As you evolve along the e-commerce maturity curve—moving from reactive mode, where you mainly respond to customer requests, to proactive, where you initiate actions that optimize your e-commerce capabilities to increase value for you and your customers—it’s important to put measurements in place to track progress and document success. And an e-commerce scorecard is a great tool to help you do it.
How can an e-commerce scorecard benefit your business?
An e-commerce scorecard gives you a highly effective way to share key metrics that reveal the success of your e-commerce strategy. Why is this important?
- Enhances buy-in and support at all levels of the organization. When you share measurements, you increase visibility and appreciation for the value of e-commerce at all management levels—including the executive level. For example, hard numbers demonstrating how much of your company’s revenue comes through e-commerce can make management take serious notice. Similarly, when you can show how much money you’re saving on every electronic order that comes in unassisted (like the cost of 10-20 minutes of sales agent time per order) and how much faster you’re getting paid (by five to 15 days or more), executives can better understand the extraordinary potential of e-commerce to lower sales costs and reduce days sales outstanding.
- Hones your strategy to drive better results. Besides making it easier to socialize your initiatives internally, publishing a clear set of measurements helps you and your team focus on what you really want to accomplish. With the right scorecard metrics, for example, you can see where you need to improve to achieve your goals and meet—or exceed—service levels provided by your competitors. And based on this data, you can make rational decisions about where to invest further. Measurements can also be the key to securing new budget for e-commerce initiatives; the more executives see tangible proof of the value of e-commerce, the easier it is to get funding for e-commerce improvements to grow your team, enhance your e-commerce capabilities, and move further up the maturity curve.
- Helps you benchmark and improve your market position. Measurements help you objectively assess how competitive your business is relative to other suppliers. For example, you can evaluate whether your services are at least on a par with best-in-class suppliers, and identify and promote specific areas where your performance and capabilities differentiate you from other sellers—which can be critical to finding and keeping customers and driving up sales.
Getting started: Six scorecard success strategies
Okay, so you’re ready to build out an e-commerce scorecard. But how should you get started? And what can you do to maximize its value to your e-commerce team and key stakeholders? Consider the following success strategies shared by three leading sellers—Robert Calvert, head of worldwide B2Bi strategy at Hewlett-Packard; Michelle Meyer, e-commerce sales specialist at Fastenal; and Jamie Werve, senior manager of e-commerce sales operations at Insight—during a session at Ariba LIVE 2014.
Strategy #1: Develop measurements that support your focus areas. Measurements that you may want to consider include:
- Customer satisfaction levels
- Operational efficiency—reduction in cost of sales as well as order entry, order management, and invoicing costs
- Cash management—increase in revenue and margins, decrease in DSO
- Capabilities—improvements in
- Length: measure capabilities across lead to cash,
source to settle, or procure to pay
- Width: measure capabilities across regions and product lines
- Depth: measure features across advanced features and complexity
- Length: measure capabilities across lead to cash,
- Cross-selling or up-selling opportunities gained
- Client growth and retention
- Time needed to onboard a new client
- Degree to which clients use a new solution or capability once it’s in place
- Number of new client implementations per quarter and year
- Website uptime and speed
- New client implementations per month, quarter, and year
- Distribution of orders
Strategy #2: Capitalize on what’s happening internally. As you develop your scorecard focus areas, consider your company’s current driving forces and priorities and use them to your advantage, wherever appropriate. “It’s important to make sure you don’t get too narrowly focused in one area,” Calvert notes, “but if there’s management excitement around a certain topic, whether it’s DSO or order entry cost or something else, take advantage of that and start using it to build out your capabilities” by incorporating those metrics in your scorecard.
Strategy #3: Create a graphical representation of your scorecard for at-a-glance readability. HP uses a heat map with a color-coded, build-on matrix to make it easy to track capabilities quickly. “It’s kind of hard for management to get a grasp around this; they need pictures,” Calvert says. “The visual is nice and it lets you drill down.” Besides highlighting what you’re already doing well, this helps draw attention to what requires additional improvement and investment, so you can quickly focus discussions on where you need to spend time, energy, and money.
Strategy #4: Combine and align. Strive to make your scorecard align with your company’s overall performance objectives viewed by the executive team and upper management. “Our e-commerce scorecard is part of the overall scorecard at Insight,” Werve says. “So our executive leadership looks at it, tracks it, and talks about it in their meetings being a key differentiator for Insight. It has visibility all the way to the top, which I think is key.”
Strategy #5: Measure yourself aggressively. But don’t worry if you see gaps or places you fall short. Instead, view this as valuable information on where you can improve. And if you’re hitting 100% in a particular area, don’t pat yourself on the back too quickly; you’ve probably defined that measurement category too tightly.
Strategy #6: Share your prioritization criteria with all teams involved. Doing so helps you gain the benefits of cross-functional buy-in and support. “Our sales team, our IT team, and of course our e-commerce operations team are really collaborating and talking about what things we should try to go tackle,” Werve says. “They know what the working list is, so there’s full transparency there.” These stakeholders can help you look at how you’re setting your business apart from the competition—and identify missing tools, capabilities, and other areas that need investment.
To get additional information on the best way to build an e-commerce scorecard—and the benefits you’ll gain from doing so—watch the full session on the Ariba Slideshare site. You can also take advantage of the Ariba directional e-commerce value calculator, which helps you accurately assess your potential ROI in five key e-commerce areas so you can determine the smartest direction for your efforts.