An important role in an eCommerce operation is responsibility for solutions ownership and the results delivered to senior management and other stakeholders. It’s a senior role that focuses on the macro level results that define the success and viability of the eCommerce team. In addition to the traditional financial and market metrics, the solutions owner must deliver customer focused results. It’s the customer focus that provides the building blocks for the traditional results and helps to set an eCommerce team apart from it’s competitors.
Traditional financial results
A solutions owner is responsible for profitable results with positive contribution margins. The contribution margin of a product is defined as the revenue minus the variable costs. eCommerce sites should consider both product variable costs as well as an allocation cost assigned to the channel for the variable costs associated with keeping the site running.
What about cost reduction? Typically, eCommerce operations help to reduce costs because they scale well and require less labor to maintain for the level of output. Cost reduction can be tied into the profitability calculations if the variable costs for the eCommerce channel are less than those for other channels. In this case, the channel would be more profitable per sale.
Customer focused financial results
An often overlooked part of financial results are those of the client, in a B2B relationship, or a customer, in a B2C relationship. In a B2B framework, the solutions owner is responsible not only for delivering results to his own company, but to his client as well. The eCommerce operation is as successful as it is in keeping the client in business with it’s customers. The mission is to make the client profitable. This concept applies whether your site a straight B2B or a B2B2C site. Either way, the costs of the products from your eCommerce will be part of the final price that the end-customer pays and part of the profitability of the middle business.
The solution owner should also be concerned about the financial results of the customer because the customer’s financial results determine if they’ll be repeat customers. In this sense, the financial results must be in alignment with the strategic positioning of the product in the market place. If your product competes on lowest cost (i.e. Wal-Mart) then obviously customers will repeat as long as they feel they get a better price. But if you compete on something other than price (i.e. Chic-Fil-A with community and customer service), then you will help customers to find ways to off-set the price premium. My drawer is full of Chic-Fil-A coupons for free food. That makes me feel financially successful with those purchases. But it also makes me spend more money at their stores because when I go, I usually buy for other members in my family. I could list many other examples of this, but the point is the solutions manager must consider the financial results to the end-customer.
Traditional market results
Typically a solutions owner oversees market results that focus on market share, units sold, and the percentage of products sold through the eCommerce channel (channel penetration). These are good and necessary result categories that show how the eCommerce operation is performing in a broader context. It’s important to note that growth may not be the expected result in all cases. If the product is in the declining stage of its product life-cycle then year-over-year comparisons may be expected to show decline.
Customer focused market results
A solutions owner with a customer focused view of market results recognizes that the eCommerce channel does not compete with other channels but is offered as a complementary channel to the customer. In the early days of eCommerce, many companies setup the eCommerce channel as a stand-alone profit center with separate P&L metrics from other channels. There was fear among retailers that the eCommerce site would cut into the storefront sales. That kind of thinking leads to internal competition and moves the focus away from the customer. Over the years, companies have realized that customers like to shop using multiple channels. So it’s the job of the eCommerce site to deliver an experience on par with a brick and mortar storefront and that has cross channel linking for the customer.
A third area for solution owners to deliver results is with organizational engagement. As with any good manager the solutions owner must engage employees in the overall mission and success of the team. This means communicating openly about the objectives of the team and explaining how the objectives align to the greater organization. People respond when they believe and understand how they belong to the bigger picture.