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Clickstream Data Warehousing Companion website for the book by Mark Sweiger, Mark Madsen, Jimmy Langston, and Howard Lombard Published by John Wiley & Sons, January 2002 |
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| Clickstream Data Warehouses, the Key to e-Business Success |
| By Mark Sweiger, President and Principal, Clickstream Consulting A cold chill has been running through the New Economy ever since the Internet stock market crash began in the Spring of 2000. The speculative bubble burst and it continues to take-out e-businesses that principally relied on other people’s money (venture capital and the public stock market) to prosper. Current e-business models are shifting from a land rush mentality, to a more balanced emphasis on consistent revenue growth and a clear path toward profitability. You know the land rush is over when 10’s of millions of web sites compete for 100’s of millions of eyeballs. The formerly virgin territory is now occupied with millions of settlers, all of whom have staked their claim. When the land rush ends, it is time to farm the land. The Internet isn’t dead--it is ready to be farmed. And farming it requires a level of business sophistication that goes beyond one’s ability to register a domain name and posit some grand plan for that chunk of land. You have to work it, and you need the tools to do it right. One path to prosperity is to build tools for farming the Internet. Internet infrastructure is clearly a growth industry, and the builders of the tools have continued to prosper in the face of the current chill. I would bet on the future of Internet infrastructure providers any day, but what if you are the farmer, trying to make money using the best tools that infrastructure providers give you? How does your Internet farm prosper? The answer, I think, is a clickstream data warehouse. How do you know if your Internet crop is growing well? How do you know if your Internet customer base will buy it? Without a clickstream data warehouse the e-business environment can be remarkably opaque-often nothing more than a set of grand assumptions with little understanding of the actual dynamics of the underlying market. The irony is that clickstream data is remarkably easy to collect. Unlike the tortured mechanisms that have been created to extract data from operational systems into data warehouses in traditional brick-and-mortar environments, clickstreams are automatically recorded by all popular web servers in several standard formats. This avalanche of detailed user behavior data can be transformed and loaded into clickstream data warehouses, which will certainly be the largest data warehouses in existence. Web Log File Analysis Tools Are Useful, But They Are Not a Substitute For a Clickstream Data Warehouse An intermediate step in the path to a clickstream data warehouse is the use of web server log file analysis tools, like WebTrends, Analog, or NetTracker. These tools are especially good for recording site hit statistics, site entry and site exit pages, and other gross statistical aggregates. These tools are typically not good at time sequence analyses, like what happened over the course of a site visit, why was the shopping cart or visit abandoned, what was the effectiveness of a promotion targeted at a particular user population, or what are the overall trends in these statistics over time? You need a clickstream data warehouse to do these kinds of time series analyses. Interestingly, the output of log file analysis tools can be used as part of the input data for a clickstream data warehouse, meaning that log file analysis tools and clickstream data warehouses often coexist in a synergistic fashion. The e-business environment has a number of unique characteristics that make a clickstream data warehouse the key business success. The Internet is a great leveler of the normally high barriers to entry for many types of businesses or business functions. In six months time it is not hard for your enterprise, or its competitors, to create e-business that has a worldwide reach and the promise of a multi-million dollar revenue stream. Such a business would have taken decades to create in the past. In the Internet environment, everyone has access to the same tools and the same infrastructure, all at a very low entry cost. Although many e-business make much out of their “first mover” business advantage or the novelty of a particular e-business model, neither of these provide any sustainable business advantage in such a level environment. How Do You Know How Your e-Business Is Doing Without a Clickstream Data Warehouse? It may come as a rude shock, but the level Internet business environment actually rewards business efficiency and savvy marketing even more than the much more bumpy traditional brick-and-mortar environment. And what is the e-business mechanism you use to achieve efficient operations and understand your market? The answer is the clickstream data warehouse. It is your competitive advantage engine and your success differentiator. One other aspect of clickstream data that has yet to be fully exploited by e-businesses is the richness of information collected by the clickstream. It is much richer than the CRM-style data collected by leading-edge brick-and-mortar companies. In the Internet environment, an enterprise can know everything about what a user does, whether he is a customer or not. The enterprise can get a picture of total market behavior that goes well beyond actual customers. Unless you are a monopoly, your enterprise only has a small fraction of the total market as its customers. And while you may understand these customers well in the CRM sense, the key to growth and market dominance is the understanding of what non-customers want and how to convert them. Clickstream data warehouses are the mechanism you use to move beyond CRM to eRM, that is, electronic relationship management of the entire marketplace, not just your customers. This is the first in a series of educational articles about clickstream data warehouses. The series starts with big picture strategy articles like this one, and then delves into progressively more detail about clickstream data warehouse implementation issue, including a generalized clickstream data warehouse meta-schema. The subject matter in each article is self-contained, but your understanding of clickstream data warehousing will be more complete if you read each of the articles in sequence. Thanks for stopping by and please don’t forget to consider Clickstream Consulting for your clickstream data warehouse projects. |
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