17 Key E-Business Metrics

Published in DFW Direct Marketing Association NewsMark

 

Measuring the profitability of Web sites has taken center stage as corporations and their investors realize the time has come to show the money. But with all of the speculation about what to measure, maybe it’s time for Web marketers to learn from direct marketers who have refined the practice of measuring and accounting for every marketing dollar invested. Here are seventeen report categories every successful direct marketer uses to measure their business that can be applied to Web marketers:

 

1. Customer Database History

Retaining a database of your customers is essential. Are you segmenting them into groups such as quintiles? The Prado Principle is probably alive and well in your business: 20% of your customers may be generating 80% of your business. Do you know them by name? Do you give them a higher level of service or stronger offers to come back over and over again?

 

2. Sources of Inquiries

Consider a customized page that will help you understand if an inquiry was the result of advertising from television, direct mail, or other media.

 

3. Conversions to Sale

So what if you had a “hit” or a “visit.” Did they leave money with you? The future of ecommerce businesses who survive are dependent on conversions to sale. You must know your conversion level by source (so you know where to advertise again) and repeat customer.

 

4. Marketing Cost

You should know your cost per inquiry and per order. To do this right, you must know how the customer found you. Better: develop an allowable marketing cost model before spending dollars to determine the thresholds that must be met for profitability.

 

5. Order sizes

What is your average sale? How about average sale by source? By product category? How many units per transaction?

 

6. Product Sales Analysis

What sells and what doesn’t will become the lifeblood of your business. Sales by product, with percent of total sales by product will reveal many insights for you.

 

7. Space Utilization

If you have multiple items on one page (or screen) how do they stack up against each other? Which items deserve greater space and which items should be reduced or eliminated?

8. Space to Sales Ratios

What are your sales and gross margin by selling space? Plot sales versus profit per item in a grid to determine where there are opportunities to increase or reduce space as well as increase or reduce prices.

 

9. Profit per Inquiry, Conversion, or Customer

This is a basic metric that should be compared to a variety of elements. How does profitability from one cohort of customers from one media source compare to another? Do customers generated from direct mail have higher repeat purchases than those generated from television?

 

10. Long-Term Customer Value

By compiling a database of customer purchasers, you will ultimately be able to build models that reveal the long-term value of a customer.

 

11. Link of Product Sales to Individual Customers

Through your analysis, you may also find that some customers only order certain types of products. If so, do they really need or care about other products you offer? Does your Web site allow easy access by your best customers to quickly find the products they wish to purchase?

 

12. Loyalty Programs

Frequent fliers earn miles. Frequent diners earn points. Does your ecommerce enterprise lend itself to a loyalty program? Caution: once started, a loyalty program is difficult to retract. Make sure the program satisfies a business or marketing strategy.

 

13. Affiliate Programs

If you’re paying a commission to referring Web sites, you should ask yourself: would you have generated the business without the affiliate anyway?

 

14. Customer Account Activity

Can your customers look up sales records you are compiling about them?

 

15. E-mail Marketing Databases

Make sure your customers are opting-in to be on your e-mail marketing database.

 

16. E-mail Address Changes

With high turnover of most email addresses, how are you keeping up with changes? Technology permits you the ability to track the number of times a message was undeliverable, triggering a letter sent by USPS or a phone call for an updated e-mail address.

 

17. Unique characteristics of your business

Every business is different and usually requires customized reports and programming. Make sure your technology and marketing people clearly identify reporting needs in writing before launching into programming.