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Chapter 12

BUS 252 Chapter Notes - Chapter 12: Clickstream, System For Information On Grey Literature In Europe, Balanced Scorecard


Department
Business
Course Code
BUS 252
Professor
Hanadi
Chapter
12

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Chapter 12: Metrics for Performance Measurement in Ecommerce
Metrics can help an entity to better understand its business model to understand the customer base and
thereby better target the content of the ecommerce website; to better handle promotions and
discounts, product placements, up-selling and cross-selling; and to better manage the price.
Metrics acts as an incentive to motivate certain types of performance.
In the absence of metrics, performance assessment would be simply on end results, like cash in the
bank, with little insight into the nature of the specific activities that led to those results.
ALIGNING METRICS WITH BUSINESS OBJECTIVES
If an entity has set objectives and knows how to measure them, then this is an indication that it knows
how to link its activities to its business objectives.
An ebusiness may have different objectives at different times in its life.
During the business start-up phase, maximising traffic may be a legitimate objective, and the cots
involved may be considered an investment for the future.
Although traffic is definitely a key metric for ecommerce, even more important is the conversion of
traffic into customers.
For a product sales site, maximizing revenue could be the main objective.
Increasing market share is different from maximizing sales because it involves competition more
completely.
Minimizing transaction costs is an objective that is aimed at reducing the costs of doing business.
Maximizing return on investment (ROI) deals with earning relative to the investment incurred relative to
start the ecommerce activity, including site-development costs.
Metrics that recognize expenditures on ecommerce sites as investments will focus on return rather
income alone.
LIMITATIONS OF METRICS
Some measures may be ambiguous or susceptible to faulty analysis and interpretation. For example,
website stickiness may be good in some circumstances and bad in others.
Online measures are vulnerable to tampering by insiders or outsiders, and therefore the data sources
should be safeguarded against unauthorized access.
CLICK FRAUD
One of the problems associated with both display ads and search ads is click fraud, fraudulent sites
generating false data to generate metrics for which they can extract payment from marketers under
false pretences.
Click fraud is the subject of some controversy and increasing litigation due to the fact that advertising
networks can benefit from such frauds by collecting fees for clicks that they have been able to generate
even if the clicks are not from legitimate customers or potential customers.
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