Copyright © 2002 by Marketspace LLC Rayport, Jaworski e-Commerce Chapter 7 Enhanced Lecture Slides Metrics Exhibits and Tables.

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Metrics — Today’s Objective Develop an understanding of how to assess the financial and strategic performance of an e-business company.

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Chapter 7: Metrics Purposes of metrics Comprehensive measures of performance Implementing performance metrics Example of metrics development: MarketWatch.com Sources of metrics information Case study: Schwab Conclusion

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–A: Purposes of Metrics Clarify strategic priorities Specify value proposition Outline specific goals Obtain employee buy-in Receive feedback Modify tactics Link to performance appraisal system Tie individual performance to metrics for the company, the team and the individual. Harmonize individual objectives, departmental goals and companywide strategy. Define Business Model Communicate Strategy Align Objectives Track Performance Increase Accountability Managers can use metrics to evaluate a business’s progress in the following areas:  Examples

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–B: Challenges to Specifying Metrics for Online Businesses Companies’ strategies change rapidly. Online measurement is resource intensive. –Development of systems to capture data can require significant capital investment and human resources. –Data mining is often needed to make data usable. –The amount of Information generated can overwhelm managers. Online metrics are still evolving. –There is little agreement on which measures are appropriate. –Some metrics are ambiguous (e.g., amount of time spent at site). –Data capture is subject to manipulation. “Hard” measures are needed for investment community, but “soft” measures are often the best early indicators of site performance. Some reasons why many online businesses do not take a systematic approach to developing and applying metrics:

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Exhibit 7–1: The Balanced-Scorecard Strategy In Operational Terms Financial To succeed financially, how should we appear to our shareholders? Internal Business Process To satisfy our shareholders and customers, what businesses must we excel at? Customer To achieve our vision, how should we appear to our customers? Learning and Growth To achieve our vision, how will we sustain our ability to change and improve? Vision and Strategy Source: Robert S. Kaplan and David P. Norton, “Using the Balanced Scorecard as a Strategic Management System,” Harvard Business Review 74 (January-February 1996): 76. The “Balanced Scorecard” was developed in response to managers’ tendency to focus too heavily on short-term financial performance.

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–C: The Balanced Scorecard – Typical Measures Internal Business Process Innovation: perceived innovativeness, percent of sales from new products. Operations: order processing, cycle time, delivery time, number of errors. Post-sale service: returns, warranty processing, response time, payment processing. Customer Market share, customer acquisition, customer satisfaction, customer profitability. Learning and Growth Employee: selection, training, retention, satisfaction. Information systems: timeliness, accuracy, data utility. Motivation: personal and company goal alignment. Source: Robert S. Kaplan and David P. Norton, “Using the Balanced Scorecard as a Strategic Management System,” Harvard Business Review 74 (January-February 1996): 76. Financial Revenue, revenue growth, gross margins, operating income, net margin, earnings per share, cash flow.

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–D: Strengths of Balanced Scorecard and Limitations for Online Businesses

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Exhibit 7–2: The Performance Dashboard Financial metrics Financial metrics Steps of Strategy Customer interface Customer interface Branding and implementation Branding and implementation Performance Dashboard Market opportunity assessment Market opportunity assessment Business model Business model Branding and implementation metrics Branding and implementation metrics Customer interface and outcome metrics Customer interface and outcome metrics Business model metrics Business model metrics Opportunity metrics Opportunity metrics Evaluation Like the Balanced Scorecard, the Performance Dashboard is intended to reflect a business’s health. The business strategy process drives metrics in this framework:

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–E: Introducing the Performance Dashboard Financial Steps of Strategy: Customer interface Branding and implementation Branding and implementation Performance Dashboard: Areas Addressed: Size of market opportunity Attractiveness of target segments Competitive landscape Customer lifetime value Customer satisfaction Site experience and usability Branding Delivery system Innovation capabilities Revenue Profit Cost Balance sheet Market opportunity Business model Branding and implementation Branding and implementation Customer Business model Market opportunity Uniqueness of value proposition Attractiveness of offering Firm capabilities relative to competition Relationship with suppliers, partners Evaluation

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Exhibit 7–3: Life Cycle of a Company Startup/Beta Customer Acquisition Customer Acquisition Monetization Maturity Develop a platform for rapid growth by building a strong team and creating a flexible site Build market share as quickly as possible by aggressively spending on partnerships and promotion Increase revenues and customer lock-in by developing new revenue streams Control costs and optimize marketing expenditures to achieve profitable growth 6 months - 1 year1 - 2 years2 - 5 years> 5 years Strategy Business.comPaypal.com Evite.com Yahoo Amazon.com Schwab AOL Examples* * At time of writing (March 2000) Strategy changes throughout a company’s life cycle, increasing or decreasing the importance of each metric.

