PERFORMANCE METRICS

PERFORMANCE METRICS DEFINITION The standard measurement for describing performance Performance Metrics

MEASURING ELECTRONIC SHOPPING EFFECTIVENESS Performance Metrics

MOTIVATION • Designing an online store with effective customer interfaces has a critical influence on traffic and sales Performance Metrics

ELECTRONIC SHOPPING • Electronic marketplace (EM) becoming a major part of commerce in the coming decade • In 1995, cyberspace sales of $1B in US • Total US retail industry of $1 trillion • 2000 projection of $7B-$117B Performance Metrics

ELECTRONIC SHOPPING cont • Changes how business is conducted • Business strategy • Technical infrastructure • Government policies • EM demographics • How technology is used Performance Metrics

ELECTRONIC SHOPPING cont • Differences in EM and traditional store • Service desk → help button • Layout → pull-down menus, product indices, search engines • Very important: User Interface (UI) • Should not assume customers know-it-all • UI affects productivity in general Performance Metrics

TRAFFIC AND SALE FACTORS • 6 factors affecting traffic and sales • Merchandise • Service • Promotion • Convenience • Checkout • Store navigation Performance Metrics

1/6. MERCHANDISE • Customers prefer wide range of products • 5% of stores had 500+ items • 62% of stores had < 50 items • Range of products causes 17% variance in traffic, but no affect on sales • Physical properties cannot be sampled Performance Metrics

1/6. MERCHANDISE cont Performance Metrics

1/6. MERCHANDISE cont • < 8% screen area contained images • Large images: Slow • Small images: Poor quality Performance Metrics

1/6. MERCHANDISE cont Performance Metrics

2/6. SERVICE • Provide company profile + history • Quick responsiveness to inquiries • Anytime, anywhere, any language • Useful FAQs • Credit, debit, and payment policies Performance Metrics

2/6. SERVICE cont Performance Metrics

2/6. SERVICE cont • < 33% provide company profile + history • 80% had < 10 lines of such information • 95% did not have links to related products • 25% had help for product selection • < 9% had FAQ section • 47% did not have interactive email • 80% of stores had 1+ complaints Performance Metrics

2/6. SERVICE cont Performance Metrics

2/6. SERVICE cont • FAQ section increases traffic • Feedback + help section increases sales • Delays in answering complaints a PR disaster Performance Metrics

3/6. PROMOTION • 1 hr promotion → 4%↑ in variance of sales and 1.4%↑ in variance of traffic • Promotion = sales, advertising, appetizer features • 6% of stores offer ‘What’s New’ section • 76% did not offer incentives • Related links an important part of promotion Performance Metrics

3/6. PROMOTION cont • Advertising • Banners: top/ bottom of page • Spotlight: the logo prior to entrance • Features: first thing you see • Positions: some ads are never read Performance Metrics

3/6. PROMOTION cont Performance Metrics

4/6. CONVENIENCE • Layout, organization, ease of use • Help function should assist convenience • 12% had help sections • Status indicators • Short text, informative headlines (multi-layered), use of white-space, colors Performance Metrics

5/6. CHECKOUT • Long checkout  lose customers • Repetitive entry of information • Ideal: universal checkout interface • Shopping cart scheme • Remove items at will • w/o moving everything at a time • Shipping date, out-of-stock info Performance Metrics

5/6. CHECKOUT cont Performance Metrics

6/6. STORE NAVIGATION • Contribution to ease of navigation: • Product search • Sitemaps • Products indices • Site organization and design, • Links to related products Performance Metrics

6/6. STORE NAVIGATION cont Performance Metrics

6/6. STORE NAVIGATION cont • 4% of stores have site index • 6% had product search engines • 22% offered browsing buttons • Product list ↑ sales by 61%, ↑ traffic 7% • More description, pictures, and less click to purchase increase sales • Link to master index (site map) • Groupings, cross-store searches Performance Metrics

WEB INFORMATION SYSTEMS • Search engines are important, especially for large sites • Navigation path of user unknown • Every page must have navigation tools Performance Metrics

