chapter

16

Customer Metrics
McGraw-Hill/Irwin

2004 The McGraw-Hill Companies, Inc., All Rights Reserved.

Customer Metrics Todays Objectives

Objectives will be to:

Understand the strengths and weaknesses of traditional offline metrics Understand the strengths and weaknesses of online metrics Discuss the need for an integrated set of metrics

Examine eBays customer metrics

Chapter 16: Customer Metrics

Offline Customer Metrics Online Customer Metrics The Need for Integrated Customer Metrics

EBays Customer Metrics

Conclusion

Chapter 16: Customer Metrics

Offline Customer Metrics Online Customer Metrics The Need for Integrated Customer Metrics

EBays Customer Metrics

Conclusion

Exhibit 16.2: Traditional Hierarchy-ofEffects Model

Awareness

I am aware of Amazon

Awareness

Knowledge

I know what products Amazon carries I know Amazon vs. BN.com

Attitude

I like Amazon

Purchase Intent

I plan to buy from Amazon Next time I buy, it will be from Amazon

Exploration/ Expansion

Purchase

Frequency of purchase Amount of purchases

Postpurchase Behavior and Satisfaction

Quality of customer service interactions Satisfaction with Amazon

Commitment

Loyalty

Frequency of repeat purchases Amount of repeat purchases Share of wallet vs. competition

Chapter 16: Customer Metrics

Offline Customer Metrics Online Customer Metrics The Need for Integrated Customer Metrics

EBays Customer Metrics

Conclusion

Exhibit 16.3: Stages of the Online Buying Process

Search & shopping

Number of visitors Requests for product information (e.g., page views and patterns)

Exploration/ Expansion

Purchase

Size of purchases Conversion rates Acquisition costs

Postpurchase

Online satisfaction surveys

Commitment

Loyalty

Frequency of repurchases Dollar amount of repurchases Purchase intervals Share of wallet in category Lifetime value metrics

Dissolution

Attrition

Interval since last purchase Percentage of returns

Chapter 16: Customer Metrics

Offline Customer Metrics Online Customer Metrics The Need for Integrated Customer Metrics

EBays Customer Metrics

Conclusion

Exhibit 16.4: An Integrated Model of Customer Metrics

Awareness Awareness Knowledge Knowledge

Ask
Attitude Attitudes

Purchase Intent

Purchase Intent

Search & shopping

Search & shopping

Observe
Purchase Purchase Purchase

Postpurchase

Postpurchase

Postpurchase

Loyalty

Ask and Observe

Loyalty Loyalty

Attrition

Attrition

Observe

Exhibit 16.5: Strengths & Weaknesses of Online & Offline Metrics

Online
Prepurchase Attitude Knowledge Search and Actual Shopping Behavior

Offline
Weak

Strong

Weak

Strong

Purchase and Loyalty

Moderate

Strong

Exhibit 16.6: The Power of Conversion Rates

Conversion Rate
2% Advertising Costs Visitors Transactions Cost/Transaction Revenue Marketing/Revenue (%)
$10,000 5,000 100 $100 $10,000 100%

4%
$10,000 5,000 200 $50 $20,000 50%

8%
$10,000 5,000 400 $25 $40,000 25%

Note: Average transaction size = 100% Source: Gurley, J. William, The Most Powerful Metric of All, CNetNews.com, 21 February 2000

Integrated Customer Metrics

Chapter 16: Customer Metrics

Offline Customer Metrics Online Customer Metrics The Need for Integrated Customer Metrics

EBays Customer Metrics

Conclusion

Exhibit 16.9: Online Tracking EBay Customer Metrics

Exhibit 16.10: EBay Metrics Unique Monthly Visitors (Mar 2002)

100000 91899 83010 80000 78647

Unique Monthly Visitors

60000 40954 40000 36016 33000 32154 29334 29259 26232

20000

at or

ay

ou s t/P rim ed ia G oo gl e

Ya ho o

ar ne r

az on

Ly co

M ic ro s

eB

Ti m

M SN

Te

AO

Ab

rra

Am

NE T

of

Exhibit 16.11: EBay Metrics Unique Monthly and Daily Visitors (Mar 2002)
Monthly Daily

100 90 80 70
Unique Visitors (in millions)

91.9 78.6

60 50 40 30 20 10 0 AOL*
80%

33.9 21.2

29.3

29.3

5.5
Yahoo
69%

2.3
Amazon
26%

Percent of Total Web Users (114 million)

eBay
26%

Exhibit 16.13: EBays RegisteredUser Evolution

45 40 35 30 25 Number of Registered Users 20 (in millions) 15

42.4

22.0

10.0
10 5 0 Dec-98 Dec-99 Dec-00 Dec-01

2.2

Source: Company Reports

Exhibit 16.14: EBay Metrics Average Minutes Spent per User per Day
50

40
Average Minutes Spent by Customers per Day

38.8

30

21.6
20

24.3

10

7.4

9.5 5.9

0 AOL Yahoo eBay Amazon uBid Yahoo Auctions

Chapter 16: Customer Metrics

Offline Customer Metrics Online Customer Metrics The Need for Integrated Customer Metrics

EBays Customer Metrics

Conclusion

Customer Metrics Conclusion

Traditional offline customer metrics and online customer metrics can be brought together in an integrative approach to measuring and tracking customer experience. Although there can be metrics that illustrate the integration of physical and online stores, there are a number of challenges to developing and deploying this integrative customer experience strategy. In order to understand the success and performance of marketing interventions, the link from customer metrics to the companys financial metrics must be examined.