Applying the Balanced Scorecard to E-marketing

 Metrics for the Customer Perspective: – The most important of these metrics measure customer loyalty and lifetime value. However, many other metrics can help a firm optimize customer value: for example, customer perceptions of product value, appropriateness of selected targets, and customer buying patterns. As an example, Exhibit-1 displays several possible measures for some customer goals of an e‑business firm.

 

Customer Perspective
Example Goals Possible Measures
Build awareness of a new Web site  service i) Number of visitors to the site
Position firm as high tech i) Survey target attitudes
High customer satisfaction with Web site i) Number of visits and activity
High customer satisfaction with value of online purchasing i) Number of complaints (e-mail, phone)

ii) Number of abandoned shopping carts

iii)Sales of online versus offline for same Products

Build customer relationships i) Number of purchases per customer over time (using cookie data)

i) Customer retention percentage

Exhibit –2:  Customer Perspective Scorecard for E‑Marketing

Metrics for the Internal Perspective: – The internal perspective is critical to a successful e‑marketing. Many goals in this perspective affect human resources, information technology, and other areas that directly and indirectly affect marketing. The following example shows the goals and measures in the internal perspective.

 

Internal Perspective
Example Goals Possible Measures
Quality online technical help i) Amount of time to answer customer e-mail

ii) Number of problems covered by Web site FAQ

iii) Customer follow up survey

Quick product cycle time i) Number of days to make the product
Optimized number of customer service reps responding to online help i) Number of inquiries to customer service rep ratio
Superior Web site content management i) Number of updates per week

ii) Web site log traffic pattern statistics

High supplier satisfaction i) Supplier profits from our firm’s orders.

Exhibit—3: Internal Perspective Scorecard for E‑Business Firm

 Metrics for the Innovation and Learning perspective: – The innovation and learning perspective typically considers two issues—Customer relationship management (CRM) and sales conversions.

 

Innovation and Learning Perspective
Example Goals Possible Measures
Online service innovation

 

i) Number of new service features not offered by competitive offerings

ii) Percent of sales from new services

Continuous improvement in CRM system i) Number of employee suggestions

ii) Number/type of improvements over time

High Internet lead to sales conversion i) Number of conversions from online leads
Successful penetration of new markets

 

i) Percentage of the firm’s sales in each new market

Exhibit—4: Innovation and Learning Scorecard for E‑Business Firm

Metrics for the Financial Perspective: – Two of the most frequently used metrics are profits and return on investment. The financial perspective scorecard relies heavily on sales, profit, and return figures. The following exhibit presents some common performance metrics used by marketers.

 

Financial Perspective
Example Goals Possible Measures
Increase market share for online products i) Market share percentage (firm’s sales as percentage of industry sales)
Lower customer acquisition costs (CAC) in online channel i) CAC (costs for advertising, etc. divided

by number of customers)

Increase conversion rates at Web site

 

i) Number of orders divided by number of visitors to site
Increase individual customer profit

 

i) Average order value  

ii) Profit contribution over time less CAC  

Exhibit –5:  Financial Perspective Scorecard for E‑Business Firm

Six steps of e-marketing plan.

E-marketing Plan: – The e-marketing plan is a blueprint for e-marketing strategy formulation and implementation. It is a guiding dynamic document that links the firm’s e-business strategy with technology-driven marketing strategies and lays out details for plan implementation through marketing management.

Many companies short circuit this process and develop strategies unprepared. Some of them are successful, but many more fail. The Gartner Group predicted that up to 75% of all e-business projects fail due to fundamental flaws in planning.

Six-Step E-marketing Plan: – Six key planning elements include—

  • A situation analysis,
  • The link from e-business to e-marketing strategy,
  • The plan objectives,
  • An implementation plan,
  • The budget, and
  • A plan for evaluating success.

We cannot overemphasize the need to include feedback mechanisms to assess the plan’s success.

The following exhibit represents the six-Step E-Marketing Plan.

Step Tasks
1. Situation analysis ♯  Review the firm’s environmental and SWOT analyses.

♯  Review the existing marketing plan and any other information that can be obtained about the company and its brands.

♯ Review the firm’s e-business objectives, strategies, and performance metrics.

2. Link e-business with e-marketing Strategy ♯  Identify revenue streams suggested by e-business models.

Tier-1

♯  Perform marketing opportunity analysis to identify target stakeholders.

♯  Specify brand differentiation variables.

♯ Select positioning strategy

Tier-2

 Design the offer, value, distribution, communication, and market/ partner relationship management strategies.

3. Objectives ♯  Identify general goals.

♯ Select target specific goals.

4. Implementation plan ♯ Design e-marketing mix tactics:

— Product/service offering

— pricing/ valuation

— distribution/ supply chain

— integrated communication mix

♯  Design relationship management tactics.

♯ Design information gathering tactics.

Design organizational structure for implementing the plan.

5. Budget ♯  Forecast revenues

♯  Evaluate costs to reach goals.

6. Evaluation Plan Identify appropriate performance metrics.

Key factors affecting e-marketing environment.

E‑Marketing Environment: – The marketing environment is ever changing, providing plenty of opportunities to develop new products, new markets, and new media to communicate with customers, plus new channels to reach business partners. At the same time, the environment poses competitive, economic, and other threats. This section introduces three key environmental factors that affect e‑marketing: legal, technological, and market­-related factors.

Legal Factors: – Current and pending legislation can greatly influence e‑marketing strategies. Chief among these are laws concerning privacy, digital property (including copyright), and fraud. Privacy is difficult to legislate, yet it is critically important to consumers who routinely yield personal information over the Internet.

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Digital property problems began in the Web’s early days and continue to puzzle firms and legislators alike. In a medium where content is freely distributed, it can be freely ripped off—not a good thing for the content authors. Spam, offensive content, and other forms of personal expression conflict with user rights and, thus, form an ongoing discussion among legislators. Finally, new technology brings new opportunities for fraud. Although regulatory agencies are working hard to prevent fraud, enforcement is difficult in a networked world.

Technology

Technological developments are altering the composition of Internet audiences as well as the quality of material that can be delivered to them. Some Web sites are beginning to create three forms, of content: a high‑speed multimedia form, a standard PC offering, and a handheld format for wireless devices such as cell phones. Also important are technology concerns in developing countries. As communication infrastructures improve and more people use handheld devices, new geographic markets develop.

Consumer Market

 The internet is a global market with opportunities existing in unimagined locations. Iceland and Denmark are two of the most wired countries in the world with over 60% internet penetration. Also, consumers in many countries pay by the minute for local phone access. In addition, the infrastructure in some countries do not support high speed modems. Content delivered to these countries may, therefore, have to light on bandwidth.

Consumer Needs

What do customers want in the information economy? Privacy is one need. Customers want marketers to keep their data confidential, and they don’t want to be bothered by sales calls at home during dinner. They also want to safeguard children from Web sites they find objectionable. Consumers want marketers to ask permission before sending commercial e‑mail messages. And they want e‑commerce to provide convenience, self‑service, speed, good customer service, personal attention, and value. Fortunately, e‑marketing can meet all these needs.