The purpose of the present report is to make a summation of topics that a company has to consider on to implement a Metrics Measurement Plan.
1. – Introduction to Metrics in the Companies
Most companies have several different reporting systems and productivity tools to collect and display data related to sales, customer activity, marketing campaigns, market trends and financial performance. Some even have handy collaboration sites where employees can post charts and tables for others to view and edit. Yet all these spreadsheets, files and tools can lead to confusion because it is difficult to make decisions from all these reports.
To close this gap we need to move away from data toward metrics. Metrics are actionable measures associated with core business processes, such as: conversion rating of sales and site visits, on-time delivery for a manufacturing company or employee attrition for HR. To put all this together we need to develop a “Metrics Plan” for the company.
1.1. – Why are companies using metrics, and for what
a. – For a better definition of the business model, helping increase the precision of value proposition.
b. – Strategy Communication with clearly documented performance targets.
c. – Track performance in real time, allows appropriate modifications in strategy.
d. – Increase accountability, metrics can be linked with the reward system.
e. – Alignment of Objectives, precise metrics help align individual with department objectives and company´s strategy.
1.2. – Who needs to use metrics
Today almost all companies use internet to sale their products or interact with customers, but not all are in the same stage of usage, some use their web sites only for Broadcast others for Interact or Transact and the more advanced to Collaborate and have full interaction with their customers. Another important to consider is if the company is 100% web based, has offline activity or a combination of them.
All this activity generates a lot of Data, but sometime companies’ don´t go aggressively after this data, why? Here are a few reasons: don’t know that the data is available or don’t know how to get at the data, even if they know it’s available, there’s too much information and it’s difficult to make heads or tails out of it and there’s no one on staff with the skills or time to adequately analyze the data.
But using this data with a correct Metric Measurement the companies can anticipate customer’s needs, develop customers solutions, have feedback of the business model, catch market opportunities, improve your marketing and branding, or improve the product delivery and know the return of investments (ROI) of a specific campaign or product.
1.3. – Importance of Metrics
The importance of metrics is that they can be used to increase the effectiveness of ecommerce sites by judging products and services quality, rating customer’s relationship and measuring employee’s satisfaction and commitment.
2. – The Web Metric Plan
With a basic understanding of what is data availability and in order to evaluate how effectively the web site is in delivering profits to the bottom line of the firm, we need to know more than how many visitors came to the site, and how many bought (which is your overall conversion rate). To make the connection between the business challenges at hand and the volumes of data available, a Web Metrics Plan can be developed.
2.1. – Types of Web Metrics
First of all, we can define web metrics by grouping them in these categories:
– Web usage and patterns
– User supplied data
– Site performance
– Financial analysis (ROI)
Depending of what we want to measure, we have two types:
– Measure to Control Metrics (MTC), and
– Measure to Analysis Metrics (MTA)
They have to be used cooperatively; usually we create a list of MTC metrics first and use MTAs for insights into MTCs. The MTC are Business Focused Metrics and Customers Focused Metrics. We can have some examples:
– Business Focused: Revenue, Cost savings, Efficiency, Call avoidance, Subscriptions, Sales or Leads.
– Customer Focused: Time savings, Easy use, Ability to do task, Enjoyment or Satisfaction.
2.2. – Evaluating Methods and use of different types of metrics
Metrics are one type of the evaluation process; they have to be used in coordination with other forms of company´s evaluations. Clearly, internal metrics are important but must be used with other types of external data sources like: Market Research, Analysis Reports and Financial Information.
Metrics will be different form company to company, depending on the market and industry where the firm is, what is the business model that they have, the availability of data and the technical, human and monetary resources that the company has to make the metrics plan.
2.3. – Life Cycle of the company
Depending on the stage that the company is in their life cycle, the relevant and important information could be different, or have different emphasis. Strategy changes throughout a company’s life cycle, increasing or decreasing the importance of each metric.
2.4. – Awareness and warnings
We see than having a Metrics Measurement Plan to leverage the different areas of the company has a lot of positive issues, but the companies have to be aware that not all metrics are meaningful, misinterpretation of measures can be worse that no data, too much information sometimes makes more difficult to take decisions (overwhelming) and, sites can be manipulated to produce specific results such sales promotions to increase sales or treating hits as customers.
3. – Outputs: The Performance Management Tools
Ecommerce performance management must be targeted, straight forward, easily to execute and integrated to ensure success. We have to define Key Corporate Metrics, isolating relative Departmental and Functional Metrics, and ensure everyone buys into all metrics as a priority in management.
For this we have 2 main tools: The Balanced Scorecard and The Performance Dashboard.
3.1. – The Balanced Scorecard
With these tools we can integrate all the metrics we have collected and integrate them in a one report. In our case, we define 4 main areas and related them with the Metrics:
Financial Metrics: Assess the financial performance of the company: Revenue, revenue growth, gross margins, operation incomes, etc.
Customer Metrics: Assess the management of customer relationship: Market share, customer satisfaction, acquisition or profitability.
Internal Business Process Metrics: Focus on the operation inside the company: Innovation, Operations and Post Sale Service.
Learning and Growth Metrics: Cover employees (selection, training, retention, satisfaction), information systems (timeliness, accuracy, data utility) and motivation metrics (personal and company goals alignment).
3.2. – The Performance Dashboard
It can be used as equal as the Balanced Scorecard, integrates measurements systems to track the progress of a new strategy or change program, it´s used for critical path for a project or in this case, to reflect business health.
4. – Conclusions
With the accession of Internet, a lot of companies are using it not only as an online brochure, they are able to sell and deliver all around the world, and use it to improve their logistic and coordination capabilities. All this activities create a great amount of Data, which come from all the online activities of the firm. The creation of a Metrics Measurement Plan ensures that all this data can be used to improve the core activities and generate value for the customers and the owners.
Halper and Hurwitz (2011, 3). “How to Build a Metrics-Driven Company”. Retrieved on October 1, 2011 from http://www.dashboardinsight.com
Weidman, Will (2003, 2) “Web Site Metrics”. WC Journals. Retrieved October 2, 2011 from http://www.weidmanconsulting.com
Krishnamurthy, Ram (2010, 3). “Metrics for e-commerce”. Retrieved October 2, 2011 from http://quaero.csgi.com
Strupp, Paul (2008, 6). “An Introduction to Web Metrics”. Sun Microsystems. Retrieved October 2, 2011 from http://www.libqual.org