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Mary Haggard
Program Manager
Microsoft Corporation
August 24, 1998
Editor's note: Bad news, Mary Haggard fans. Mary has been unable to continue writing the For $tarters column, due to increasing pressures from her "day job" -- handling internationalization for Microsoft's msn.com site. The column has gone on indefinite hiatus.
The following article was originally published in Site Builder Magazine (now known as MSDN Online Voices).
As soon as your Web site turns from a place to publish information about your organization toward becoming a place where you actually sell your products and services, moving forward without a plan can cause you serious headaches -- and a lot of money.
This time, we're going to veer away from the technical side of things a bit and talk about ways to use the Internet to do research and answer important questions, such as:
For this column, I've enlisted the help of my favorite guy from Oz (Australia, that is): Dirk McLeish, a product planner here at Microsoft, who spends his days figuring out where Microsoft should target its online businesses. I also talked with Doug Conners, a reference librarian at Microsoft who helps planners, such as Dirk. Both added some great advice throughout this column on how to effectively find and use information on the Internet as you build your plan.
In many ways, the online business plan you build is similar to those you've put together in the past. However, important differences exist here in the places you go to find the information, and in the accuracy level of the data. We're all just figuring out the Internet, so data from two or three very reliable sources can vary widely. (Dirk has some great advice below for how to make solid decisions even with data that defies the seismograph.)
The first time I did research online, I was surprised at the sheer amount of data that is out there and how reliable the sources are. Important information for your business plan is readily available. To show you how easy it is, I used a table to outline different business questions, and the places where I found the information online. Following the table is a listing of sites that Dirk and Doug find useful when doing business planning.
This is by no means an exhaustive listing of what information is available, but it can get you started in the direction you need to go.
| Business question | Where's the info? |
| "Golden Vacations" specializes in selling travel packages to men and women in the United States who are over 50 years old. They need data on online usage for this age group. | CyberAtlas ( www.cyberatlas.com ) pointed me to a Business Week Poll that studied age groupings on the Internet, and to the GVU (Graphic, Visualization, and Usability) Center at Georgia Tech's WWW User Surveys.
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| "Stevie Ray's Pottery" wants to expand their telephone ordering system online. They want to know about the market potential for selling ceramics online. | Most of the places I visited to find specific information about market segments and Internet commerce charged for detailed reports that analyzed consumer spending online, and the product segments the money was going to. Sites offering these reports included: Jupiter Communications ( http://www.jup.com/), Forrester Research ( http://www.forrester.com/) and ActivMedia Incorporated ( http://www.activmedia.com/). Other well-known research companies include Gartner/DataQuest (http://gartner5.gartnerweb.com/), IDC (http://www.idc.com/), Hurwitz ( http://www.hurwitz.com/), and the Yankee Group (http://www.yankeegroup.com/).
Some offered free looks at Executive Summaries, but to see the reports themselves, you've got to pay. Check out the Web sites for more information.
Another thing to think about is adding an industry analyst's research to your mix. In many cases, you'll find that market analysts in your particular area (household consumer goods, in this example) have already taken a look at the Internet potential of their specific market. That data may be extremely useful to you. |
| "Terry's Hi-Fi" wants to use the worldwide reach of the Web to expand their high-end audio business to a few markets overseas. They want to find out about growth forecasts for international Internet markets. | Not only demographic market analysis may be valuable here, but also information on how to do business in these marketplaces. I saw listings at PriceWaterhouseCoopers ( http://www.pwcglobal.com/) for publications on the ins and outs of doing business in hundreds of different marketplaces.
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Here are a few more from Doug and Dirk to help get you started:
))))), for Web site and home PC usage measurements))Note: Georgia Tech's results represent a large but voluntary, Web-based survey; not a true cross-section of the population. Still, they have some interesting results.
))))Another essential element of your research involves taking a look at what your competitors are doing. Their activities define your environment, so understanding their online plans is essential.