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Exhibit 7–4: Blueprint to the Performance Dashboard Step One: Articulate business strategy Step Two: Translate strategy into desired outcomes Step Three: Devise metrics Step Four: Link metrics to leading and lagging indicators Step Five: Calculate current and target performance Define goals and value proposition Market Opportunity Opportunity size? Competitive environment? Market Opportunity Opportunity size? Competitive environment? Customer How to acquire customers? How will customers change? The customer experience? Customer How to acquire customers? How will customers change? The customer experience? Implementation and Branding How to develop brand? How to go to market? Implementation and Branding How to develop brand? How to go to market? Financial Financial consequences in terms of revenue, profit, cost and balance sheet? Financial Financial consequences in terms of revenue, profit, cost and balance sheet? Market Opportunity Market size and growth Average age and income Competitor concentration Market Opportunity Market size and growth Average age and income Competitor concentration Customer Market share Purchases per year Success rate Number of service requests Customer Market share Purchases per year Success rate Number of service requests Implementation Customer brand awareness System uptime percentage Number of IT staff members Percent of inaccurate orders Implementation Customer brand awareness System uptime percentage Number of IT staff members Percent of inaccurate orders Financial Revenue Profit Earnings per share Debt to equity ratio Financial Revenue Profit Earnings per share Debt to equity ratio For each metric, determine the metrics that it affects and that affect it Map the linked set of metrics, indicating leading and lagging indicators Ensure that there is a balance between leading and lagging indicators For each metric, determine the metrics that it affects and that affect it Map the linked set of metrics, indicating leading and lagging indicators Ensure that there is a balance between leading and lagging indicators Develop resource system required to deliver the strategy For each metric, calculate current level of performance Determine target level required to meet outcomes described in Step 2 Ensure that targets are consistent with each other For each metric, calculate current level of performance Determine target level required to meet outcomes described in Step 2 Ensure that targets are consistent with each other Business Model Unique value proposition? Capabilities vs. competition? Business Model Unique value proposition? Capabilities vs. competition? Business Model Customer-perceived benefits Exclusive partnerships $ invested in technology vs. competition Business Model Customer-perceived benefits Exclusive partnerships $ invested in technology vs. competition

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–F: MarketWatch.com Strategy “To be a leading provider of comprehensive, real-time business news, financial programming and analytic tools” 1. Value Proposition 3. Resource System 2. Marketspace Offering Metrics development using the Performance Dashboard: Step 1: Articulate the business strategy (Customer Acquisition Stage) Learn Track Investments

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC User Interface and Outcomes Market Opportunity Business Model Implementation and Branding Financial Evaluation Supporting Exhibit 7–G: MarketWatch.com Desired Outcome Summary Significant opportunity Moderate degree of competition Significant opportunity Moderate degree of competition Revenue Profit Cost Balance sheet Revenue Profit Cost Balance sheet Brand awareness vs. competition Best-in-class IT infrastructure Brand awareness vs. competition Best-in-class IT infrastructure User acquisition User online behavior User satisfaction and loyalty User acquisition User online behavior User satisfaction and loyalty Value proposition vs. competition Capabilities vs. competition Sustainability of value proposition Value proposition vs. competition Capabilities vs. competition Sustainability of value proposition Business Model Step 2: Translate strategy into key outcomes (Customer Acquisition Stage)

