation was very simple, and we easily defined multiple sites to be monitored by WebAgain. A wizard stepped us through choosing whether users would publish to the WebAgain server using FTP or a directory share, and whether WebAgain would use FTP or a directory share to publish to the live Web servers.
WebAgain also includes the must-have ability to monitor and publish to several mirrored servers at the same time.
Double the publishing
Before webagain could begin monitoring a site, all the site content had to first be published to the WebAgain server –a needless hassle. This step was tedious, especially with large sites being published through FTP. We would prefer an initial setup option that automatically loads the entire site.
Plenty of other tools, including site management packages and development applications, have the ability to automatically harvest files from a site.
Once we had defined our sites, we could configure how often WebAgain would scan a site for changes. The default is every 15 minutes, and we could scan as often as once a minute. It is also possible to configure alerts to be sent through e-mail, SNMP or the NT event log whenever an altered file is detected.
When WebAgain detects a file that has been changed, it places the file in a quarantine directory. This was useful to actually see what types of defacements occurred after WebAgain had removed the files from the Web site (see screen, Page 57). However, we would also like to see WebAgain use the server information to list the location from which the file was loaded; this information would be useful for determining if an attack originated externally or internally.
WebAgain ignores some files for good reason, such as Web cam and database files that change constantly simply by their nature. However, Web Again’s inability to deal with files that have been added to a site is a major weakness. The product can look for changes in files that should be on a site, but if an attacker adds a file through a compromised connection, WebAgain ignores it. This would enable an attacker to add a page and then send e-mail or newsgroup messages directing people to a fake file on the actual company site.
In addition, if a site is using default directory pages such as index.htm or default.htm, it’s possible that an attacker could add a file that ranks higher on the default page hierarchy than does the actual default page.
To address this problem, WebAgain should implement some form of directory synchronization –any do-it-yourself solution could employ a directory synchronization tool for this capability.
Because the WebAgain server becomes a staging server for the Web site, it is possible that the server could become a target for “officially” adding altered files. However, We b Again makes it simple to define fairly strict IP-based access policies to its publishing interface. In addition, most attackers wouldn’t know to look for the WebAgain server in the first place, and it can easily be placed behind a firewall. [acute accent]
Web sites that want to protect themselves against embarrassing and potentially costly Web page defacement should take a look at WebAgain, an inexpensive but effective tool for minimizing the damage of these attacks.
Short-term business Impact // WebAgain can quickly provide a layer of protection against Web site vandalism, although some content authors will have to adjust to different content publishing methods.
Long-term business Impact // As new technologies emerge and sites grow more complex, businesses will need to build or purchase more advanced tools, such as Web Again, that can look for a variety of changes in many different types of content.
Pros: Can monitor Web page content, including dynamic pages, for alterations and remove changes; easy to implement; publishes to multiple servers; inexpensive.
Cons: Can’t monitor for files added illegitimately to a site; entire site must be republished before it can be monitored.
A successful user-centered project naturally begins with a clear picture of the user. Understanding your audience not only gives the selected vendor a headstart; it also provides a vital foundation for system requirements, which influences every area of the system. Leverage the expertise of your organization to gather consumer demographics and psychographics. Understand the user’s domain knowledge, environment, background, and familiarity with the Internet and technology. If possible, conduct a user-needs analysis, which helps you develop a business case outlining user-centered requirements and measurable objectives.
A usability test of an existing system helps you better understand your current user base. It also identifies specific problems that must be rectified through the redesign, as well as provides a baseline for measuring the success of that redesign.
Develop a solid set of requirements
Whether you’re creating a new product or enhancing an existing one, there’s a reason to look for outside expertise. Maybe your site isn’t getting enough repeat visitors, or maybe your internal staff can be more productive if technology carries more burden. Your perceived need is the foundation for your system requirements.
These suggestions help you: (a) maximize the probability that your needs are met; and (b) establish an appropriate level of specificity to provide the greatest value to the usability group.
1. Go beyond the features list. Don’t let your requirements become simply a list of features the new system must contain. Such lists are built with an underlying assumption that if the new system has these features, it meets the perceived need. While a list of expected features is worthwhile, the assumptions behind them mustn’t be lost. To let the vendor correctly assess the applicability of requirements (and provide strategic direction), you must expressly state the needs that the requirements are intended to satisfy.
2. Explicitly require the achievement of specific goals. For greatest impact, you must define success criteria that are performance-based and that implicitly tie the system’s usability to specific business objectives. Here are some examples of criteria whose attainment is directly affected by a Web site’s usability:
* The average number of repeat visitors per month must increase by 20 percent.
* Calls to the Help desk must decrease by 30 percent.
* First-time users must successfully complete checkout in an average of four minutes or less.
Distill success criteria down to two or three fundamental needs to keep the project focused and to prevent a lengthy assessment period at the project’s end.
3. Express what must be done, not how it should be done. It’s appropriate to have specific ideas about how you want the product to look and act, but don’t become too constrained by your ideas, and prevent those ideas from leaking into the requirements. Instead of embedding design into requirements, keep the implementation purposely ambiguous to avoid implicitly dictating designs. Here are two examples:
Instead of: There must be a Chat Area link in the standard header of every page;
Use: The site’s Chat Area must be readily accessible from any point in the site.
