The need for market intelligence

In my previous article, I outlined the need for measuring and optimising web site performance to be a more holistic and consumer focus discipline than purely the quantitative analysis of data from a web analytics tool.

I asserted that an effective measurement strategy for optimising website performance has four key components:

  1. Good market intelligence
  2. Sophisticated visitor behaviour analysis
  3. Excellent user profiling
  4. Effective site performance tracking

In this article I am going to look at what I mean by “market intelligence”? As I said in the last article, market intelligence provides the context for the business’s own performance. In order to ensure that the marketing plan operates in the right context, it is important to build up an understanding of how the external world is behaving and developing. In the our world the kind of things you might want to know would include:

  • The proportion of the target market that is online (ie number of businesses, numbers of households or individuals)
  • The profile of Internet users (demographics, device ownership, psychographics, lifestyle etc)
  • Usage of the Internet (length of time online, sites visited..)
  • Competitive activity (advertising campaigns)

More...

This type of information all helps an e-business to build up a picture of the environment in which they are operating.

How fast is the market growing and where is it growing fastest?
How are my competitors performing and how do I compare against them?

Consider the following UK based scenario. Let’s assume that the table below represents the (site-centric) performance of an online retailer over a six month period.

 

 March
 September
 Change
Site unique visitors
 1,270,000
 1,400,000
 +10%
Orders
 44,450
 50,250
 +13%
Sales value
 £2,750,000
 £3,150,000
 +15%

What conclusions might you draw from these results?

On the face of it, these results look quite positive. Over the six month period overall traffic is up by 10%, orders are up by 13% and the value of those orders is up by 15%. Also the conversion ratio (% of visits with an order) has gone up marginally and so too has the average order value.

Let’s add some “market intelligence” to our site-centric perspective of this retailer⿿s online performance:

 

 March
 September
 Change
Site unique visitors
 1,270,000
 1,400,000
 +10%
Orders
 44,450
 50,250
 +13%
Sales value
 £2,750,000
 £3,150,000
 +15%
Total number of people online
 22,350,000
 26,100,000
 +17%
Reach (%)
 5.7%
 5.3%
 -0.4 pts
Visitors to E-commerce sites
 13,180,000
 15,950,000
 +21%
Online retail sales index
 275
 370
 +35%

Now the picture isn’t looking quite as rosy. Overall traffic growth is lagging the growth in the number of people online generally and well behind the growth in traffic to e-commerce sites as a whole. Additionally, the sales growth being experienced by the retailer is significantly below that being reported by other retailers.

So, whilst from one angle the conclusion might be that the growth is good, the other perspective is that the good growth just isn’t good enough. And that’s the point. When markets, as they are in Europe, are generally still growing organically, how do you know that “good is good enough” and you’re maximising your potential? The answer is by tracking what the market is doing and by benchmarking against your competitors.

Typically this type of market information is obtained from third party providers as companies usually do not have the opportunity or resources to create this type of analysis themselves. There are a wide variety of sources available and even the answer to a simple question like “how many people are online?” requires careful framing or interpretation.

  • What is meant by online?
  • When do they have to have last accessed the Internet? Last week? Last month?
  • Where from or how? From anywhere? From home? From work? Via a PC or any device?
  • Are we counting households, businesses or individuals?

Depending on the answer needed or indeed the way that the data is collected there will be a wide range of estimates. So it’s important to understand how the data has been sourced and what it is you’re dealing with.

Some of the main sources of market intelligence include:

  • Audience panels such as Nielsen NetRatings, and Comscore
  • Large scale syndicated surveys
  • Data aggregators
  • Industry analysts

So, market intelligence brings context to the site-centric world often inhabited digital practitioners. It allows you to understand and assess your businesses performance in the context of the overall development of the market and the performance of your competitors.

Next time, I’ll been taking a look at user profiling and some of the methods and approaches to understanding who your visitors are and what they think.

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