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–H: MarketWatch.com Metrics Significant opportunity – Online advertising market size – Percent of of online advertising that is related to finance content – Online financial ads CPM (cost per thousand impressions) – Number and percent growth of online brokerage accounts Segment with moderate degree of competition – Site traffic vs. competitors (e.g., unique visitors, page views, time spent on site) – Rate of competitive entry/exit – Number of mergers/acquisitions – Competitor advertising expenditures Significant opportunity – Online advertising market size – Percent of of online advertising that is related to finance content – Online financial ads CPM (cost per thousand impressions) – Number and percent growth of online brokerage accounts Segment with moderate degree of competition – Site traffic vs. competitors (e.g., unique visitors, page views, time spent on site) – Rate of competitive entry/exit – Number of mergers/acquisitions – Competitor advertising expenditures Market Opportunity Step 3: Choose metrics to track outcomes (Customer Acquisition Stage)

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–H: MarketWatch.com Metrics (cont.) Step 3: Choose metrics to track outcomes (Customer Acquisition Stage) Business Model Value proposition vs. competition – Perceptions of key benefits vs. competition Capabilities vs. competition – Relative number and experience of journalists on staff – Number of markets where company operates – Cumulative reach of distribution partnerships – Percent of content that is outsourced – Production capacity Sustainability of value proposition – Exclusivity and duration of partnerships vs. competition – Number and duration of patents on tools and services Business Model Value proposition vs. competition – Perceptions of key benefits vs. competition Capabilities vs. competition – Relative number and experience of journalists on staff – Number of markets where company operates – Cumulative reach of distribution partnerships – Percent of content that is outsourced – Production capacity Sustainability of value proposition – Exclusivity and duration of partnerships vs. competition – Number and duration of patents on tools and services

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–H: MarketWatch.com Metrics (cont.) Step 3: Choose metrics to track outcomes (Customer Acquisition Stage) Branding and Implementation Brand awareness vs. competition – Aided brand awareness – MarketWatch.com brand associations vs. competition – Percent of users that fall into target segment Best-in-class IT Infrastructure – System uptime – Average download time – Maximum percent of servers down at any point in time – Maximum response time – Maximum information volume – Number of articles produced each day – Percent of site updated each day Branding and Implementation Brand awareness vs. competition – Aided brand awareness – MarketWatch.com brand associations vs. competition – Percent of users that fall into target segment Best-in-class IT Infrastructure – System uptime – Average download time – Maximum percent of servers down at any point in time – Maximum response time – Maximum information volume – Number of articles produced each day – Percent of site updated each day

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–H: MarketWatch.com Metrics (cont.) Step 3: Choose metrics to track outcomes (Customer Acquisition Stage) User Interface and Outcomes User acquisition costs – Number of unique visitors vs. competition – Percent of users coming from other sites – Relative marketing expenditures (as percent of revenues) – Percent of site visitors who register – Percent of visitors who purchase – Percent of visitors who return to site – Frequency of visits User online experience – Customer evaluation on 7Cs vs. competition – Average minutes spent at site per user – Popularity of individual articles – Average time to complete a task – Number of negative feedback items per time period Customer satisfaction and loyalty – User loyalty – Satisfaction overall and by attribute vs. competition – User churn rate User Interface and Outcomes User acquisition costs – Number of unique visitors vs. competition – Percent of users coming from other sites – Relative marketing expenditures (as percent of revenues) – Percent of site visitors who register – Percent of visitors who purchase – Percent of visitors who return to site – Frequency of visits User online experience – Customer evaluation on 7Cs vs. competition – Average minutes spent at site per user – Popularity of individual articles – Average time to complete a task – Number of negative feedback items per time period Customer satisfaction and loyalty – User loyalty – Satisfaction overall and by attribute vs. competition – User churn rate

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–H: MarketWatch.com Metrics (cont.) Step 3: Choose metrics to track outcomes (Customer Acquisition Stage) Financial Evaluation Revenue – Total revenue and revenue growth – Revenue breakdown by advertising, licensing, subscription, other – Total revenue per page view Profit – Total loss and percent decrease of loss over time – First expected profitable quarter Cost – Total cost – Customer acquisition cost – Percent of revenues spent on marketing and sales Balance sheet – Stock price – Available funds in liquid assets – Cash burn rate – Average days receivables Financial Evaluation Revenue – Total revenue and revenue growth – Revenue breakdown by advertising, licensing, subscription, other – Total revenue per page view Profit – Total loss and percent decrease of loss over time – First expected profitable quarter Cost – Total cost – Customer acquisition cost – Percent of revenues spent on marketing and sales Balance sheet – Stock price – Available funds in liquid assets – Cash burn rate – Average days receivables

