Performance MetricsPerformance Metrics
Assist. Prof. Dr. Özge ÖzgenAssist. Prof. Dr. Özge Özgen
20.12.201120.12.2011
OBJECTIVEOBJECTIVE
Develop an
understanding of how to
assess
the financial and the financial and
strategic strategic
performance performance of an e-
business company.
4231 views and mentions of your viral marketing campaign on the first day◦ 4231 is a
measurement.◦ Without a context, it is
just a numberConsider goals and
expectations of your company and your competitors’ effort
Performance MetricsPerformance 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
Metrics FrameworkMetrics Framework
Financial and Other Metrics of Financial and Other Metrics of OverallOverall PerformancePerformance
Sales
Revenue
Gross Margins
Profits
Marketing Spend
Sales
Revenue
Gross Margins
Profits
Marketing Spend
Market Share
Relative Return on Investment
Market Share
Relative Return on Investment
Traditional Hierarchy-of-Effects ModelTraditional Hierarchy-of-Effects Model
PurchasePurchase
Relationship Stages
Awareness
Exploration/ Expansion
Commitment
Dissolution
Hierarchy-of-Effect Stages Sample Metrics
I am aware of Amazon
I know what products Amazon carries
I know Amazon vs. BN.com
Quality of customer service interactions
Satisfaction with Amazon
Frequency of repeat purchases Amount of repeat purchases “Share of wallet” vs. competition
I like Amazon
I plan to buy from Amazon Next time I buy, it will be from
Amazon
Frequency of purchases Amount of purchases
AwarenessAwareness
KnowledgeKnowledge
AttitudeAttitude
Purchase intent
Purchase intent
Post-purchase
behavior and satisfaction
Post-purchase
behavior and satisfaction
LoyaltyLoyalty
Not in model
Stages of Online Buying ProcessStages of Online Buying Process
Search and shopping
Search and shopping
PurchasePurchase
Post-purchase
Post-purchase
LoyaltyLoyalty
Exploration/ Expansion
Commitment
Dissolution
Hierarchy-of-Effect Stages Sample Metrics
Number of visitors Requests for product
information (e.g., page views and patterns)
Size of purchases Conversion rates
Online satisfaction surveys
Frequency of repurchases Dollar amount of repurchases Purchase intervals “Share of wallet” in category Lifetime value metrics
Relationship Stages
AttritionAttrition Interval since last purchase Percentage of returns
An Integrated Model of Customer An Integrated Model of Customer MetricsMetrics
Online IntegratedOffline
PurchasePurchase
Post-purchasePost-purchase
LoyaltyLoyalty
AwarenessAwareness
KnowledgeKnowledge
AttitudesAttitudes
Purchase intentPurchase intent
Search and shopping
Search and shopping
PurchasePurchase
Post-purchasePost-purchase
LoyaltyLoyalty
AttritionAttrition
AwarenessAwareness
KnowledgeKnowledge
AttitudesAttitudes
Purchase intentPurchase intent
Search and shopping
Search and shopping
PurchasePurchase
Post-purchasePost-purchase
LoyaltyLoyalty
AttritionAttrition
“Ask”
“Observe”
“Observe”
“Ask” and“Observe”
ConversionsConversions 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%.
The Power of Conversion RatesThe Power of Conversion Rates
Conversion Rate
2% 4% 8%
Advertising costs $10,000 $10,000 $10,000
Visitors 5,000 5,000 5,000
Transactions 100 200 400
Cost / Transaction $100 $50 $25
Revenue $10,000 $20,000 $40,000
Marketing / Revenue (%) 100% 50% 25%
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.
The chart illustrates that a small improvement in conversion rate has a large increase in revenue
Frequently Used Website MetricsFrequently Used Website Metrics3. Visit Metrics
Stickiness (visit duration time)
The length of time a visitor spends on a website. Can be reported as an average in a given time period, without regard to visitor duplication.
Raw Visit Depth (total webpages exposure persession
The total number of pages a visitor is exposed to during a single visit to a website. Can be reported as an average or distribution in a given time period, without regard to visitor duplication.
Visit Depth (total unique webpages exposure per session).
