Performance Metrics
OBJECTIVE
Develop an understanding of
how to assess
the financial and
strategic performance of
an e-business company.
Assist. Prof. Dr. Özge Özgen
20.12.2011


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
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
Metrics Framework
Financial Metrics
Customer-Based Metrics
Objectives
Implementation
Metrics
Financial and Other Metrics of Overall
Performance
Financial Metrics
Performance Relative to
Competitors

Sales


Revenue


Gross Margins

Profits

Marketing Spend
Market Share
Relative Return on
Investment
Traditional Hierarchy-of-Effects Model
Relationship Stages
Hierarchy-of-Effect Stages
Awareness
Awareness
Knowledge
Attitude
Purchase intent
Sample Metrics


I know what products Amazon carries
I know Amazon vs. BN.com

I like Amazon



Exploration/
Expansion
Purchase
Commitment


Post-purchase
behavior and
satisfaction
Loyalty





Dissolution
Not in model
I am aware of Amazon
I plan to buy from Amazon
Next time I buy, it will be from Amazon
Frequency of purchases
Amount of purchases
Quality of customer service interactions
Satisfaction with Amazon
Frequency of repeat purchases
Amount of repeat purchases
“Share of wallet” vs. competition
Stages of Online Buying Process
Relationship Stages
Hierarchy-of-Effect Stages
Search and
shopping
Exploration/
Expansion
Purchase
Post-purchase
Sample Metrics



Size of purchases
Conversion rates

Online satisfaction surveys


Commitment
Loyalty




Dissolution
Attrition
Number of visitors
Requests for product information
(e.g., page views and patterns)


Frequency of repurchases
Dollar amount of repurchases
Purchase intervals
“Share of wallet” in category
Lifetime value metrics
Interval since last purchase
Percentage of returns
An Integrated Model of Customer Metrics
Offline
Online
Integrated
Awareness
Awareness
Knowledge
Knowledge
“Ask”
Attitudes
Attitudes
Purchase intent
Purchase intent
Search and shopping
Search and shopping
Purchase
Purchase
Purchase
Post-purchase
Post-purchase
Post-purchase
Loyalty
Loyalty
Loyalty
Attrition
Attrition
“Observe”
“Ask” and
“Observe”
“Observe”
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%.
The Power of Conversion Rates
The chart illustrates that a small improvement in conversion rate has a large increase in
revenue
Conversion Rate
2%
4%
8%
$10,000
$10,000
$10,000
5,000
5,000
5,000
Transactions
100
200
400
Cost / Transaction
$100
$50
$25
$10,000
$20,000
$40,000
100%
50%
25%
Advertising costs
Visitors
Revenue
Marketing / 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.
Frequently Used Website Metrics
1. Visitor Metrics
3. Visit Metrics
Unidentified
Visitor
A visitor is an individual who visits a website. An
“unidentified visitor” means that no information about
that visitor is available.
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.
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.
Raw Visit Depth
(total webpages
exposure per
session
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.
•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.
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.
•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
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.
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.com
Frequently Used Online Advertising Metrics
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
Banner/Page/Site
Reach
Frequency
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
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.
The number of unique visitors
exposed to a banner or who visited a
page/site in a given time period.
The number of times that an
individual is exposed to a particular
advertising message in a given
period of time.
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?
Social 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 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 Metrics
Stages
Search and Shopping
Auction
Post-auction
Loyalty
Customer Metrics
Implementation Metrics
 Number
of unique visitors
 Number of repeat visitors
 Number of registered users
 Website: Number
 Number
of auctions user
participates in
 Average dollar amount per
auction
 Average dollar amount per
product category
 Website: Time
 Percentage
of returns
 Online satisfaction surveys
 Auctions won vs. lost
 Community: Replies
 Frequency
 Distribution: Items
of auction
participation
 Interval since last auction
 Share of auctions (identify
competitors)
of page views, length
of stay (stickiness), pattern of sites visited
 Community: Number of users on My
eBay
spent inside auction
 Product: Conversion to “Buy Now”
feature; length of auction
 Communications: Conversion to “E-mail
a Friend”
 Distribution: Profitability per seller
to feedback, number
of fraud reports
 Website: Transactions finalized vs.
dropped
sold vs. not sold
EBay Metrics — Unique Monthly Visitors
(March 2002)
100.000
91.899
83.010
78.647
80.000
Unique Monthly
Visitors
60.000
40.954
40.000
36.016
33.000 32.154
29.334 29.259
26.232
Source: Media Metrix U.S. Top 50 Web and Digital Media Properties, March 2002
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EBay Metrics — Unique Monthly and Daily
Visitors (March 2002)
One quarter of all Web users visit eBay.
100
91,9
90
78,6
80
70
Unique
Visitors
(in millions)
60
Monthly
Daily
50
33,9
40
29,3
30
29,3
21,2
20
5,5
10
2,3
0
AOL
Percent of Total Web
Users (114 million)
80%
Source: Jupiter Media Metrix, March 2002
Yahoo
69%
eBay
26%
Amazon
26%
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)
30
20
10
0
Monthly
Daily
eBay
uBid.com
Yahoo
Auctions
Andale
websites
Qool.com
Bidz.com
MyItem.
com
HUD.org
29,334
3,153
2,904
2,778
0,905
0,804
0,772
0,532
0,506
0,249
0,221
0,197
5,502
0,208
0,193
0,228
0,215
0,053
0,04
0,02
0,022
0,034
0,008
0,007
Audience size for all auction sites with reportable traffic:
Source: Jupiter Media Metrix, March 2002
Skyauction
PhilTanny.
eDeal.com
.com
com
32.6 million monthly unique visitors
6 million daily Unique visitors
EP.com
EBay’s Registered-User Evolution
EBay’s registered user base has doubled or almost doubled every year.
45
40
42.4
35
Number of
Registered
Users
(in millions)
30
25
22,0
20
15
10,0
10
5
2,2
0
Ara.98
Source: Company Reports
Ara.99
Ara.00
Ara.01
EBay Metrics — Average Minutes Spent per
User per Day
EBay rates high in “stickiness.”
50
Average
Minutes
Spent by
Customers
per Day
40
eBay vs. other popular
38,8 websites
30
21,6
24,3
eBay vs. other auction
websites
24,3
20
9,5
7,4
10
5,9
0
AOL
Source: Jupiter Media Metrix, March 2002
Yahoo
eBay
Amazon
eBay
uBid
Yahoo
Auctions
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