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–I: MarketWatch.com Linking Metrics Market Opportunity Business Model Implementation and Branding Customer Interface Financial Competition underserving market Unique value proposition Build brand Brand awareness Attractive segments that company can serve well Attractive offering to users Develop improved offering to users Satisfaction and loyalty Leverage capabilities to deliver offering Invest in IT infrastructure Optimized system costs Ad revenue Other revenue sources Usage Profit System reliability Step 4: Map leading and lagging indicators (Customer Acquisition Stage)

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–J: MarketWatch.com Metrics at Two Time Points Source: MarketWatch.com, Media Metrix Step 5: Calculate current and target levels for select metrics (Customer Acquisition Stage) MarketWatch.com tracks key metrics vs. competitors. Target performance is generally to become the best performer. Monthly fluctuations are important to track, because they can indicate trends and identify areas that need changes.

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–K: Information Sources for Metrics Data collected internally are important, but external data are also useful for benchmarking and performance tracking: Data TypeSample MeasuresSample Sources Market researchSite usability Customer satisfaction Site traffic BizRate.com Jupiter Media Metrix AC Nielsen Analyst reportsIndustry trends Company or site ratings Forrester Aberdeen Group Frost and Sullivan IDC Financial informationCompany profiles Financials Industry and market comparative data Hoover’s Online Edgar Online DLJ Direct SEC filings

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Table 7–1: POV: Bill Gurley on the Power of Conversion Rates Source: J. William Gurley, “The Most Powerful Metric of All,” CNET News.com, 21 February 2000. A website’s conversion rate is a key metric of performance. Small increases in customer conversion can significantly impact marketing costs per transaction.

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Table 7–2: US Top 25 Web and Digital Media Properties (March 2000) Source: Media Metrix press release, 31 March 2000. The number of unique visitors to a site is a key metric for the customer interface.

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–L: US Top 25 Web and Digital Media Properties (December 2000 and November 2001) Source: Media Metrix press releases, 16 January 2001 and 26 December 2001

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Exhibit 7–5: Market Research Source — BizRate.com BizRate asks consumers to rate the performance of an online store. “Ten dimensions of service”

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Exhibit 7–6: Analyst Source — Forrester Forrester ratings are based on expert reviews and customer surveys.

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Exhibit 7–7: Financial Information Source — Hoovers Online Hoover’s Online provides industry information and profiles of individual companies.

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Exhibit 7–8: Mapping Internet Research Onto the Performance Dashboard Market Implementation Customer Financial Market ResearchAnalyst Financial Information

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Slide 7–M: Point-Counterpoint: Which is Better? User- Based or Expert-Based Research Content?

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Slide 7–W: Point-Counterpoint: Which is Better? Offline or Online Data Sources?

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Exhibit 7–9: Metrics for Seamless Online/Offline Customer Purchase Process Awareness of offline offer vs. awareness of online offer Perceived benefits of online vs. offline offer  Information Available offering information online vs. offline Currency of information online vs. offline Security and privacy associated with purchasing  Customer service Response time online vs. offline Customer loyalty incentive programs online vs. offline Exchange policies online vs. offline Awareness Knowledge Evaluation of alternatives Evaluation of alternatives Purchase Satisfaction Loyalty Disposal Prepurchase Post-purchase Purchase Well integrated online/offline businesses offer a seamless customer experience (front end).

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Table 7–3: Metrics for Seamless Internal Business Processes and Operations Ability to open accounts online and offline Ability to access accounts online and offline Integrated customer databases Information Sharing Information Sharing Fulfillment Systems Fulfillment Systems Seamless order processing Seamless order tracking Integrated inventory keeping Well integrated online/offline businesses offer a seamless set of internal business processes and operations (back end).

