Defining an eCommerce Operation – Metrics Management

This is my fifth post on the defining elements of an eCommerce Operation. Previously, I’ve written about management in the areas of solution ownership, content management, product management, and demand management. In this post I’ll explore elements related to the metrics management of the group.

The term metric in this case refers to a measurable unit of an item that is relevant to the success of the eCommerce operation.  Typically, management will also specify a few key performance metrics or key performance indicators to provide focus on those with direct correlation to business success.  The measurements are intended to be a measure of success against some threshold. That threshold might be a value set by previous baseline or it could be a stretch goal to show improvement in a certain area. Within the eCommerce group I’ll call out the areas where its important to have metrics.

Web site analytics provide information about how many people are visiting your site, what actions they take, information about their purchase, and other metrics about their identity. This area is important because it assists with determining if your merchandising tactics are working to close sales or provide customers with answers to service needs. Common metrics in this area include:

• number of visitors
• number of cart abandonments
• number of session abandonments
• number of purchases
• geographic location
• referral source (organic, link, keyword, etc.)
• keywords or adwords used for entry

Metrics for customer involvement include traditional survey results but have expanded in recent years with the advancement of social media. Marketers now have the ability to measure customer involvement through other techniques such as Twitter, Facebook, blog comments, and customer reviews. Results in customer involvement can be both qualitative and quantitative. Common metrics in this area include:

• number of customer reviews
• average ratings on customer reviews
• customer feedback on survey questions
• number of customers participating in discussion groups or fan pages
• reach of customers as followers

Metrics related to sales of your products and services are also part of metric management. Depending on your business, you may look to measure revenue, average cart purchase amount, product up-sell statistics, or retail value.  When measuring the financial results of the operation be sure to specify if the metric is taken from the web site analytics or the back office reporting. It’s important to note that the numbers may vary slightly based on the ability of customers to cancel, modify, or return their order after its placed on your web site.

Metrics related to channel are used to measure the effectiveness of the Internet channel compared to other channels such as phone, paper, or retail store front. In some businesses, it’s important to get as many Internet orders as possible if it provides the lowest cost to service. In other cases, it may be more desirable to have channels work in tandem to capture a sale in anyway possible. Create goals on channel usage and then measure the percentage of orders that come in by each channel. You should also keep the financial metrics split by channel.

Metrics related to products will involve the type, attributes, and quantity of products sold on an eCommerce site. Cross-sell and up-sell metrics belong in this group. Common metrics in this area include:

• items per order (IPO)
• number of SKUs sold
• optional attributes purchased

I added these elements of the eCommerce organization to the concept diagram that I’ve grown with each post.  This updated image shows the eCommerce operation that I have discussed so far.  I have a few other areas to add so stay tuned. ( Select the diagram to expand it.)