INMA_A01.QXD

(National Geographic (Little) Kids) #1
A widely used method of assessing channel outcomes is to review the conversion rate,
which gives an indication of the percentage of site visitors who take a particular out-
come. For example:

Conversion rate, visitors to purchase = 2% (10 000 visitors, of which 200 make purchases).
Conversion rate, visitors to registration = 5% (10 000 visitors, of which 500 register).
A related concept is the attrition ratewhich describes how many visitors are lost at
each stage of visiting a site. Figure 9.4 shows that for a set time period, only a proportion
of site visitors will make their way to product information, a small proportion will add
an item to a basket and a smaller proportion still will actually make the purchase. A key
feature of e-commerce sites is that there is a high attrition rate between a customer
adding an item to a basket and subsequently making a purchase. It is surmised that this
is due to fears about credit card security, and that customers are merely experimenting.

5 Channel profitability


A contribution to business profitability is always the ultimate aim of e-commerce. To assess
this, leading companies set an Internet contribution target of achieving a certain propor-
tion of sales via the channel. When easyJet (www.easyjet.com) launched its e-commerce
facility in 1998, it set an Internet contribution target of 30% by 2000. They put the
resources and communications plan in place to achieve this and their target was reached
in 1999. Assessing contribution is more difficult for a company that cannot sell products
online, but the role of the Internet in influencing purchase should be assessed. Discounted
cash flow techniques are used to assess the rate of return over time.

PERFORMANCE MANAGEMENT FOR INTERNET MARKETING

Attrition rate
Percentage of site
visitors who are lost at
each stage in making a
purchase.


Figure 9.4 Attrition through e-commerce site activities

Payment & fulfilment

0

Percentage of

site vi

sit

s

Failed
delivery

No e-mail
notification

Card validation
error

Price
uncompetitive

Awkward
selection

Clumsy site
navigation

Slow page
load

Wrong
audience

Unclear
marketing
message

Unengaging
look and feel

No real-time
stock information

High shipping
costs

First impressions Product selection
Depth of relationship

Acquisition

100

Channel
profitability
The profitability of the
web site, taking into
account revenue and
cost and discounted
cash flow.

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