Instead of: Pressing the Add to Cart button must take the user to the Shopping Cart page;
Use: The user must have clear and immediate confirmation of success when he adds anything to the Shopping Cart.
Dictating what goes on what page, talking about links as “buttons,” etc. are clear indications that designs have crept into your requirements. When you discover an implied design, ask yourself, “What am I trying to achieve here?” The answer is nearly always the actual requirement.
Develop a quality RFP
A request for proposal (RFP) is sometimes all consultants have to go on as they begin preparing the pitch. As such, your RFP must contain all the necessary information for a consultant to develop a proposal to meet your needs. Be prepared to invest some time developing the RFP. Here are some issues to consider:
1. Include the requirements and performance-based success criteria.
2. Define all unusual terms and use consistent terminology across the document.
3. Provide as much information about your target audience as you can.
4. Include the results of any usability tests you’ve conducted.
5. State the expected educational and experiential background of the vendor.
6. Include time and budget constraints.
7. Walk through your own requests to make sure the constraints are realistic.
Select the right vendor
There are three general classes of vendors that can provide usability outsourcing:
* General IT consulting firms, such as Andersen Consulting and KPMG
* Pure-play Internet consulting companies, such as marchFIRST and Sapient
* Usability consulting companies, such as the Nielson Norman Group and Cognetics
There are a wide variety of focuses and skills within each class of vendors. Some may solely provide usability testing, while others have a methodology that weaves usability throughout the lifecycle. Some vendors may have more experience with graphical user interfaces (GUIs), while others excel at Web design. Different projects necessitate different types of vendors, but here are a few general questions to ask before you make your choice:
1. Do they have a dedicated usability group (rather than developers or graphics designers doubling as usability specialists)?
2. Do they have a proven track record? Can they provide tangible evidence of their expertise, such as examples of Web sites they’ve designed?
3. Can they clearly articulate their usability methodology and describe the techniques they use?
4. Can they provide examples of the deliverables they’re describing?
5. Does their methodology employ usability throughout the lifecycle (in contrast to “after-the-fact” testing)?
6. Will they follow up to ensure initial successes aren’t just novel effects due to marketing?
7. Will they provide an original usability strategy, or does it seem they just create what you tell them to create?
Executing the project
Develop a user-centered project plan
A user-centered process doesn’t typically adhere to the traditional waterfall method of development. Depending on the situation, there are many ways to approach a user-centered project. Here are a few broad guidelines whether you or the consultants actually create the plan.
1. Provide sufficient time in the analysis/discovery phase for the usability group to develop user profiles, analyze user tasks, evaluate the current Web site, etc.
2. Ensure usability begins up front and continues throughout the lifecycle; set up dependencies and arrange project tasks so that usability actually drives the process in many respects.
3. Plan to test achievement of stated success criteria at the end of the project.
4. Build iteration into the plan to (a) integrate evaluation into the design/development process; and (b) allow the evaluation to affect the user interface, as necessary.
5. Don’t begin development of any underlying technology until the usability group has developed a strategy and has completed at least the first iteration of design.
Provide ongoing support
The right environment can make a big difference in the success of the user-centered design process. Here are some ideas to keep in mind:
1. Give the usability experts some creative license. Don’t create a situation where the constraints are so stifling that the experts end up simply putting down what they expect you want. Let them know you support exploration within the project’s boundaries.
2. Ensure they have all the tools. Provide any user information you have, such as demographic information, to the usability group, even if it’s already stated in the RFP. (Sometimes those who actually do the work have never seen the RFP.)
3. Make the target audience available to the usability group. When developing public Web sites, assist in recruiting for usability tests directly and/or supply incentives (such as gift certificates) to participants. For intranet projects where internal employees are the target audience, eliminate negative impacts for assisting with system development (for example, higher workload because employees missed a day of work), and maximize rewards (such as bonus pay).
Watch for red flags
Since usability engineering is still relatively new for many people, there’s potential for snags along the way. Here are a few things to watch for:
1. Developers complain that usability makes their lives harder. This is a fairly common complaint because the usability expert’s job is essentially to shift the burden from the user to the underlying technology. This situation can be lessened throughout the project if management and the requirements place the emphasis on the user experience rather than on the technology, and developers have internalized the goal of a usable system.
Make sure the usability specialist’s suggested designs are truly reasonable before placing all fault with developers.
2. Graphic designers feel their territory is being invaded. Usability professionals must be sensitive to roles–especially when they’re outsiders working with in-house designers. The usability experts should establish site organization, navigation, and vocabulary, but they should purposely avoid dictating aspects of the screen that belong to the graphic designer.
If graphic designers have traditionally handled all aspects of the user interface, try positioning the usability specialist as someone who can shoulder the burden of functionality to let the designers focus on what they do best: aesthetics.
