The growth of E-channels in many markets has been phenomenal (£4 million is spent online every hour). So what are the options for e-channel performance reporting?

Take the example of UK E-retail where we see that in the 10-week run-up to Christmas 2006, online shoppers will spend an average of £4 million every hour, or £7 billion in total which is 40% more than the £5 billion spent online during the same period in 2005, and more than double the £3.3 billion recorded in 2004. Source: IMRG

So, how do you report on performance of your online channels now they are rapidly increasing in importance? Although the use of marketing and business performance dashboards is now widespread, where do the metrics for new digital channels fit in? This article reviews some of the options for integrating e-channel reporting into business dashboards and suggests a framework for you to check you are incorporating the right metrics.

Do I need another dashboard?

You may believe there is no place for the e-channel on your marketing dashboards. Certainly, the importance of e-channels vary by markets served. But the growth of online, both for sales of products and services, and selecting these services is undeniable. In the UK, there is now more money spent each month on advertising in Google than on TV advertising for Channel 4 and it is predicted that ITV will be surpassed shortly. This change in ad budget allocation reflects changes in customer channel behaviour – many of us will include an online search at some point in the purchase of a product even if we buy through retail or phone channels.

Which key E-channel metrics do I need for my marketing dashboard?

The e-channel or online contribution is a key metric I believe should be on every dashboard – it indicates the % of revenue, profit, sales, leads and influence or reach of the online channel overall and for different products or services. The web is the e-channel which is of overriding importance, but other media like e-mail, mobile or interactive TV may be important for some companies.

Another key metric for the E-channel is how it influences perception of a brand, so I think that marketing dashboards should report on e-channel satisfaction and its influence on customer loyalty and advocacy. For example, in banking there is national monthly reporting of satisfaction known as VOBS (Virtual Online Banking Survey), which the banks take very seriously. Banks like HSBC or First Direct will include satisfaction, loyalty and recommendation levels for their e-channels. Loyalty is typically measured through level of activity of the channel with measures such as % dormancy, % of users accessing the account or using different services with a 90 day period. Of course, e-channel activity also translates to cost savings, so it is important to keep tabs on these savings also.

Which framework should I use for my E-marketing dashboard?

The best, most usuable dashboards are based on a sound metrics architecture which groups metrics into clear groupings making review and action straightforward. My WebInsights™ framework, as shown below, gives 5 key areas to consider for E-marketing metrics.

The 5 areas in this framework are shown in the table below.

1. Business contribution These are effectiveness measures comparing the performance of the online channel with other channels. Examples: • Online revenue contribution (€, %) – direct and indirect (i.e. transacted online and referred online from offline); • Online profit contribution (€, %) – Profit contribution to the company in the period; • Online sales transaction contribution (n, %) – direct and indirect (% sales online may differ considerably from % revenue or profit contribution if there is a different average order value or profitability online); • Online service transaction contribution (n, %, €) – what percentage of different types of customer service occur online. Cost savings can be calculated for these also; • Online reach % – Share of online users attracted to the site in an industry category in a week or month assessed by services such as Hitwise or Netratings. Strictly, reach should be assessed through reaching customers via third party sites; • Online market share – % of online market revenue captured in comparison with offline. This is difficult to establish in some markets, dependent on industry collaboration; • Online customer migration – % of existing customers using online services.

2. Marketing outcomes: • Sales (n, €) (If relevant); • Leads (n) (registrations of other opportunities to sell); • Cost per Acquisition (CPA) – Promotional cost of obtaining a first time sale; • Other costs – Cost of good sold and average margin. Cost of service; • Average order value (Basket size); • Lifetime value (€) for different customer groups; • Average touch frequency – for example, for e-mail marketing.

3. Customer satisfaction: • Customer satisfaction and loyalty indices; • Number of comments from site and e-mail (% favourable and unfavourable); • Brand metrics (brand favourability); • Site performance and availability; • E-mail enquiry response time and accuracy.

4. Customer behaviour: • Site engagement rates (Bounce rates overall and for different pages); • Site conversion rates (Visit to Sale, Visit to opportunity and Opportunity to Sale); • E-mail conversion rates (Newsletter and campaign related); • Visits involving a page view in different categories (Product pages, Service pages, Where to Buy, Contact Us). Visits / customers can be scored according to this; • Visits to purchase/Time to purchase – indication of number of visits involved with purchase; • Number of products purchased per customer; • Transaction behaviour (Recency, Frequency, Monetary value analysis for different categories and customer types). RF analysis also relevant for site visits, e-mail response and different service types; • Activity or participation levels (Percentage of customer base / registrations who are actively using online service(s)). nActivated, nActive, nDormant, nLapsed, etc.; • Loyalty or churn metrics (% of customers repeat purchasing in given time, e.g. 1 year).

5. Site promotion: • Referrer mix from different sources (direct, search, affiliates, etc); • Share of search (main terms within market); • Cost Per Click (Visitors) average and CPM average for online ads.

Of course, this framework is just one approach; some companies prefer to create e-marketing dashboards, based on traditional frameworks such as the balanced scorecard or the customer lifecycle grid. But I hope my framework will enable you to review whether your e-channel metrics.

Dr Dave Chaffey
www.davechaffey.com
Director, Marketing Insights Limited

Email: dave.chaffey@marketing-insights.co.uk
Web: www.marketing-insights.co.uk

Recently published:
Internet Marketing, 3rd edition
SEO Best Practice Guide

About the author

Dave Chaffey (www.davechaffey.com) is author of E-marketing Excellence; Total E-mail Marketing, E-business and E-commerce management and Internet Marketing: Strategy, Implementation and Practice. His day job is helping organisations improve their online marketing through Internet marketing training and consulting. He has been recognised by the CIM as one of 50 marketing gurus worldwide who have shaped the future of Marketing and by the Department of Trade and Industry as one of the leading individuals who have provided input and influence on the development and growth of E-commerce and the Internet in the UK over the last 10 years.