Stage 2 Defining the performance metrics framework

Measurement for assessing the effectiveness of Internet marketing can be thought of as answering these questions:

1 Are corporate objectives identified in the Internet marketing strategy being met?

2 Are marketing objectives defined in the Internet marketing strategy and plan achieved?

3 Are marketing communications objectives identified in the Internet marketing plan achieved? How efficient are the different promotional techniques used to attract visitors to a site?

These measures can also be related to the different levels of marketing control specified by Kotler (1997). These include strategic control (question 1), profitability control (question 1), annual-plan control (question 2) and efficiency control (question 3).

Efficiency measures are more concerned with minimising the costs of online marketing while maximising the returns for different areas of focus such as acquiring visitors to a web site, converting visitors to outcome or achieving repeat business.

Chaffey (2000) suggests that organisations define a measurement framework which defines groupings of specific metrics used to assess Internet marketing performance. He suggests that suitable measurement frameworks will fulfil these criteria:

(a) Include both macro-level effectiveness metrics which assess whether strategic goals are achieved and indicate to what extent e-marketing contributes to the business (revenue contribution and return on investment). This criterion covers the different levels of marketing control specified by Kotler (1997), including strategic control, profitability control and annual-plan control.

(b) Include micro-level metrics which assess the efficiency of e-marketing tactics and implementation. Wisner and Fawcett (1991) note that typically organisations use a hierarchy of measures and they should check that the lower-level measures support the macro-level strategic objectives. Such measures are often referred to as 'performance drivers', since achieving targets for these measures will assist in achieving strategic objectives. E-marketing performance drivers help optimise e-marketing by attracting more site visitors and increasing conversion to desired marketing outcomes. These achieve the marketing efficiency control specified by Kotler (1997). The research by Agrawal et al. (2001), who assessed companies on metrics defined in three categories of attraction, conversion and retention as part of an e-performance scorecard, uses a combination of macro- and micro-level metrics.

(c) Assess the impact of the e-marketing on the satisfaction, loyalty and contribution of key stakeholders (customers, investors, employees and partners) as suggested by Adams et al. (2000).

(d) The framework must be flexible enough to be applied to different forms of online presence, whether business-to-consumer, business-to-business, not-for-profit or transactional e-tail, CRM-oriented or brand-building. Much discussion of e-marketing measurement is limited to a transactional e-tail presence. Adams et al. (2000) note that a 'one-size-fits-all' framework is not desirable.

(e) Enable comparison of performance of different e-channels with other channels as suggested by Friedman and Furey (1999).

(f) The framework can be used to assess e-marketing performance against competitors' or out-of-sector best-practice.

When identifying metrics it is common practice to apply the widely used SMART mnemonic and it is also useful to consider three levels - business measures, marketing measures and specific Internet marketing measures (see objective setting section in Chapter 4).

There are a framework of measures, shown in Figure 9.3, which can be applied to a range of different companies. Metrics for the categories are generated as objectives from Internet marketing planning which then need to be monitored to assess the success of strategy and its implementation. Objectives can be devised in a top-down fashion, starting with strategic objectives for business contribution and marketing outcomes leading to tactical objectives for customer satisfaction, behaviour and site promotion. An alternative perspective is bottom-up - success in achieving objectives for site promotion, on-site customer behaviour and customer satisfaction lead sequentially to achieving objectives for marketing outcomes and business contribution.

The WebInsights™ diagnostics framework includes these key metrics:

1. Business contribution:

Online revenue contribution (direct and indirect), category penetration, costs and profitability.

2. Marketing outcomes:

Leads, sales, service contacts, conversion and retention efficiencies.

G. Customer satisfaction:

Site usability, performance/availability, contact strategies. Opinions, attitudes and brand impact.

4. Customer behaviour (web analytics):

Profiles, customer orientation (segmentation), usability, clickstreams and site actions.

5. Site promotion:

Attraction efficiency. Referrer efficiency, cost of acquisition and reach. Search engine visibility and link building. E-mail marketing. Integration.

.C.hann.flP.rOim.O.t.'On. Figure 9.3 The five diagnostic categories for e-marketing measurement

Measures that assess why customers visit a site - which adverts they have seen, which sites they have been referred from.

Referrer

The site that a visitor previously visited before following a link.

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