Data-Driven Decisions – Not Hunches

Consumers are spending more time and money online today than ever before. They start and end their day checking email and popping onto social gaming and shopping sites. This often comes at the expense of other entertainment options like traditional television, film or even spending an evening out. What is it that’s so appealing about sitting at home in front of a computer monitor?

The obvious answer is that consumers find these online sites much more appealing than traditional entertainment options. But you need to look deeper to find out how these social networking and shopping sites have snagged the attention of consumers from 8 to 80. The answer may surprise you: It’s in the massive amounts of information they collect from site visitors, customers and subscribers that drive constant improvements based on actual usage. In other words, through the advanced analytics being used by vendors, consumers are driving their own experience and improvements, which leads to more consumption.

Forward-thinking organizations have long understood the importance of business intelligence and analytics. By taking a look at the data generated in the course of doing business — from point of sale records to network performance data to clickstream analysis of website traffic — these companies have access to a wealth of information about how customers and site visitors interact with a company’s website, products, services and other users. The problem is the massive amounts of data generated today and the inability of traditional database and analytics systems to handle all this data in a timely manner.

Next-Generation Analytics Platforms

That’s where a new breed of analytics platforms have stepped up to deliver real-time analysis and massive scalability at a price point that makes sense for organizations of all sizes. With these new analytics platforms, online retailers and social networking sites can mine the mountain of data collected to learn more about the behavior of site visitors, customers and subscribers, as well as deliver predictive analysis on how consumers will behave based on the previous actions of existing customers. This allows much finer-grained customization of the user experience, even down to the actual product/service being consumed, as exemplified by online gaming.

Two of the major advantages of the next generation of analytics platforms are their ability to handle data in real-time and their ability to handle massive amounts of disparate data. When you have the ability to analyze what’s happening on your site or in the game in real-time, you have the ability to make decisions on the fly. Further, when you can take a look at all of your detailed data, instead of pruned aggregates or data from a short period of time (one or two months), you are able to drive predictive analysis with greater accuracy because of the longer periods of time analyzed.

Both real-time analytics and massive scalability are requirements for next-generation analytics platforms, as well as a huge competitive advantage for today’s online leaders.

Real-Time Results

Today, website visitors have become accustomed to a very personal experience when they visit large content and shopping sites. Consumer sites like Amazon and Netflix, and social networking sites like Facebook, deliver a very customized user experience because they have analyzed not only how you interact with their website, but also how your social network and other people like you interact with the site.

As you search for new books, movies or other merchandise, real-time decisions are made that affect what is shown on each page, including which ads or products you are offered. This wealth of information about your past decisions and the patterns of other users who most match your values is being taken into consideration on the fly with next-generation analytics platforms.

For online businesses, this means they now have the ability to make better decisions about how to monetize a website based on actual user behavior, using real-time analytics that can drive content and monetization opportunities while customers and visitors interact with the site. With real-time analytics, you can present the most appealing offers at the right time, based on actual usage data instead of making a guess, a proposition nearly impossible with traditional database systems.

Long-Term Perspective

Decisions about new offerings, upsale, related products and site design should not be made in a vacuum but instead should be based on all of your past usage data. With today’s next-generation analytics platforms, there is a wealth of information about site visitor behavior available in the clickstream logs — the records of every interaction on the website — that can help you predict future site visitor behavior based on usage data collected over the entire history of the site, not just a few months.

Imagine being able to look at individual behavior over the entire lifecycle of a visitor’s interaction with your website. Using this type of information, you could determine why certain types of customers made a purchase decision — how many times they visited, what pages they looked at, and the pages where they ultimately hit the “add to cart” button.

You could also analyze where your site might be falling short, taking a look at why visitors abandoned shopping carts without purchasing. You could then allow changes to be made based on the actual data, instead of guessing when and why carts were being abandoned.

The Money Is in the Information

There is a host of other advantages of this next generation of analytics platforms. Higher price/performance, familiar interfaces, flexibility in deployment (using industry-standard hardware or private or public clouds), and in-database analytics for faster analysis all lead to faster return on investment. However, real-time performance and massive scalability provide an almost immediate payback for today’s cutting-edge e-commerce and social networking sites.

When you can make decisions in real-time based on user interactions while delivering powerful predictive analytics based on past user behavior over a significant amount of time, you have the tools to create a user experience that brings buyers back to your site again and again.

It is therefore no surprise that several more traditional businesses are following these cutting-edge businesses and embracing many of their techniques to get closer to their own customers and find new ones using these same advanced analytics.

More good news is that these next-generation platforms are cost-effective and simple enough for any organization to deploy. Take a look at your data, and see what your data can do for you!

Christopher Lynch president and CEO of Vertica Systems.Vertica Systems.

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