Setting proper performance measures: a practice guaranteed to succeed!

As the Internet has matured, it has become possible to make better use of performance measurement tools to verify whether a site, functionality, campaign or any other online tool has met the business objectives that were established. To put a web site online without planning and studying these measures is equivalent to purchasing a product without understanding its purpose. There is no longer any valid reason for this image to persist in relation to e-business projects.

Do you calculate the conversion rate of your visitors (number of visitors who become online or off-line buyers)? What is your average online and off-line sale amount? How many people who visit your site also make in-store purchases? These questions must be answered to ensure that your investments yield returns.

A recent study conducted by Adviso Consulting and the RBC Financial Group Chair of E-Commerce examined the online department store sector in Canada and discovered that, in general, Canadian department stores do not use adequate measures to evaluate the success of their web sites. In fact, companies in the retail trade sector make minimal use of their web site to better understand their clientele’s purchasing process, which can in turn help to prioritize the changes that must be made to the site.

A Forrester Research survey from April 2003 concluded that 14% of retailers are completely ignorant of their conversion rate and 43% do not know their rate of shopping cart abandonment [1]. Yet these metrics are of vital importance and make it possible to greatly improve a site. When Amazon, who secured 9% of online sales in the US in 2002, making it the largest online retailer, noticed that many of its customers abandoned their shopping carts, it decided to impede customers from resuming their shopping once they had clicked on “Proceed to Checkout” [2]. When implementing important modifications such as this to a site, it is crucial to verify how customers react to such a change and to ensure that the action taken has solved the problem that was previously identified.

Companies that use the raw data provided by various online tracing tools to extract quality metrics obtain a significant competitive advantage since they know exactly where invested funds secure the most profits. Take the example of the online florist FTD.com. This business invested funds in a customized reminder system that allows customers to choose their own dates because it realized that when e-mail reminders were sent on the dates requested by customers themselves, the company’s e-mail conversion rate increased from an average of 3-5% to 28% [3]. Considering that a 3 to 5% conversion rate is average, that a 2% rate is fairly low and that a rate of 10% is high, it was clearly profitable for FTD.com to invest in such a tool.

These examples prove the importance of using measurement tools, yet like many managers, you are certainly asking yourself where to begin. Several solutions are possible. Therefore, listed below are certain steps you must complete in order to get your performance measures and your e-business tools working together:

Define the business objectives of the intervention in question.

1. Obtain raw data concerning your site and media placing that corresponds to the objectives defined in Step 1. 2. Define online ratios that adequately represent your business needs and practices. 3. Calculate the ratios, analyze them and identify those that must be improved before any others. 4. Define which actions to take to improve the chosen ratios. 5. Carry out the corrective actions identified in Step 5. 6. Evaluate whether the actions taken were beneficial. 7. Restart Step 3 to ensure that the chosen ratios are still a priority.

By completing these few steps, you can greatly improve your use of the Internet and your online investments will be much more premeditated, profitable and suitable for your business strategy.

[1] Ross Rubin, “Retail Site Metrics: Conversion and Revenues,” eMarketer , Oct. 10, 2003.

[2] Ibid

[3] Internet Retailer, April 11, 2003,