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Exhibit 7–10: Charles Schwab — Customer Acquisition Stage Step 1: Articulate the Business Strategy “Use technology to offer innovative products and superior service at lower prices to investors unwilling to pay for investment advice” Schwab Learning Center Live events Principles of investing Understanding market cycles “Did you know” Q&A Schwab signature services Schwab AdvisorSource Options service Global investing service Online chat with customer service representatives Customer service via phone Customer service via e-mail Customer service at branch My Watch List Margin loans Money transfers Automatic investing Options service After-hours trading Account protection Bill payment Overall General goal planner Investor profile Sample investment plans Retirement Retirement planner IRA analyzer Product Offering Online Investment Process Get educated about investing Plan investments Decide on investment Perform investment Post- investment support Perform research Estate Estate tax and probate calculator Alternatives comparison College College planner Tax Tax strategies IRS withholding calculator Overall Quotes and charts Analyst center Stocks and Options Stock analyzer Bonds and Treasuries Schwab BondSource services CDs and Money Markets SchwabOne Annuities Schwab Select annuity Life Insurance Insurance needs calculator Superio r service Lower prices Lower prices Innovati ve product s 1. Value Proposition 2. Marketspace Offering 3. Resource System

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Exhibit 7–11: Schwab Desired Outcome Summary Step 2: Translate strategy into key outcomes (Customer Acquisition Stage) Market Opportunity Significant opportunity Financially attractive segment Competitively attractive segment Business Model Value proposition vs. competition Offer vs. competition Capabilities vs. competition Sustainability of value proposition Customer Interface and Outcomes Lower customer acquisition costs Transition customer base Outperform competition on interface perceptions Customer satisfaction and loyalty Implementation and Branding Brand associations vs. competition Best-in-class IT infrastructure Ability to deliver brand promise Financial Evaluation Revenue Profit Cost Balance sheet Business Model

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–O: Schwab Metrics Step 3: Choose metrics to track outcomes (Customer Acquisition Stage) Market Opportunity Is the opportunity significant? – Discount brokerage share of total retail brokerage – Percent of growth rate of discount brokerage – Percent of customers in target segment Is the target segment financially attractive? – Number of individuals with medium or high net worth – Percent of target customers with Internet access How intense is competition in the target segment? – Relative market shares – Rate of competitive entry/exit Market Opportunity Is the opportunity significant? – Discount brokerage share of total retail brokerage – Percent of growth rate of discount brokerage – Percent of customers in target segment Is the target segment financially attractive? – Number of individuals with medium or high net worth – Percent of target customers with Internet access How intense is competition in the target segment? – Relative market shares – Rate of competitive entry/exit

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–O: Schwab Metrics (cont.) Step 3: Choose metrics to track outcomes (Customer Acquisition Stage) Business Model Value proposition vs. competition – Benefits offered by competitors – Relative perceived performance on key benefits Offer vs. competition – Importance of innovativeness, information, service, and low price to target customers – Superiority in moving customers through decision process – Superiority of products, service, information Capabilities vs. competition – Relative investment in technology – Relative brand awareness – Relative number of distribution channels – Relative number of strategic alliances Sustainability of value proposition – Exclusivity and duration of partnerships – Number and duration of patents – Average switching costs for customers Business Model Value proposition vs. competition – Benefits offered by competitors – Relative perceived performance on key benefits Offer vs. competition – Importance of innovativeness, information, service, and low price to target customers – Superiority in moving customers through decision process – Superiority of products, service, information Capabilities vs. competition – Relative investment in technology – Relative brand awareness – Relative number of distribution channels – Relative number of strategic alliances Sustainability of value proposition – Exclusivity and duration of partnerships – Number and duration of patents – Average switching costs for customers

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–O: Schwab Metrics (cont.) Step 3: Choose metrics to track outcomes (Customer Acquisition Stage) Branding and Implementation Brand associations vs. competition – Unprompted brand awareness – Schwab brand associations – Schwab online investing associations Best-in-class IT Infrastructure – Trade capacity to volume ratio – Simultaneous users capacity – System uptime – Speed of routing information – Number of security breaches Ability to deliver brand promise – Number and staffing of branches – Salesperson training – Time to respond to and resolve problems – Percent of orders not filled or not filled accurately Branding and Implementation Brand associations vs. competition – Unprompted brand awareness – Schwab brand associations – Schwab online investing associations Best-in-class IT Infrastructure – Trade capacity to volume ratio – Simultaneous users capacity – System uptime – Speed of routing information – Number of security breaches Ability to deliver brand promise – Number and staffing of branches – Salesperson training – Time to respond to and resolve problems – Percent of orders not filled or not filled accurately

