Any retailer whose online conversion rate is double the industry average of 2-3 percent must be doing something right. Even so, Noah Maffitt, director of global e-commerce for Office Depot, wasn’t satisfied.

“It was respectable,” he says of the results the company was achieving when he joined Office Depot several years ago. “There was a strong case that we were doing a fine job.”

But Maffitt was convinced that Office Depot’s e-commerce business hadn’t reached its potential: at the very least, he and his team needed to learn more about their online customers. What paths were they taking to navigate the site? Where did they tend to get frustrated and abandon their searches? From what other sites were they coming?

The problem, he says, was “we didn’t have the analytical framework, technology and processes in place we needed to make rational, metrics-based decisions.” Without this infrastructure, no one could be sure which business lines and products were going well, and which were bringing down the average. So Maffitt began implementing several web analysis tools from Coremetrics.

The San Mateo, Calif.-based firm helps online retailers gain a greater understanding of their customers’ buying experience and the way in which their sites are generating both business-to-business and business-to-consumer sales.

To do that, Coremetrics’ Online Analytics software records the moves each visitor makes within the site, and places this information within a single, secure data warehouse. With this information, the retailer can determine how effectively its marketing programs work and how people navigate the site. Retailers also can gain greater insight into cross-sell opportunities and learn how they can make their site easier to navigate.

Office Depot is using Coremetrics Online Analytics on an ASP basis (it isn’t available on an installed basis). As a result, it didn’t need to add hardware in order to accommodate the programs. Employees did, however, need to “tag” the web pages. “They’re relatively minor site changes,” Maffitt says.

More important than adding the technical tools, however, was “evolving the process that follows the technology,” he says. No one needs more data; most marketers are inundated with it. What retailers do need, however, is “insight into the dynamics driving the business,” Maffitt says. That means companies that implement analytical tools have to build processes that enable them to take the information provided by Coremetrics and use it to drive decision-making.

Maffitt and his team began by using information provided by Coremetrics to tackle relatively straightforward issues, such as improving onsite search. By digging into the data, they realized that customers were wading through what seemed to be an excessive number of pages before arriving at their desired destination. The result was abandon rates that were higher than Maffitt thought they should be. “We saw a huge opportunity to improve,” he says.

Employees and executives within Office Depot have varying schedules for reviewing and analyzing the information provided by Coremetrics. Some receive weekly e-mails with summary information; others get data in real time. Given that the site now captures approximately $550,000 in revenue each hour, making changes that boost conversion rates as soon as possible can result in noticeable benefits.

International deployment
To start, Office Depot deployed the tools just on its North American website. Maffitt’s team was able to figure out how it could most effectively use the information, as well as the staff required to do this. Now, Maffitt is working on integrating the applications with broader customer analytic tools.

Currently, Coremetrics’ analytical tools are deployed across 40 Office Depot websites around the globe, and Maffitt is working to boost adoption of tools in these far-flung offices. While the locations have the systems in place, many have yet to set up processes that will enable them to analyze the information and integrate it to their overall business processes. “Driving adoption is one thing that we continue to do,” he says.

Office Depot is using several other Coremetrics applications, as well. Coremetrics Search helps retailers manage their search initiatives with Google, Yahoo and other search engines by, among other things, comparing the cost of bidding on a word with the revenue the word generates. The tool also lets retailers measure the time that elapses between a visitor’s use of a search term and the point at which he or she actually makes a purchase.

If the application shows, for instance, that the time lapse for people searching under the word “furniture” typically runs 30 days, the retailer may decide to send these visitors an e-mail about its furniture selection on day 20 or 25.

Intelligent Offer analyzes past transactions to develop product recommendations that are likely to be of interest to consumers currently making a purchase. As its name suggests, LiveMail collects e-mail addresses of visitors to the site, along with the pages that each visitor looked at. Retailers can use this to send visitors targeted, relevant e-mails. Finally, LiveMark, a benchmarking product, allows retailers to see how their online efforts compare to their competitors.

Payoff on its investment
Coremetrics collects metrics from each of its retailing clients, such as conversion rates, search engine traffic and use of site search. Each retailer’s individual information is kept confidential; retailers can compare their performance against the aggregate results of the other retailers, but not against a specific company.

It appears that Office Depot’s investment in Coremetrics’ applications has paid off. The company’s online conversion rate has jumped to about 11 percent, and it rings up about $5 billion in online sales each year. Even so, Maffitt is quick to point out that Coremetrics isn’t a magic pill. To be sure, some problems that it identifies, such as broken links, are relatively easy to uncover and fix; addressing other initiatives requires more effort and attention.

For example, Maffitt and his team will analyze how website visitors who live near a bricks-and-mortar store navigate the pages and compare their navigation paths with those of visitors who live farther from a physical Office Depot location. The findings can inform Office Depot’s catalog distribution strategy and influence the placement of future stores.