Performance Metrics

1. Performance Metrics Assist. Prof. Dr. Özge Özgen 20.12.2011 OBJECTIVE Develop an understanding of how to assess the financial and strategic performance ofan e-business company.

2. 4231 views and mentions of your viral marketing campaign on the first day • 4231 is a measurement. • Without a context, it is just a number • Consider goals and expectations of your company and your competitors’ effort

3. Performance Metrics • Metrics translate the company’s vision, mission or e-business model into components with measurable outcomes. • The performance metrics must be easy to understand and use • Metrics must be actionable • When employee evaluations are tied to metrics, people will be motivated to make decisions that lead the desired outcomes

5. Metrics Framework Financial Metrics Customer-Based Metrics Objectives ImplementationMetrics

6. Financial and Other Metrics of OverallPerformance Performance Relative to Competitors Financial Metrics • Sales • Revenue • Gross Margins • Profits • Marketing Spend • Market Share • Relative Return on Investment

7. Traditional Hierarchy-of-Effects Model Hierarchy-of-Effect Stages Sample Metrics Relationship Stages Awareness Exploration/ Expansion Commitment Dissolution Awareness • I am aware of Amazon • I know what products Amazon carries • I know Amazon vs. BN.com Knowledge Attitude • I like Amazon Purchase intent • I plan to buy from Amazon • Next time I buy, it will be from Amazon • Frequency of purchases • Amount of purchases Purchase Post-purchase behavior and satisfaction • Quality of customer service interactions • Satisfaction with Amazon • Frequency of repeat purchases • Amount of repeat purchases • “Share of wallet” vs. competition Loyalty Not in model

8. Stages of Online Buying Process Hierarchy-of-Effect Stages Sample Metrics Relationship Stages Exploration/ Expansion Commitment Dissolution Search and shopping • Number of visitors • Requests for product information (e.g.,page views and patterns) Purchase • Size of purchases • Conversion rates Post-purchase • Online satisfaction surveys • Frequency of repurchases • Dollar amount of repurchases • Purchase intervals • “Share of wallet” in category • Lifetime value metrics Loyalty Attrition • Interval since last purchase • Percentage of returns

9. Awareness Knowledge Attitudes Purchase intent Search and shopping Search and shopping Purchase Purchase Post-purchase Post-purchase Loyalty Loyalty Attrition Attrition An Integrated Model of Customer Metrics Offline Online Integrated Awareness Knowledge “Ask” Attitudes Purchase intent “Observe” Purchase Post-purchase “Ask” and “Observe” Loyalty “Observe”

10. Conversions • Conversion is the number of visitors who took a desired action on your site • Buy Something • Download • Filled out a form • Conversion Rate = Desired Action /Total Number of Visitors (Typically 1 month) • For example, if 1,000 unique visitors were driven to your website from a search engine and 10 elected to purchase a product then your “sales” conversion rate would be 1.0%.

11. The Power of Conversion Rates The chart illustrates that a small improvement in conversion rate has a large increase in revenue Note: Average transaction size = 100%Source: Gurley, J. William. The Most Powerful Internet Metric of All. CNet.com, 21 February 2000. URL: http://news.com/Perspectives/2010-1072-281288.html.

12. Frequently Used Website Metrics

13. www.onlinewebstats.com

14. Frequently Used Online Advertising Metrics

15. Complexities and Challenges in Online Metrics In developing and deploying online metrics, a number of challenges may arise: Are relevant data being used? How does one capture the one-time buyer more effectively? Are metrics integrated across channels? Who is the advocate for integrative customer metrics? Are marketing costs accounted for?

16. Social Media Metrics • Social media leads. • Track web traffic breakdowns from all social mediasources, and chart the top few sources over time. • Membership increase and active network size • Activity ratio. • How active is your company’s collective social network? Compare the ratio of active members vs total members

17. Social Media Metrics • Conversions • Brand mentions in social media • Virality. • Social members might be sharing Twitter tweets and Facebook updates relevant to your company, but is this info being reshared by their networks? • How soon afterwards are they resharing? • How many Friends of Friendsare resharing your links and content?

18. Online Tracking — EBay Customer Metrics Stages Customer Metrics Implementation Metrics Search and Shopping • Number of unique visitors • Number of repeat visitors • Number of registered users • Website: Number of page views, length of stay (stickiness), pattern of sites visited • Community: Number of users on My eBay Auction • Number of auctions user participates in • Average dollar amount per auction • Average dollar amount per product category • Website: Time spent inside auction • Product: Conversion to “Buy Now” feature; length of auction • Communications: Conversion to “E-mail a Friend” • Distribution: Profitability per seller Post-auction • Percentage of returns • Online satisfaction surveys • Auctions won vs. lost • Community: Replies to feedback, number of fraud reports • Website: Transactions finalized vs. dropped Loyalty • Frequency of auction participation • Interval since last auction • Share of auctions (identify competitors) • Distribution: Items sold vs. not sold

19. EBay Metrics — Unique Monthly Visitors (March 2002) Unique MonthlyVisitors Source: Media Metrix U.S. Top 50 Web and Digital Media Properties, March 2002

20. EBay Metrics — Unique Monthly and Daily Visitors (March 2002) One quarter of all Web users visit eBay. UniqueVisitors(in millions) Percent of Total Web Users (114 million) 80% 69% 26% 26% Source: Jupiter Media Metrix, March 2002

21. EBay Metrics — Unique Daily Visitors to Auction Websites (March 2002) EBay has more visitors than all other auction websites combined. Daily Unique Visitors (in millions) Audience size for all auction sites with reportable traffic: 32.6 million monthly unique visitors 6 million daily Unique visitors Source: Jupiter Media Metrix, March 2002

22. EBay’s Registered-User Evolution EBay’s registered user base has doubled or almost doubled every year. Number of Registered Users(in millions) Source: Company Reports

23. EBay Metrics — Average Minutes Spent per User per Day EBay rates high in “stickiness.” eBay vs. other popular websites eBay vs. other auction websites Average Minutes Spent by Customers per Day Source: Jupiter Media Metrix, March 2002

24. Customer Metrics — Conclusion • Each set of metrics – financial, customer-based and implementation – gives managers information on different aspects of performance. • Financial metrics assess the bottom-line performance of the business • Customer-based metrics measure the health of the business’s customer assets • Metrics that measure the implementation of the marketing program explain what actions need to be taken to strengthen the customer base and, ultimately, the financial results