MARKETING & MERCHANDISING METRICS Performance Metrics

MOTIVATION • Internet has become the channel for sales and customer service • Max return on investment • Understand the effectiveness of their sites • Make appropriate action • Two main perspectives for analyzing the effectiveness of the sites • Marketing • Merchandising Performance Metrics

MARKETING • Definition • Defined as the activities used to acquire customers to an online store and retain them • Techniques • Use of banner ads, email campaigns Performance Metrics

MARKETING METRICS • Traditionally • Clickthrough rate: the percentage of viewers who click on a banner ad • Conversion rate: the percentage of visitors who purchase from the store • Recently • Ad banner return on investment (ROI) Performance Metrics

MERCHANDISING • Definition • Activities involved in acquiring particular products and making them available at the places, times, and prices and in the quantity to enable a retailer store to reach its goal, it also include how and where to display products, and which products to advertise and promote • Responsibilities • Product assortment and product display, including promotions, cross-selling and up-selling Performance Metrics

MERCHANDISING METRICS • Traditionally • Web page hit counts • Provide a broad indication of visitor interest • Conversion rate • Indicates the percentage of visitors who purchase form the store • Useful for evaluating the overall effectiveness of the store • Cannot understand the possible factors within the store that may affect the sales performance • Recently • Micro-conversion rates • Provide detailed insight into the success of different web merchandising, product assortment, and site design strategies Performance Metrics

MERCHANDISING ANALYSIS 1. Product assortment • Deals with whether the products in an online store appeal to the visitors • Merchant can adjust brands, quality, selection, inventory or price to optimize sales Performance Metrics

MERCHANDISING ANALYSIS 2. Merchandising cues • Different ways web merchants present their products to motivate purchase in online stores • Cross-sells • Refers the visitor to a web page marketing an item complementary in function to the item marketed on the current web page • Up-sells • Refers visitor to a web page presenting a similar but more upscale item • Recommendations • Highlights product pages that are likely to be of interest to the shopper based on knowledge of the shopper and the behavior of a larger population • Promotions • Refers a visitor to a product page for informing, persuading and/or reminding the shoppers about a product and/or other aspects of the site Performance Metrics

MERCHANDISING ANALYSIS 3. Shopping metaphor • Different ways that shoppers use to find products of interest 4. Web design features • Different ways how hyperlinks group together Performance Metrics

MERCHANDISING ANALYSIS Performance Metrics

Web Marketing Uses banner ads and referral sites Clickthrough rates, ad banner ROI Controlled in external sites Web Merchandising Hyperlinks and image links within the store Micro-conversion rates Controlled internally MARKETING VS MERCHANDISING Performance Metrics

PROBLEM • Tracking and measuring • Classifying each hyperlink by its merchandising purposes • Tracking and measuring traffic on the hyperlinks and analyzing their effectiveness • Attributing the profit of the hyperlinks to their merchandising cue type, shopping metaphor, and design features Performance Metrics

MICRO-CONVERSION RATE Product Impression Look-to-Click rate Clickthrough Click-to-Basket rate Look-to-Buy rate Basket Placement Basket-to-Buy rate Purchase Performance Metrics

MICRO-CONVERSION RATE Performance Metrics

MICRO-CONVERSION RATE • Micro-conversion rate can be calculated for • individual merchandising cue types • individual products • individual shopping metaphor types • individual design features • individual banner ads • Mini-Conclusion • All the individual hyperlinks pointing to product pages in various forms and purposes can be analyzed Performance Metrics

PARALLEL COORDINATES & STARFIELD VISUALIZATION Performance Metrics

DATA REQUIREMENTS FOR THE ANALYSIS OF WEB MERCHANDISING 1. To visualize the effectiveness: • Traffic data, from web server logs • Sales data, from the database of associated commerce server 2. To visualize a complete set of micro-conversion: • Product impression data: • From content meta-data tags or • Dynamically parser the content of a web page Performance Metrics

DATA REQUIREMENTS FOR THE ANALYSIS OF WEB MERCHANDISING cont 3. To examine merchandising purpose: • Implementation time data: • Static hyperlink labels • Tagged hyperlinks and dynamically parsed Overall: • Data preparation is easier for dynamic online stores • Dynamic URLs can be easily identified Performance Metrics

PERFORMANCE METRICS