As more and more companies continue to leave store-front businesses in exchange for e-commerce sites, one important question that these businesses must ask themselves is if they really understand their customers. While it is easy to say you made a hundred sales in one month, the more important question is why your customers chose to buy your products and how you can replicate the same results.

With user information becoming increasingly valuable, being able to understand your customers behaviors, trends as well as likes and dislikes can be the key to whether or not you have a successful business.

The Importance of Data

As a business, each and every user that visits your website forms a relationship with you. Some may be long-lasting, while others may be one time ‘flings.’ Whether it’s long-lasting or not, understanding the reasons behind this is important. By capturing visitor data, businesses can learn how to better improve both their marketing and product development.

On the marketing side, by analyzing data to find correlations between purchases, you can determine how you should proceed as far as allocating funds for online advertisements, adwords, and how items are presented to visitors. Additionally, product development can benefit from knowing specifics such as what accessories are most often purchased with certain purchases as well as how often users come back to buy a particular type of item.

Lower Bounce Rate, Increase Relevance

Aside from being able to better tailor your website to your customers individual preferences, knowing how customers interact with your website will allow you to best optimize your site for when a customer lands on your site for the first time. For example, if you know that 90% of users scroll down and click on the About Us tab, by moving the About Us to the top of your website you are increasing the chance that they will stay on your site since they don’t have to search around for it. Too often are website content with leaving things the way they are out of their own convenience which means they are missing out on potential sales.

When a consumer first arrives at your website, you typically only have between 1-3 minutes to ’show’ them something relevant to what they are looking for. If you don’t, the chances of them coming back your website are drastically lower.

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While it may seem difficult, there are many tools out there that enable you to understand your customers and allow you to optimize your site in real-time. Being able to tell others how much money you made is great, but being able to tell them how and why is even better.

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Joseph Yi is the Director of Marketing at Viralogy.com and works in social media and sports consulting. Find more about him on his website.

Meet Craig Newmark. You may not recognize him if he walked past you, but you’ve probably heard of the website he started. Craigslist. With an estimated 48.7 million people visiting his site a month from the U.S. alone, Craigslist is in a league of its own.

While it continues to climb in traffic, one thing continues to stay consistent: the lack of change. Unlike sites like Apple, where the main page seems to change every other day, Craigslist has had the same bland user interface that everyone has now become accustomed to seeing. Aside from minor changes here and there, Craigslist has made little change to their website for the most part. With no future plans to change the site nor many of its policies, with online engagement and social media on the rise, the question now becomes: What Would Craigslist Do?

No Thanks

“No Thanks.” That is the answer that you would probably get if you asked Craigslist about making a change to the site. Starting at first as an email distribution list for friends in 1995, Craigslist has gone through hundreds and thousands of ’suggestions’ with few changes since then.

Although Craigslist generates revenue solely through paid job ads in select cities, it’s not that they can’t find other means, it’s that they won’t. To many, this is mind boggling, but to Craigslist, its just another day. By no means should anyone worry though, analysts suggest that Craigslist will bring in over $100 million this year from their paid job ads.

Why They Won’t Change

No one can pinpoint the exact reason why Craigslist doesn’t take advantage of the many opportunities they have, but many will agree is that if Craigslist did decide too, they would change the e-commerce landscape.

With just 30 employees, Craigslist gets more traffic than leading e-commerce sites eBay and Amazon.com, each of whom have more than 15,000 employees. Take that into account also the fact that their customer service has been called out for being unresponsive and unhelpful along with it being accused of facilitating prostitution, it is incredible how far they have come.

Door Is Closing

As of right now, Craigslist is in a league of their own. They dominate their market in helping individuals conduct face to face transactions and have yet to have had a serious contender. Still, the question becomes how long will they go without a challenge. When MySpace broke out on the scene, they were seemingly untouchable. Then came Facebook and later, Twitter. Although Craigslist has ruled their market for almost 10 years, everyday they don’t make a move, someone else is.

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Craig Newmark may never be as recognizable as Steve Jobs or Bill Gates, but perhaps if he changed his name to Craigslist he would be. Nevermind, Craigslist doesn’t change for anyone. Even for Craig himself.

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Joseph Yi is the Director of Marketing at Viralogy.com and works in social media and sports consulting. Find more about him on his website.

According to the Deloitte Annual Holiday Survey, consumers will be turning to social media sites to help handle their holiday shopping this year. 17% of consumers, to be exact. It comes as no surprise that more than half of these users will be searching for discounts and deals. The rest are looking for gift ideas, and stalking the wishlists of their friends and family members.

Online shoppers predict they will spend an average of $281 online during Q4 2009, a 24 percent increase over last quarter. [via]

In years past, consumers were doing research for purchases online, but still following through with the purchases in retail stores. In the current economic climate these offline consumers are turning into online customers.

It’s about time for a little optimism, don’t you think?

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