Here's what Doug has to say: "Certainly, filling in the competitive landscape is a top priority. Who else is providing a similar product? What are the online services, major ISPs, or portals doing or planning in this space, if anything? Maybe no one is -- that's good information, too. Who is buying whom, who is making deals, especially distribution deals? Knowing these gives a glimpse into the directions of your competition -- they're not coming out to tell you themselves. For competitive information, it's always surprising to me how much companies put online about themselves. Many include a 'press room' page, or something similar, containing their own press releases or statements from management.
"The more established companies, or their corporate parents, will tend to be public -- and therefore will file regular financial statements with the SEC. These are readily available at http://www.sec.gov/edgarhp.htm. Still, many businesses going online are private, and it's sometimes difficult to get even basic information."
Doing a business analysis doesn't have to be entirely about looking at market analysis. Data you gather from your own site can be extremely valuable in making your decisions. Most of you know that you can use Internet Information Server (IIS) 4.0's log-analysis features to find out about site hit rates, unique users, and other general data. But you can also use the logs to find out where your users are coming from (by gathering and analyzing their IP addresses), see their favorite places to go (are they looking to buy?), and see where they've been (were they just on your competitor's site?). You can also add fields to the logs to track specific things you want to see. There is a lot of information in those log files that can help you learn about your users. It's worth taking a look at the information in the IIS 4.0 documentation and the IIS Resource Kit to learn more about log-file analysis.
On the tucows site ( http://www.tucows.com/) I found listings for a handful of other applications that analyze IIS log files -- all of which provide HTML reporting capabilities. Their "cow" rankings on the site were all fairly high, so it's worth taking a look.
It's also a good idea to put measurement requirements into your business analysis. It's one thing to talk about getting to be successful, but you've got to clearly define what success means and how you will measure it. Because of the quickly changing Internet landscape, be ready to change quickly what you mean by success.
One of the greatest benefits (and drawbacks) to the Web is that it is full of great information. Because of the newness of the medium, and disagreement over how to manage major components of it, market research tends to vary widely. I asked both Doug and Dirk how they manage to make sense out of widely varying data. Both said that it is challenging, and that they spend a lot of time cross-checking data for accuracy.
Dirk had the following advice: "One problem with using data from the predictive gurus (such as Jupiter and Forrester) is that their numbers rarely, if ever, match up. However, this is actually a really good thing. This gives you the opportunity to test the robustness of your business case against a range of likely scenarios. I usually combine the forecasts to provide a "best guess" scenario (through a simple average, or perhaps probability-adjusted if there's reason to believe one outcome is more likely than the others), and then base my core revenue/cost/volume forecasts on that. At the same time, I rerun the numbers using the best and worst case predictions. This gives me a good understanding of just how much risk I'm taking on.
"Don't forget that, in general, your competitors are going to have access to the same information as yourself. Any additional pertinent data that you can get hold of, or any greater understanding you can reach of the assumptions behind the data you're using, will be a significant competitive advantage. Of course, in an area as uncertain as the Internet, best guesses only go so far, so be sure to build flexibility into your plans, and be fanatical about revisiting your assumptions."
It's also important to double-check everything you get from a research company with what is happening on your Web site, and in your market. If they don't match, you need to figure out why. Is the data from your site bad? Is it poorly designed? Is it promoted correctly? Even if you don't decide to move to online commerce for now, the business analysis can help you improve your current site immensely.
The core of a successful online business is a great plan. Getting the data for that plan is available in many forms, but it is easily accessible on the Web and through analysis of your current site usage. Hopefully, we helped you get started in the right direction. Many thanks to Doug and Dirk for their assistance.
Another core part of any online business is your plan to promote your goods and services. To continue with the idea of using the Internet to learn about your market, we'll take a look next time at how to use the Internet to bring your market to you by making and managing smart online promotional decisions.
Until then, happy planning!
Mary Haggard is a program manager in charge of internationalization issues for Microsoft's portal site to the Internet.
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