1. Chapter 7 Enhanced Version Metrics Exhibits / Tables October 22, 2000

2. CAS-COD-Prez-Date-CTL Confidential 2 Exhibit 7-1: The Balanced Scorecard - Strategy Into 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 succeed financially, how should we appear to our shareholders? LEARNING AND GROWTH To succeed financially, how should we appear to our shareholders? Vision and Strategy Source: Kaplan, Robert S. and David P. Norton. 1996. Using the Balanced Scorecard as a Strategic Management System. Harvard Business Review 74 (January-February): 76.

3. CAS-COD-Prez-Date-CTL Confidential 3 Exhibit 7-2: The Performance Dashboard Financial Metrics Financial Metrics STEPS OF STRATEGY Customer Interface Customer Interface Branding & Implementation Branding & Implementation PERFORMANCE DASHBOARD Market Opportunity Assessment Market Opportunity Assessment Business Model Business Model Branding & Implementation Metrics Branding & Implementation Metrics Customer Interface & Outcome Metrics Customer Interface & Outcome Metrics Business Model Metrics Business Model Metrics Opportunity Metrics Opportunity Metrics Evaluation

4. CAS-COD-Prez-Date-CTL Confidential 4 Supporting Slide 7-A: Introducing the Performance Dashboard Financial Steps of Strategy: Customer Interface Implementation and Branding Performance Dashboard: Areas Addressed: Size of market opportunity Attractiveness of target segments Competitive landscape Customer acquisition Changes in customer behavior Site experience and usability Branding Technology infrastructure Internal organization Relationship with suppliers and partners Fulfillment capability Revenue Profit Cost Balance sheet Market Opportunity Business Model Implementation & Branding Implementation & Branding Customer Business Model Market Opportunity Uniqueness of value proposition Attractiveness of offering Firm capabilities relative to competition Sustainability of competitive position Evaluation

5. CAS-COD-Prez-Date-CTL Confidential 5 Exhibit 7-3: Life Cycle of a Company STARTUP/ BETA 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 Year - 2 Years2 Years - 5 years> 5 Years Strategy Business.com TNBT.com Mvalue.com Paypal.com Evite.com Yahoo.com Amazon.com Schwab AOL Examples* * At time of writing (3/2000)

6. CAS-COD-Prez-Date-CTL Confidential 6 Table 7-1: POV: Bill Gurley on the Power of Conversion Rates Source: Gurley, J. William. 2000. The Most Powerful Metric of All. CNET News.com, 21 February. URL: http://www.news.com/Perspectives/Column/0,176,403,00/html?tag=st.ne.

7. CAS-COD-Prez-Date-CTL Confidential 7 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 / year Success rate Service requests / customer Customer Market share Purchases / year Success rate Service requests / customer Implementation Customer brand awareness System uptime percentage Number of IT staff % inaccurate orders Implementation Customer brand awareness System uptime percentage Number of IT staff % 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

8. CAS-COD-Prez-Date-CTL Confidential 8 Table 7-2: U.S. Top 25 Web & Digital Media Properties (March 2000) Source: Media Metrix (www.mediametrix.com/usa/press/releases/20000424.jsp) March 31, 2000

9. CAS-COD-Prez-Date-CTL Confidential 9 Exhibit 7-5: Market Research Source - Bizrate.com

10. CAS-COD-Prez-Date-CTL Confidential 1010 Exhibit 7-6: Analyst Source - Forrester

11. CAS-COD-Prez-Date-CTL Confidential 1 Exhibit 7-7: Financial Information Source - Hoovers Online

12. CAS-COD-Prez-Date-CTL Confidential 1212 Supporting Slide 7-B: Which is Better? Online or Off-line Datasources

13. CAS-COD-Prez-Date-CTL Confidential 1313 Supporting Slide 7-C: Which is Better? User-Based or Expert-Based Research Content

14. CAS-COD-Prez-Date-CTL Confidential 1414 Exhibit 7-8: Mapping Internet Research Onto The Performance Dashboard Market Implementation Customer Financial Market ResearchAnalyst Financial Information

15. CAS-COD-Prez-Date-CTL Confidential 1515 Exhibit 7-9: Metrics for Seamless On-line / Off-line Customer Purchase Process Awareness of off-line offer vs awareness of on-line offer Perceived benefits of web vs off-line offer  Information Available offering information on-line vs off-line Currency of information on-line vs off-line Security and privacy associated with purchasing  Customer service Response time on-line vs off-line Customer loyalty incentive programs on-line vs off-line Exchange policies on-line vs off-line AWARENESS KNOWLEDGE EVALUATION OF ALTERNATIVES EVALUATION OF ALTERNATIVES PURCHASE SATISFACTION LOYALTY DISPOSAL Pre-Purchase Post-Purchase Purchase

16. CAS-COD-Prez-Date-CTL Confidential 1616 Table 7-3: Metrics for Seamless Internal Business Processes and Operations Ability to open accounts on-line and off-line Ability to access accounts on-line and off-line Integrated customer databases Information Sharing Information Sharing Fulfillment Systems Fulfillment Systems Seamless order processing Seamless order tracking Integrated inventory keeping

17. CAS-COD-Prez-Date-CTL Confidential 1717 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 email 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 On-Line 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 1. Value Proposition 2. Marketspace Offering High quality Investment Information High quality Investment Information Innovative products Low price Technology Leadership Superior service 3. Resource System

18. CAS-COD-Prez-Date-CTL Confidential 1818 Exhibit 7-11: Schwab Desired Outcome Summary 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 & OUTCOMES Lower Customer Acquisition Costs Transition Customer Base Outperform competition on Interface Perceptions Customer Satisfaction & Loyalty IMPLEMENTATION & BRANDING Brand Associations vs. Competition Best-in-class IT Infrastructure Ability to Deliver Brand Promise FINANCIAL EVALUATION Revenue Profit Cost Balance Sheet Business Model

19. CAS-COD-Prez-Date-CTL Confidential 1919 Exhibit 7-12: Charles Schwab -- Customer Acquisition Stage Business Model Business Model Implementation & Branding Implementation & 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 VP Provide attractive offering

20. CAS-COD-Prez-Date-CTL Confidential 2020 Table 7-4: Charles Schwab -- Customer Acquisition Stage Current and Target Levels for Select Metrics *Source: Tempest, Nicole and Warren McFarlan. 1999.Charles Schwab Corporation (B). Case no. 9-300-507, 13 September. Boston: Harvard Business School Publishing.