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–O: Schwab Metrics (cont.) Step 3: Choose metrics to track outcomes (Customer Acquisition Stage) Customer Interface and Outcomes Efficiency and effectiveness of customer acquisition – Customer acquisition cost – Online and offline marketing dollars – Number of new accounts – Churn rate Ability to transition customer base to website – Average user account balance – Number of trades per customer per year – Total assets in offline and online accounts – Percent of customers online and offline Outperform competition on interface perceptions – Customer evaluation on 7Cs – Site usability – Conversion rate – Failure incidence and service recovery – Completed service requests per user Customer satisfaction and loyalty – Customer satisfaction measures – Percent of users in frequent user programs Customer Interface and Outcomes Efficiency and effectiveness of customer acquisition – Customer acquisition cost – Online and offline marketing dollars – Number of new accounts – Churn rate Ability to transition customer base to website – Average user account balance – Number of trades per customer per year – Total assets in offline and online accounts – Percent of customers online and offline Outperform competition on interface perceptions – Customer evaluation on 7Cs – Site usability – Conversion rate – Failure incidence and service recovery – Completed service requests per user Customer satisfaction and loyalty – Customer satisfaction measures – Percent of users in frequent user programs

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Supporting Exhibit 7–O: Schwab Metrics (cont.) Step 3: Choose metrics to track outcomes (Customer Acquisition Stage) Financial Evaluation Revenue – Total revenue and revenue growth – Revenue breakdown by offering – Total transaction volume Profit – Total profit and profit growth – Profit breakdown – Earnings per share and growth Cost – Total cost – Cost breakdown by department – Cost per transaction Balance sheet – Debt to equity ratio – Corporate credit rating – Total margin loans – Margin loans spread Financial Evaluation Revenue – Total revenue and revenue growth – Revenue breakdown by offering – Total transaction volume Profit – Total profit and profit growth – Profit breakdown – Earnings per share and growth Cost – Total cost – Cost breakdown by department – Cost per transaction Balance sheet – Debt to equity ratio – Corporate credit rating – Total margin loans – Margin loans spread

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Exhibit 7–12: Charles Schwab – Customer Acquisition Stage Step 4: Map leading and lagging indicators Business Model Business Model Implementation and Branding Implementation and Branding Customer Financial Build brand Increase system uptime Train branch staff Improve customer service Improve customer service Increase customer loyalty Increase profit Optimize cost Increase revenue Invest in technolog y Invest in technolog y Increase number of IT staff Increase customer satisfactio n Increase customer satisfactio n Increase usage Acquire new customer s Acquire new customer s Market Opportunity Market Opportunity Avoid crowded markets Play in attractive market Target attractive segments Leverage capabilitie s to deliver offering Provide unique viewpoint Provide attractive offering

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC *Source: Nicole Tempest and Warren McFarlan, “Charles Schwab Corporation (B),” Case no. 9-300-507. Harvard Business School Publishing (13 September 1999). Table 7–4: Charles Schwab – Customer Acquisition Stage Current and Target Levels For Select Metrics Step 5: Calculate current and target levels for select metrics

Last Updated: 03/19/02 Copyright  2002 by Marketspace LLC Metrics — Conclusion Why should senior managers be concerned with metrics? How does the Balanced Scorecard assess the performance of firms? What are its strengths and weaknesses with respect to new-economy firms? What are the steps to implement the Performance Dashboard? What types of data can firms use for metrics? What are the strengths and limitations of each kind of data? After today’s lesson, you should be able to answer the following questions:

Copyright © 2002 by Marketspace LLC Rayport, Jaworski e-Commerce Chapter 7 Enhanced Lecture Slides Metrics Exhibits and Tables.

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Copyright © 2002 by Marketspace LLC Rayport, Jaworski e-Commerce Chapter 7 Enhanced Lecture Slides Metrics Exhibits and Tables.

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