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E-commerce sites want to know when and why you buy

What makes online shoppers tick? It's a question that keeps marketing executives up at night, particularly in the wake of the market's steep decline.

What makes online shoppers tick? Answering that question has taken on new urgency as the shares of many e-commerce stocks languish near all-time lows.

One company hopes to find the answer by asking its own questions. Vividence has signed up 100,000 computer users worldwide who have agreed to click and tell about a host of clients' sites, including Drugstore.com, Compaq.com and Altavista.

In a typical 45-minute Vividence review, about 200 people download an enhanced browser and are guided to a group of sites, usually the client's site and its competitors. The browser then asks questions along the way and lets testers comment on site design and general impressions.

Vividence evaluates the responses and works with the target company based on the results.

Despite the Web's ability to produce lightning-speed data on consumer profiles, preferences and shopping habits, Internet executives still have a hard time understanding what their customers want--and often the data itself.

Marketers often feel pinched by the high costs of acquiring customers--nearly $250 per customer in some cases--so honing in on what customers want and need from a site can lower costs and help retain customers.

"Internet companies are really focusing on retaining customers in this market," said Michele Slack, advertising analyst at Jupiter Communications. "Because of some of the pressure on e-commerce companies for results, bumping up sales from market research can make a difference."

Because the Internet is still relatively new, users navigate the Web in very different ways. Most Web sites are in a perpetual state of development, continually changing the design or incorporating new technologies such as streaming media.

Evite, a Web site for sending invitations, hired Vividence to learn more about its customers and competitors. Vividence consultants helped the company define its objectives, set up a test and interpret the data. It found that consumers thought of Evite only for parties, a narrow view that the company wanted to change.

"Based on the research, we've broadened our positioning to include other types of everyday events such as dinner parties or setting up golf games," said Jennifer Mullin, vice president of products at Evite.

Typically, companies will quiz a random representation of the population about their new brand image, product or advertising. To do this, companies fly in 10 or more people from across the country, give them a cheap gift, and ask a slew of questions about what they like and don't like. Many high-level business decisions are made based on this research.

"With just this information, you're essentially flying blind," said Artie Wu, who founded Vividence in 1998.

Mullen said Vividence's software offers a better system because it tracks the way people use the Web in a natural setting, not under the pressure of a controlled environment. And because the users do it in their own homes, it's faster.

"Vividence gets granular by following every click on each page, and they also measure the time it took to click," said Mullen, who plans to use Vividence on an ongoing basis.

Demand for this type of customer information has skyrocketed alongside the popularity of the Web.

Online market research is estimated to nearly triple from $90 million in 1999 to $250 million in 2000, according to IMT Strategies. Overall, the market research industry is worth $3.9 billion.

"This is a part of a long evolution of attempts by outside organizations to help marketers understand their customers," said Tom Collinger, associate professor of e-commerce marketing at Northwestern's IMC graduate program.

"This is a terrific tool that collapses historically independent tools, such as tracking shopping behavior, but it's not the silver bullet," Collinger said. "There isn't a silver bullet in any marketing campaign."

One limitation is that Vividence software doesn't give a so-called "360 degree view" of a customer's experience; it doesn't track visits to physical stores or other sites outside a test, Collinger said. But no one solution offers that.

"Vividence tries to understand the mental model of the customer," said Wu, who says he came up with the idea for the company while working with Steve Kirsch, founder of Infoseek. At one point, Kirsch said something to the effect of: "I don't know what Yahoo and Infoseek look like to a grandma. Find out!"

Vividence, based in San Mateo, Calif., charges between $20,000 and $40,000 for a first-time evaluation based on the size of the test group and the scope of the site and test. A company can also opt to train one of its own employees with the software.

Wu said that a year's worth of tests can cost in the low to mid six figures. "A year with Vividence is like an Olympic training program. If you decide you're going to be No. 1 in your space, you need an Olympic level trainer."

Testers typically receive $15 gift certificates to such online stores as Amazon, or they can choose from gifts or donate the money to charity. Bounties can go up if the group is highly targeted, and that cost is passed along to the client.