business performance management in e-commerce

BUSINESS PERFORMANCE MANAGEMENT
IN E-COMMERCE:
THEORY AND PRACTICE
HEIKKI LEMPINEN
KARI HÄRKÖNEN
OCTOBER 2015
HEIKKI LEMPINEN , D.SC. (ECON.)
1983
1993 1997
2005
2013
2015
LECTURE GOALS
UNDERSTAND THE BASICS OF BUSINESS
PERFORMANCE MANAGEMENT
LEARN WHY IT IS IMPORTANT IN E-COMMERCE AND
DIGITAL BUSINESS IN GENERAL
HIGHLIGHT THE VALUE OF HYPOTHESES AND DATADRIVEN CULTURE
WHY E-COMMERCE?
WHY E-COMMERCE?
BUSINESS PERFORMANCE
MANAGEMENT: DEFINITIONS
BUSINESS PERFORMANCE MANAGEMENT IS A SERIES OF BUSINESS
PROCESSES AND APPLICATIONS DESIGNED TO OPTIMIZE BOTH THE
DEVELOPMENT AND EXECUTION OF BUSINESS STRATEGY…
A PERFORMANCE MEASUREMENT SYSTEM IS A SET OF METRICS AND
INFORMATION SYSTEMS USED TO QUANTIFY BOTH THE EFFICIENCY
AND EFFECTIVENESS OF ACTIONS AND THE REPORTING PROCESS
THAT GIVES FEEDBACK ON THE OUTCOME…
BUSINESS ANALYTICS IS THE PRACTICE OF ITERATIVE, METHODICAL
EXPLORATION OF AN ORGANIZATION’S DATA WITH EMPHASIS ON
STATISTICAL ANALYSIS AND IS USED BY COMPANIES COMMITTED TO
DATA-DRIVEN DECISION MAKING…
BUSINESS PERFORMANCE MANAGEMENT IS A SERIES OF BUSINESS
PROCESSES AND APPLICATIONS DESIGNED TO OPTIMIZE BOTH THE
DEVELOPMENT AND EXECUTION OF BUSINESS STRATEGY…
A PERFORMANCE MEASUREMENT SYSTEM IS A SET OF METRICS AND
INFORMATION SYSTEMS USED TO QUANTIFY BOTH THE EFFICIENCY
AND EFFECTIVENESS OF ACTIONS AND THE REPORTING PROCESS
THAT GIVES FEEDBACK ON THE OUTCOME…
BUSINESS ANALYTICS IS THE PRACTICE OF ITERATIVE, METHODICAL
EXPLORATION OF AN ORGANIZATION’S DATA WITH EMPHASIS ON
STATISTICAL ANALYSIS AND IS USED BY COMPANIES COMMITTED TO
DATA-DRIVEN DECISION MAKING…
IN SHORT: THE ONLY WAY TO SUCCEED
IN DIGITAL BUSINESS IS THROUGH DATA
IF YOU CAN’T MEASURE YOU CAN’T
MANAGE
WHAT YOU CAN’T MEASURE DOES NOT
EXIST
DECREASE COGNITIVE LOAD BY
FOCUSING ON KEY METRICS
1: ON INFORMATION OVERLOAD
YES, BUT OFTEN YOU NEED SEVERAL
DATA POINTS MAKE A GOOD DECISION
MARKETING
INVEST
TRAFFIC
/
SEM
DISPLAY REACH
DISPLAY RETARGETING
EMAIL
TV
RADIO
SEO
CPV
ORDERS
X
SALES
X
BOUNCE RATE
PRODUCT PAGE CTR
CHECK-OUT FUNNEL
…
CONVERSION
RATE
ITEMS PER
ORDER
BASKET
SIZE
+ SPLITS
BY DEVICE
BY CUSTOMER SEGMENT
BY HOUR
…
X
AV ITEM
VALUE
AV PRICE /
CATEGORY
X
CATEGORY
SHARE
CLOTHING
SHOES
ACCESSORIES
OTHER
INFORMATION ASYMMETRY WILL NOT
PERSIST IN THE INTERNET ECONOMY
2: ON DIGITALIZATION AND CONTROL
YES, BUT PEOPLE ARE STILL PEOPLE
P(MORAL HAZARD)
>
P(MORAL HAZARD) = 0?
ACTIVELY MANAGE TRADE-OFF BETWEEN COMPLETENESS
OF DATA VS SPEED OF DECISION MAKING
USE COMMON SENSE TO AVOID INCORRECT CONCLUSIONS
VISIT DURATION
A = 1.5 MIN B = 1.5 MIN
THE FANCIER THE BETTER
3: ON APPLICATIONS
NOT ENTIRELY TRUE, SIMPLE TOOLS
MAY ALSO WORK JUST FINE
APPLICATIONS CAN BE MANY
(EXAMPLE: HUUTO.NET)
APPLICATION
USE
WEB DATA ANALYTICS AND REPORTING
DATA INTEGRATION FROM MULTIPLE SOURCES
TRAFFIC AND PLATFORM REPORTS
SOCIAL MEDIA MONITORING, SENTIMENT ANALYSIS
SEO REPORTING AND DIAGNOSTICS
MANAGEMENT DASHBOARD
AD REVENUE TRACKING
BUT ONE RULES THEM ALL
IN THE END IT IS ABOUT BUILDING A
DATA-DRIVEN CULTURE
INTERACTION IS KEY WHEN
DEVELOPING PERFORMANCE
MANAGEMENT SYSTEMS
4: ON SYSTEMS DEVELOPMENT
AGREE, HOWEVER, HAVE NOT SEEN
THAT HAPPEN IN MANY CASES
WHY IS IT SO HARD?
BECAUSE THEY SERVE MULTIPLE NEEDS AND
AUDIENCES
TYPE
DESCRIPTION
TO WHOM
MANAGEMENT
REPORTING
DAILY, WEEKLY & MONTHLY REPORTS
REAL TIME MONITORING
BUSINESS
MANAGEMENT,
EXECUTIVES
MARKETING
CONTROL
DIAGNOSTICS AND REPORTS TO STEER
MARKETING INVESTMENT
MARKETING
MANAGERS,
ANALYSTS
SERVICE
DEVELOPMENT
AD HOC ANALYSIS TO EVALUATE THE
COMMERCIAL IMPACTS OF TECH/DESIGN
DECISIONS
INTEGRATED A/B TESTING IN PRODUCT
DEVELOPMENT CYCLES
PRODUCT
MANAGEMENT,
DEVELOPERS,
SERVICE
DESIGNERS
BUSINESS
ANALYTICS
INDUCTIVE EXPLORATION OF
BEHAVIORAL DATA
ANALYSTS, DATA
SCIENTISTS
ETC.
LOOK BEYOND KEY PERFORMANCE
MEASURES AND INDICATORS
TRAIN YOUR BRAIN TO HANDLE MORE
INFORMATION
IT IS NOT THE DATA BUT THE
HYPOTHESIS THAT COUNTS