Cookies may eventually crumble online registration

Forcing online customers to register for a Web site before letting them enter is likely to hurt business, say analysts. Instead, experts recommend the Amazon.com approach.

E-commerce companies are hungry for detailed customer information to help them target products and services, but some experts warn that they may end up starving themselves by alienating users through the practice of requiring registration to access content on a Web site.

Consider the case of Learning Resources Inc. of Vernon Hills, Ill., a manufacturer of educational toys and products looking to expand its presence online. Even though the company has seen its Web-based business grow during the last year, officials at the firm wonder whether skipping the registration process altogether might increase sales.

"It's something we considered very seriously while building the strategy around our site, and it became clear early on that there were strong opinions on both sides," said Timothy Bruess, network manager at Learning Resources.

In the end, the company decided to go with a system that requires users to log on with an e-mail address and create a password, so it could push customized content to repeat customers. Yet Learning Resources is concerned enough about the issue that it plans to revisit its policy.

Bruess is hoping that IT researchers will soon produce a study that gives a stronger indication of just how many sales may be lost because of the registration process. According to several industry analysts, these numbers may still be too difficult to calculate. "All we have thus far are informal surveys, but they do indicate that registration has, in some ways, become a hindrance to sales," said Brian Bingham, program manager at International Data Corp. in Framingham, Mass.

According to Bingham, much of the research done in this area has been kept under wraps by big-name online vendors looking to promote their own interests with proprietary surveys. However, he said, it is becoming increasingly clear that there is a relationship between how complex an online registration "clickstream" is and the number of potential customers lost in the process.

"It's like the call center model," he said. "If you're on hold for too long, you're just going to hang up."

One major example of an e-commerce company that has moved away from registration requirements is Seattle's Amazon.com. The Internet retail giant has dumped its former sign-up method in the name of a powerful cookie-based system that allows it to cater content to frequent shoppers by keeping pertinent information saved automatically to users' Web browsing software.

Analysts agree that this may be the future recipe for holding on to customer data in a less visible manner.

"This is probably the best way to provide a level of customization without affecting people's behavior," said James Van Dyke, analyst at Javelin Strategy and Research of San Francisco.

Van Dyke said one downside to the trend is that it requires a more significant upfront investment. He also concurs that there is a pressing need for researchers to provide more hard numbers to help track how registration impacts sales.

For Learning Resources, the ability to target users with personalized information remains a priority, so Bruess said the company will continue to use its traditional sign-up method until a better solution arises. "I hate to think we might discourage users, but until you can show me numbers that rationalize investment in an expensive cookie system, we'll have to wait and see," he said.

FOR MORE INFORMATION:

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