The total number of unique pages a visitor is exposed to during a single visit to a website. Can be reported as an average or distribution in a given time period, without regard to visitor duplication.
4. Hit Metrics
Hits When visitors reach a website, their computer sends a request to the site’s computer server to begin displaying pages. Each element of a requested page (including graphics, text, interactive items) is recorded by the site’s server log file as a “hit.” Hence, a single page with multiple graphics can be counted as multiple hits since each graphic is counted as a separate hit. Given that page designs and visit patterns vary from site to site, the number of hits bears no relationship to the number of pages viewed or visits to a site and so are generally regarded as an inaccurate form of measuring traffic.
Qualified Hits A further refinement of hits, qualified hits exclude less important information recorded in a log file (such as error messages, etc.). While qualified hits provide a better idea of traffic volume than overall hits, this figure is still not an accurate assessment of actual number of users.
1. Visitor Metrics
Unidentified Visitor
A visitor is an individual who visits a website. An “unidentified visitor” means that no information about that visitor is available.
Unique Visitor A unique visitor is one who can be recognized and counted only once within a given period of time, usually between a half-hour and an hour. An accurate count of unique visitors is not possible without some form of identification, registration, or authentication.
•Session visitor
A session ID is available (by cookie or token) or inferred (by incoming IP address plus browser type), which allows a visitor’s responses to be tracked within a given visit to a website.
•Tracked visitor
An ID is available (e.g., cookie), which allows a user to be tracked across multiple visits to a website. No information, other than a unique identifier, is available for a tracked visitor.
•Identified visitor
An ID is available (by cookie or voluntary registration), which allows a user to be tracked across multiple visits to a website. Other information (name, demographics, possibly supplied voluntarily by the visitor), can be linked to this ID. Another way to obtain an identified visitor ID is to develop a Web gateway or panel (e.g., WebTV or PC Meter) that captures a complete record of a visitor’s behavior.
2. Exposure Metrics
Page Exposures (page views)
The number of times a particular webpage has been presented to visitors in a given time period, without regard to visitor duplication.
Site Exposures The number of visitor sessions at a website in a given time period, without regard to visitor duplication.
www.onlinewebstats.comwww.onlinewebstats.com
Frequently Used Online Advertising Frequently Used Online Advertising MetricsMetrics
Banner/Page/Site Frequency
The number of times unique visitors were exposed to a banner or visited a page or website.
Effective Frequency The number of exposures needed for an ad to become “effective.” In mass media models, advertisements require a certain amount of exposure before they can be deemed effective. Research has indicated that less than three exposures will not allow adequate recall. Too many exposures can be inefficient—after 7, 8, or 10 exposures, improved recall is incremental.
Effective Reach The number of people who are exposed to an ad at the effective frequency.
3. Other Metrics
Ad Click-Through (ad Click Rate)
The percentage of visitors who were exposed to a banner, clicked on the banner, and then were exposed to a target ad in a given time period, without regard to visitor duplication.
Cost Per Inquiry The cost to generate an inquiry in direct-response advertising, such as banners. Calculated by the total cost of the direct-response advertisement divided by the number of inquiries it generates.
1. Exposure Metrics
Impressions (exposures, ad views)
Number of times an ad banner is downloaded and presumably seen by visitors. One impression is counted each time an advertisement is delivered by a Web server.
Gross Impressions The sum of all media exposures (number of people or homes) disregarding duplication.
CPM Cost per thousand impressions (or exposures). The cost to serve 1,000 impressions through a given website.
2. Reach and Frequency Metrics
Reach The number of unduplicated people or households that will be exposed to an advertising schedule at least once over a specified period of time.
Banner/Page/Site Reach
The number of unique visitors exposed to a banner or who visited a page/site in a given time period.
Frequency The number of times that an individual is exposed to a particular advertising message in a given period of time.
Complexities and Challenges in Complexities and Challenges in Online Metrics Online Metrics
In developing and deploying online metrics, a number of challenges may arise:
Social Media MetricsSocial Media Metrics
Social media leads.
Track web traffic breakdowns from all social
media sources, 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
Social Media MetricsSocial 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 Friends are resharing your
links and content?
