When OneStepAhead.com invested in high-end Web analytics software two years ago, the Web team crossed their fingers and hoped they could raise eretail ROI enough to cover the cost fairly quickly.

Most analytics providers estimate payback within four-six months of launch. However, OneStepAhead.com's Director of Internet Rachel Pendon was thrilled when the software completely paid for itself by helping her team improve campaign results in the very first month after implementation.

How can you replicate their outstanding results and keep management happy? Pendon shared five specific tactics that have worked for her team.

Tactic #1. Pick one quick actionable idea to start moving on immediately

While analytics packages offer tons of reports, Pendon asked her team to triage the deluge of incoming data and pick out a few actionable items they could test right away.

"We're still a small staff devoted to the Web, so we try to concentrate on what would make the most difference. Once we know we've been able to increase the impact by some change, we're able to move to the next product."

For example:

Analytics data revealed that a steady stream of OneStepAhead.com's baby-product shopping traffic was surfing over to spin-off site LeapsAndBounds that offered products for kids. In fact, about 15% of LeapsAndBounds' online sales were direct cross-sales from the original site.

So, Pendon's team tested deliberately encouraging more traffic flow between the two sites by adding two "overview tabs" at the very top of most pages. One labeled "baby" hotlinked to OneStepAhead.com's home, and the other said "Leaps and Bounds! kids."

After the change, LeapsAndBounds' cross-sales from OneStepAhead.com doubled, from 15% of total Leaps Web sales to 30%. Plus, cross-site shoppers had a 40% higher average order than main-site-only shoppers. Pendon says, "Leap cross-sales helped increase Web sales of the Kids line by 24%. And the projected annual revenue increase because of the rise in cross-sales due to this one-month project alone paid for the use of Coremetrics for the year."

Tactic #2. Apply customer segmentation discoveries across all marketing campaigns

Pendon's team profiled typical OneStepAhead.com customers and their purchasing behavior and then grouped them in segments based on acquisition source: email, affiliate program, search engine marketing, etc.

Here's what they discovered:

Gradually, Web visitor makeup was changing, with fewer people coming directly to the site (presumably from offline channels such as the catalog) and more coming from online sources, particularly search.

In fact, search-driven traffic now makes up about 30% of the site's visitors. This factor has changed the quality of the overall house list, as SEM performs at a 5% lower conversion rate than site average, with an average order value about 20% lower.

So Pendon lowered the frequency of print catalog sends to this group and increased emails.

And, because search visitors tend to seek for a particular product and don't often know much about the company, the emails at first concentrate on educating the segment on the product line, and offering incentives for them to return (either a dollar amount off or a percentage off -- the latter of which has proven more popular). Visitors from affiliates have a higher average order value than those coming from other online acquisition sources (ROI is two times higher than search, says Pendon), so she allows affiliates to run a 10% off offer on first purchases.

"The cost of the incentive is paid off by the higher AOV and higher ROI. We typically continue to incent this group in our emails."

Pendon doesn't use the analytics package to track the complete path visitors take through the site depending on the particular acquisition avenue, and she doesn't use it to track her email campaigns, although she could.

"Our analytics package gives us a quick read on comparing online sources; we use our vendors' reporting systems to give us the more detailed information on specific campaigns," Pendon says. "If I could have a whole team of analysts, that would be great."

Tactic #3. Hire a full-time analytics staffer (even if your organization is fairly small)

"We're a lean organization," Pendon says. She has six people devoted to the Web, which includes two programmers, but her team soon knew they needed to hire a full-time Web analyst/online merchandiser.

No matter how good an analytics package you have, it takes a human being to decide what to do with the information. For example, if conversions are lower than expected from a certain area of the site, or if conversions drop unexpectedly, what do they do?

"He looks at the stats and he sees why it's doing what it's doing. A conversion may drop because it's a product on the last page of thumbnails or because of the description or the price," she explains.

Interestingly, she chose someone not with an analytics background but someone with solid direct marketing experience. "My emphasis was on looking for someone who has the innate ability to pick things up quickly, as well as flexibility and an understanding of how we look at numbers," Pendon explains.

Note: Good Web analysts are notoriously hard to find (the Web Analytics Association reports there are more than 100 unfilled job openings in the field), so this may have been a particularly smart move.

Tactic #4. Actionable weekly reports

Pendon asks her Web analyst for three different weekly reports, all centered on action items the Web development and marketing teams can take advantage of immediately:

o Web site overview: general stats such as traffic vs. conversions

o Specific campaigns: reporting on anything current, such as email campaigns, affiliate programs, or search efforts

o Microreport: a different report each week based on any area of the site that they feel could be improved, such as conversions from specific departments or the effect of changes made on a promotion page

"I leave it mostly up to [the analyst], but sometimes I hear about frustrations customers have, so we'll look at those." Recently, for example, Pendon learned that customers were complaining because they didn't know how to contact customer service.

The customer service number is listed on the bottom of the home page -- but on the shopping cart, people had to click a link to get contact info. Pendon, wondering if customers wouldn't click the link for fear of losing their order, took out the link and put the contact information right alongside the credit card information. This week's microreport will focus on the impact of this change.

Tactic #5. Justify your analytics and Web design investment to upper management

At the end of each year, Pendon's team creates a formal analytics progress overview report for upper management. "What we typically do is list out different actions we've taken based on data we've analyzed. We may track a specific change either for a month, a quarter, or for a season and compare it to both the prior period before we made the change and also to the same period a year ago."

The report looks at changes in buyer/visitor rate, AOV, clickthrough rate, etc., to understand its impact, and projects out the increase in sales (or decrease in costs) annually.

For example, some of the projects that were included in this 2004's report:

--Recategorization of the Specialty Department --Baby & Kid Tab addition --clickthrough drop-off of thumbnail pages (ideal number of thumbnail pages before you see a major decline in traffic and sales) --Changes to Gift Registry and Gift Center --Top navigation vs. bottom --Impact of changing a department name --Impact of reorganizing Safety Department --Promotional spots on the home page vs. department pages

In the first year of using Web analytics, "We were able to increase our overall Web sales over the prior year by 10% by making changes to our Web site and Web programs based on our data," says Pendon. "This figure makes me confident that we're doing something right."

Given that the Web is currently responsible for about 65% of total company sales, you can understand why the entire company is a fan of analytics.

Useful links related to this article:

Coremetrics - the analytics package OneStepAhead.com uses: http://www.coremetrics.com

Shop.org -- OneStepAhead.com is a member of Shop.org, a forum for retailing online executives to share information, lessons-learned, new perspectives, insights and intelligence: http://www.shop.org

OneStepAhead.com: http://www.onestepahead.com