Compendium of Industry benchmarks

>If you were to select 5 top line KEY performance
>indicators (industry benchmarks) which would they be?

All of them and some more I omitted:-)

But if you insist then my minimal list is as follows:

0. Number of Orders (transactions)
1. Sales or GP per email
2. CTR total and unique
3. Conversion as a % of unique clicks
4. Drop off ratio
5. Relevance ratio*

Comparison can only be made across same or proven to be similar enough sectors.

Relevance ratio: I omitted this indicator, my bad. This indicator shows % of those sales that were directly promoted from email vs total sales. It shows how relevant content was in the email itself as opposed to having situation where offers in email are bad, but homepage happen to have something nice, and overall email sales are good, which gives fake feeling that email is successful whereas its not.

Philosophy and productivity - sorry typos..

On 15:17:18 1 April 2003 silversurfer wrote:
>I see - my last point on this ;-)
>
>So the aim of each business is to manage these numbers,
>are we clear how this should be conducted? Which
>department has critical dependence – (in you case I
>would opt for full support of the product buying team)//
>cutomer services? Does this industry have clear best
>practices or business sector philosophy? Perhaps? Yes?
>
>What do people do to move these numbers and how many
>people are required? (Considering OPEX) - productivity
>measures?
>
>Some good points listed in the forum. Good transparent
>business planning is required.
>
>Thanks
>Phil
>
>
>
>
>On 14:23:29 1 April 2003 Alex Chudnovsky wrote:
>>>If you were to select 5 top line KEY performance
>>>indicators (industry benchmarks) which would they
>be?
>>
>>All of them and some more I omitted:-)
>>
>>But if you insist then my minimal list is as follows:
>>
>>0. Number of Orders (transactions)
>>1. Sales or GP per email
>>2. CTR total and unique
>>3. Conversion as a % of unique clicks
>>4. Drop off ratio
>>5. Relevance ratio*
>>
>>Comparison can only be made across same or proven to
>be
>>similar enough sectors.
>>
>>Relevance ratio: I omitted this indicator, my bad.
>This
>>indicator shows % of those sales that were directly
>>promoted from email vs total sales. It shows how
>relevant
>>content was in the email itself as opposed to having
>>situation where offers in email are bad, but homepage
>>happen to have something nice, and overall email sales
>are
>>good, which gives fake feeling that email is
>successful
>>whereas its not.

>So the aim of each business is to manage these numbers,
>are we clear how this should be conducted?

Unlike math this industry is too young to have something definate and certain. I could have written PhD on that subject, and my experience would not be complete, there will be differences that I missed due to the fact that I had to ignore insignificant for us trends, which may well be significant for others.

> Which department has critical dependence – (in you case I
>would opt for full support of the product buying team)//

Well, I am not an authority on this subject, so all my comments are purely based on my experience in Jungle.com (2000-2003). More details about stuff that I did are here: http://www.chudnovsky.org/about/cv.doc (warning its my CV in word file) I am currently employed full time by Phones4U (Ecommerce) and I do not plan to change job in near future, so please do not consider this link an app for work (part time consultancy is a different matter so long as it does not conflict with my main job).

So, back to question: I consider that the most important reason for our success was the fact that we had very good business understanding linked to highly capable IT department. We had to fight a lot with commercial dept with varied success for 2 years, and with more success in the last year of Jungle's life. You can't really exclude anyone from the list, because without product in stock we can't really promote it. From our side we tried to do our best to assist relevant departments in helping us. Oveall I think the less dependencies are the better, not possible or hard to do in big corporate environments.

>cutomer services? Does this industry have clear best
>practices or business sector philosophy? Perhaps? Yes?

I can't really speak for the whole industry. My business philosophy is to be customer focused maximizing sales potential, yeah, I know its obvious stuff but I was suprised to see a lot of non-customer focussed stuff, like manufacturers offering incentives to promote their products etc.

>What do people do to move these numbers and how many
>people are required? (Considering OPEX) - productivity
>measures?

Depends on objectives, my approach is that its better to have small good multi-skilled team rather than have links to many departments. Its a long story as well, don't know how interested people are.

That’s all very interesting stuff.

