Strategic E-Marketing and

Performance Metrics The Amazon Story

Chapter 2 Objectives
• After reading Chapter 2, you will be able to: • Founded in 1995 as an online retailer.
– Explain the importance of strategic planning, – Did not become profitable until Q4 2001.
strategy, e-business strategy, and e-marketing – In 2011, generated $48.1 billion in net sales, $631
strategy. million in net income.
– Identify the main e-business models at the activity, • Leveraged its competencies into different e-business
business process, and enterprise levels. models.
– Core business is online retailing, “everything store.”
– Discuss the use of performance metrics and the
– Established e-commerce partnerships.
Balanced Scorecard to measure e-business and e-
– Developer services provider.
marketing performance.
– Content provider.
– Enumerate key performance metrics for social – Created the first affiliate program.
media communication.
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The Amazon Story, cont. Strategic Planning

• The process of developing and maintaining a
• Founder and CEO Jeff Bezos is not interested in strategic fit between the organization’s goals and
expanding to the physical world. capabilities and its changing market
• Amazon’s success is based on selection, lower opportunities.
prices, better availability, innovative technology, • Process identifies firm’s goals for
and better product information. – Growth
• Which of Amazon’s core competencies do you think
– Competitive position
will drive its strategy in the future?
– Geographic scope
– Other objectives, such as industry, products,
channels, etc.
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 ESP: Environment, Strategy, ESP model focuses on
and Performance strategy and performance
• The ESP model illustrates the relationships among
environment, strategy, and performance.
• A SWOT analysis of the business environment (E)
leads to the development of strategy (S) and the
measurement of performance (P).
• Performance metrics are designed to evaluate
effectiveness and efficiency of e-business and e-
marketing operations.

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Strategy Business Models

• A company will select one or more business
• Strategy is the means to achieve a goal. models as strategies to accomplish enterprise
• E-business strategy goals.
– Deploys enterprise resources to reach • An e-business model is a method by which the
performance objectives and create competitive organization sustains itself in the long term
advantage. using information technology, which includes
its value proposition for partners and
• E-marketing strategy
customers as well as its revenue streams.
– Capitalizes on information technology to reach
specified objectives.

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SELECTING A BUSINESS MODEL Level of Commitment
to E-Business
• Components of business model selections:

Customer value Scope

Price Revenue sources

Connected activities Implementation

Capabilities Sustainability

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Activity-Level E-Business Models Business Process-Level

E-Business Models
1. Online purchasing
2. Order processing Customer relationship Enterprise resource
management (CRM) planning (ERP)
3. E-mail
4. Content publishing Knowledge management Mass customization
5. Business intelligence (BI) Supply chain management Crowdsourcing
6. Online advertising and public relations (PR) Community building Freemium
7. Online sales promotions Affiliate programs Location-based marketing
8. Pricing strategies
Database marketing
9. Social media communication
10. Search marketing
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 Enterprise-Level Enterprise-Level
E-Business Models E-Business Models, cont.
• E-commerce refers to online transactions: selling • Social network sites are those that bring users
goods and services on the internet. together to share interests and personal or
• Social commerce uses social media to facilitate professional profiles.
online sales.
• Online brokers are intermediaries who assist in the
• Direct distribution is when manufacturers sell
purchase negotiations without actually representing
directly to consumers.
either buyers or sellers.
• Content sponsorship is a form of e-commerce in
which companies sell advertising on their Web • Manufacturer’s agents represent more than one
pages, YouTube videos, or other online media. seller.
• A portal is a point of entry to the internet that • Purchasing agents represent buyers.
combines diverse content from many sources.
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Performance Metrics
Pure Play Inform Strategy
• Pure plays are businesses that began on the • Performance metrics are specific measures
internet. designed to evaluate the effectiveness and
– They represent the final level of the pyramid. efficiency of operations, online and offline.
• Pure plays face significant challenges. • Performance metrics:
– They must compete as new brands. – Provide measurable outcomes.
– They may need to take customers away from – Must be easy to understand and use.
established businesses. – Must be actionable.
• Some pure plays have redefined industries: – Can motivate employees to make decisions
Yahoo!, Google, Twitter, Flickr, and eBay. that lead to desired outcomes.
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 Web Analytics Data Collection
• Web analytics is the e-marketing term for the
study of user behavior on Web pages. • Data for Web analytics are collected in
• Metrics measure activities such as: several ways:
– Click throughs from advertising. – Website server logs
– Page views. – Cookie files
– Number of comments posted on a blog.
– Page tags
– Number of fans on a company Facebook page.
– Conversions to sales. – Geolocation

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Metrics Used to Measure Internet The Balanced Scorecard

Marketing Performance
• The Balanced Scorecard provides a framework
for understanding e-marketing metrics.
• The Balanced Scorecard provides 4
perspectives.
– Customer perspective
– Internal perspective
– Learning and growth perspective
– Financial perspective

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The Balanced Scorecard: Customer The Balanced Scorecard: Internal
Perspective Perspectives
• The customer perspective scorecard includes ways • The Internal perspective includes ways to
to measure goals such as customer satisfaction, measure goals related to the quality of online
engagement and retention. services and measures for the entire supply
– Loyalty and satisfaction measures may include chain.
percentage of visitors who return to site, time – Number of customers who use service
between visits, and shopping cart abandonment. – Number of complaints in social media
– Customer engagement could include the number – Amount of time to answer customer e-mail
of comments, photos or videos posted.
– Number of updates per day
• Exhibit 2.7 provides a list of customer goals and • Exhibit 2.8 provides a list of internal goals and
measures. measures.

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The Balanced Scorecard: Learning and The Balanced Scorecard: Financial

Growth Perspectives Perspectives
• The learning and growth perspective scorecard • The financial perspective scorecard includes ways
includes human resources, product innovation to measure financial goals such as sales, profits
and return on investment (ROI), including:
and continuous improvement of marketing
processes. – Sales growth and market share.
– Number of new service products to market – Average order value.
– Number of customer complaints and fixes – Individual customer profit.
– Number of conversions from online leads • Exhibit 2.10 provides a list of financial goals and
• Exhibit 2.9 provides a list of learning and growth measures.
goals and measures.

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Social Media Performance Metrics
• Unique visitors
• Page views
• Impressions
• Number of searches
• Search engine ranking
• Number of followers, registrations, or
subscribers

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Brand Health Metrics Engagement Metrics

• Share of Voice (SOV) • Content viewership
• Sentiment • Tagging, bookmarking or “likes”
• Membership/Follower
• Brand influence
• Number of shares
• Content creation

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Action & Innovation Metrics
• Action metrics
– Click-through to an advertiser’s site.
– Contact form completion or registration.
– Event attendance.
– Purchase.
• Innovation metrics
– Number of ideas shared.
– Trend spotting.

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