Online Tracking — EBay Customer Online Tracking — EBay Customer MetricsMetricsStagesStages Customer MetricsCustomer Metrics Implementation MetricsImplementation Metrics
Search and Shopping
Search and Shopping
AuctionAuction
Post-auctionPost-auction
LoyaltyLoyalty
Number of unique visitors
Number of repeat visitors
Number of registered users
Number of unique visitors
Number of repeat visitors
Number of registered usersNumber of auctions user participates in
Average dollar amount per auction
Average dollar amount per product category
Number of auctions user participates in
Average dollar amount per auction
Average dollar amount per product category
Percentage of returnsOnline satisfaction
surveysAuctions won vs. lost
Percentage of returnsOnline satisfaction
surveysAuctions won vs. lost
Frequency of auction participation
Interval since last auction
Share of auctions (identify competitors)
Frequency of auction participation
Interval since last auction
Share of auctions (identify competitors)
Website: Number of page views, length of stay (stickiness), pattern of sites visited
Community: Number of users on My eBay
Website: Number of page views, length of stay (stickiness), pattern of sites visited
Community: Number of users on My eBay
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
Website: Time spent inside auction
Product: Conversion to “Buy Now” feature; length of auction
Communications: Conversion to “E-mail a Friend”
Distribution: Profitability per sellerCommunity: Replies to feedback, number of fraud reports
Website: Transactions finalized vs. dropped
Community: Replies to feedback, number of fraud reports
Website: Transactions finalized vs. dropped
Distribution: Items sold vs. not sold
Distribution: Items sold vs. not sold
83.01078.647
40.954
36.01633.000 32.154
29.334 29.25926.232
91.899
20.000
40.000
60.000
80.000
100.000
EBay Metrics — Unique Monthly EBay Metrics — Unique Monthly Visitors (March 2002)Visitors (March 2002)
Source: Media Metrix U.S. Top 50 Web and Digital Media Properties, March 2002
Unique MonthlyVisitors
78,6
29,3 29,333,9
21,2
5,5 2,3
91,9
0
10
20
30
40
50
60
70
80
90
100
AOL Yahoo eBay Amazon
Monthly
Daily
EBay Metrics — Unique Monthly EBay Metrics — Unique Monthly and Daily Visitors (March 2002)and Daily Visitors (March 2002)
Percent of Total Web Users (114 million)
80% 69% 26% 26%
UniqueVisitors(in millions)
Source: Jupiter Media Metrix, March 2002
One quarter of all Web users visit eBay.
0
10
20
30
Monthly 29,334 3,153 2,904 2,778 0,905 0,804 0,772 0,532 0,506 0,249 0,221 0,197
Daily 5,502 0,208 0,193 0,228 0,215 0,053 0,04 0,02 0,022 0,034 0,008 0,007
eBay uBid.comYahoo
AuctionsAndale
websitesQool.com Bidz.com
MyItem. com
HUD.orgSkyauction
.comeDeal.com
PhilTanny.com
EP.com
EBay Metrics — Unique Daily EBay Metrics — Unique Daily Visitors to Auction Websites (March Visitors to Auction Websites (March 2002)2002)
Daily
Uniq
ue V
isit
ors
(in
mill
ion
s)
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
EBay has more visitors than all other auction websites combined.
Number of
Registered Users(in millions)
2,2
10,0
42.4
22,0
0
5
10
15
20
25
30
35
40
45
Ara.98 Ara.99 Ara.00 Ara.01
EBay’s Registered-User EvolutionEBay’s Registered-User Evolution
Source: Company Reports
EBay’s registered user base has doubled or almost doubled every year.
38,8
21,624,3
7,4
24,3
9,55,9
0
10
20
30
40
50
AOL Yahoo eBay Amazon eBay uBid YahooAuctions
EBay Metrics — Average Minutes EBay Metrics — Average Minutes Spent per User per DaySpent per User per Day
Source: Jupiter Media Metrix, March 2002
Average Minutes Spent by Customers per Day
eBay vs. other auction websites
eBay vs. other popular websites
EBay rates high in “stickiness.”
Customer Metrics — ConclusionCustomer 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