I think you hit on a very good point here - this business sector is NOT a science and it need not be - but many have tried to make it so. Whilst I consider too a PHD or MBA to nail down these variables - I consider a great number of the answers would be obvious and well tried and tested.

I am sure engaging with the customer may be a “me too” statement but MANY e commerce companies DO NOT DO THIS and do not know how too!

I gained my insight working alongside a Mc Kinsey & Co business analyst whilst at a global dot com player. What I learnt and consider a great insight; and critical to e business success is understanding how your customers learn and how your action affect them.

What are you trying to do and how fast will your customers take to understand the critical processes of buying, shopping, browsing and communicating with each other’s – beware that cycle can be 1 day but can also be 3 months or one year.

Online I believe successful understanding of phase one processes (browsing) is 3-7 days – a very small window of opportunity – if they don’t understand that phase you really will have your work cut out to get a sale.

5 phases

1 – 3 to 7 days – browsing and understanding
2 – 7 to 21 days – registration and close in for purchase
3 – 1 to 6 weeks – 1st purchase and follow up experience
4 – Within 3 months – 2nd purchase and other activity (additional browsing or community activities
5 – Greater that 3 months – lapsed customer

Obviously this can vary between sectors but I think is a good rule of thumb. So building a good CRM and company philosophy around that can be easier.

“ Make the site fast and robust, make browsing simple and easy, make phase 1-2 process for new customer very very straight forward, phase 3 critical for phase 4 (requires good levels of support), phase 4 will happen but don’t make it complex – very governed but branding and customer experience, Phase 5 email campaign or promotional activity target – but can be high cost – good focus group target”

I think we can all looks and analysis numbers but it’s critical that these are qualitatively verified against customer expectation and experience.

On 22:49:38 1 April 2003 Alex Chudnovsky wrote:
>>So the aim of each business is to manage these
>numbers,
>>are we clear how this should be conducted?
>
>Unlike math this industry is too young to have something
>definate and certain. I could have written PhD on that
>subject, and my experience would not be complete, there
>will be differences that I missed due to the fact that I
>had to ignore insignificant for us trends, which may well
>be significant for others.
>
>> Which department has critical dependence – (in
>you case I
>>would opt for full support of the product buying
>team)//
>
>Well, I am not an authority on this subject, so all my
>comments are purely based on my experience in Jungle.com
>(2000-2003). More details about stuff that I did are here:
>http://www.chudnovsky.org/about/cv.doc (warning its my CV
>in word file) I am currently employed full time by
>Phones4U (Ecommerce) and I do not plan to change job in
>near future, so please do not consider this link an app
>for work (part time consultancy is a different matter so
>long as it does not conflict with my main job).
>
>So, back to question: I consider that the most important
>reason for our success was the fact that we had very good
>business understanding linked to highly capable IT
>department. We had to fight a lot with commercial dept
>with varied success for 2 years, and with more success in
>the last year of Jungle's life. You can't really exclude
>anyone from the list, because without product in stock we
>can't really promote it. From our side we tried to do our
>best to assist relevant departments in helping us. Oveall
>I think the less dependencies are the better, not possible
>or hard to do in big corporate environments.
>
>>cutomer services? Does this industry have clear best
>>practices or business sector philosophy? Perhaps? Yes?
>
>I can't really speak for the whole industry. My business
>philosophy is to be customer focused maximizing sales
>potential, yeah, I know its obvious stuff but I was
>suprised to see a lot of non-customer focussed stuff, like
>manufacturers offering incentives to promote their
>products etc.
>
>>What do people do to move these numbers and how many
>>people are required? (Considering OPEX) - productivity
>>measures?
>
>Depends on objectives, my approach is that its better to
>have small good multi-skilled team rather than have links
>to many departments. Its a long story as well, don't know
>how interested people are.

Just came across a piece by Howard Seibel, Managing Director of Wharton Strategic Services which gives sample customer acquisition costs from various sources across the following sectors:

- Telecoms
- Retail
- Magazines
- Satellite/Cable
- Financial
- Travel

These metrics are not purely for online acquisition (though some of the sample companies are online pure-plays) and they are US-focused but I think they are helpful as guide benchmarks. Particularly if you can show that your interactive channels are achieving much lower average customer acquisition costs than these norms.

Data available at: http://www.emetrics.org/articles/acquisition.shtml