3. There’s a lot of redesign going on. Some redesign is natural because of the iterative design process, but substantial redesign can mean the vendor’s methodology is broken. The usability process typically looks at the system as a whole, staying general as long as possible before beginning to design for specific areas of the system. When the design moves to the specific areas too quickly, rework is often the result–especially on large Web sites. That’s because the usability group sees patterns as they move from one system area to the next and they need to create a general design that handles all the examples. The fix is to back up and spend time designing at the broad, general level before going deep and specific.
4. The usability vendor doesn’t seem to need real users. Sometimes the situation calls for a simple, heuristic approach. Other times, budget and/or time constraints may prevent the inclusion of real users in the process. However, more often than not, the usability professionals must interview and evaluate designs with real users. (Feel free to challenge them if they say they don’t.)
5. The usability designer is also doing the final usability test. There’s a potential for biased results when the person conducting the final usability test is the same person who designed the screens. It’s fine for the usability designer to design the usability test and be involved, but someone else should interact with users and interpret the results. This prevents the usability specialist from involuntarily making results come out as expected.
What to expect
Imagine you’re writing a brochure to promote your company. If you invest the time and effort to thoroughly understand your audience and write and rewrite, your result effectively carries your company message to the reader. The brochure itself becomes an almost transparent vehicle to the underlying message.
Conversely, if you don’t invest the necessary resources, readers get bogged down in the condescending tone, unfamiliar terms, poor grammar, etc., and never fully grasp your intended message. In fact, your company image can be tarnished because of the difficulty you caused the potential customer.
Usability is analogous to writing a brochure. Done right, usability is something most people won’t notice; but done wrong, it’s something that gets you bad ink in The Wall Street Journal.
If your system is truly usable, you can expect to meet your business goals, including:
* Increased customer satisfaction and loyalty
* Reduced support and maintenance costs
* Increased sales and productivity
Don’t be fooled into thinking that “easy to use” implies “easy to create.” If the usability team has done its job well, the result is a product that’s extremely straightforward, clean, and usable. Therefore, while you meet your business goals, you may discover the vehicle for meeting those goals appears much simpler than you expected.
More ammunition is in the pipeline for companies that want to maximize their relationships with online customers, with a new suite of tools from Quadstone Inc. and a rash of acquisitions among developers that are pitching intelligent e-business.
Customer Conversion provides software for transforming and moving data from Web servers and other sources into a database, where it may be viewed, analyzed and distributed by other Customer Conversion tools. The application includes four components-cc:Transform, cc:Insight, cc:Mining and cc:Action.
The software, which supports Windows NT, Solaris and HP-UX, is available now. Pricing starts at $50,000.
Quadstone’s entry comes during a feeding frenzy of acquisitions. Since mid-November, industry watchers have observed six buyouts-some valued at more than $500 million-by developers looking to bolster e-business applications with data analysis software and third-party demographic data.
These newly wedded vendors claim their integrated offerings will help dot-coms close the loop on customer relationships by providing personalized marketing, which will fine-tune sales efforts by customer segmentation and profitability analysis derived from Web clickstream data.
“It’s a whole effort to add intelligence to an e-commerce system to be able to optimize your sales and marketing efforts,” said Joseph Marino, an analyst at Current Analysis Inc., in Sterling, Va.
The latest acquisition came on Jan. 17, when Net Perceptions Inc., a maker of software that provides personalized recommendations to consumers based on past activity, bought KD1 Inc., a data analysis vendor with a retail emphasis. The stock deal was valued at $126 million.
Net Perceptions is not alone in recognizing the synergies between e- commerce applications and data analysis: In mid-January, e-business software supplier Vignette Corp. said it would acquire data mining developer DataSage Inc. in a stock transaction valued at more than $500 million.
Also in mid-January, e-business analytic applications vendor Broadbase Software Inc. said it would acquire e-marketing automation vendor Rubric Inc. in a stock swap valued at $331 million. That came only several weeks after Broadbase competitor E.piphany Inc. acquired personalization software maker RightPoint Corp.
Sagent Technology Inc., a rival of Broadbase and E.piphany, took a somewhat different tack in December when it bought Qualitative Marketing Software Inc., a provider of consumer and demographic data and maker of a data cleansing tool.
Accrue Software Inc., a maker of systems to harvest and analyze clickstream data, deepened its lineup in November, buying data mining developer NeoVista Software Inc.
The market for such software is expected to be red-hot this year, as dot-coms begin to look for ways to analyze reams of clickstream data. For Seattle-based online drug store cvs.com, a subsidiary of CVS Pharmacy Inc., a means of analyzing Web logs was on the agenda as the company mapped out its e-business strategy last year.
“With an online presence, you have an additional source of data-the clickstream data-which is the equivalent of people walking through your stores,” said David Zook, manager of strategic alliances for cvs.com. “I want to integrate clickstream, transactional and demographic data into one comprehensive whole that will allow us to model customer behavior and to target campaigns and response rates to figure [return on investment] on our marketing investments.”
For that, cvs.com turned to Quadstone, based in Edinburgh, Scotland. Its Customer Conversion software proved during a proof of concept to be “extremely impressive,” Zook said.
“They took a slice of our data-Web logs, transactions, demographic data-and put it into their tool. We were able to slice and dice on command-it was absolutely breathtaking,” he said.