Define your metrics
Only 10 percent of all alliances implement meaningful performance measures, and of those that do, 80 percent of their executives deem them inadequate, according to an Andersen Consulting study. Remember ShopperConnection, the network for online retailers announced in late 1998 by CDnow CEO Jason Olim? Today, ShopperConnection is little more than a thinly veiled retail portal.
Probably not, and here’s why: Launched primarily as a defensive salvo against expansion into new product categories (see “Mall Rats,” Jan. ’99, p40), Olim counted Reel.com, eToys, and Virtual Vineyards among his sign-on partners, with combined sales approaching Amazonian levels, and a broader product offering.
Today, ShopperConnection is little more than a thinly veiled retail portal. There are no common customer profiles; no centralized billing, shipping, or customer service departments; and meager joint marketing and branding efforts. Despite early talk of a common wallet, a referral program, and other proposed services, the network is still just a hub site, with merchant links, a few coupons, a sweepstakes promotion, and not much more. “We really just launched our activities a month ago [late fall],” admits Michelle Rubin, director of affiliate marketing for CDnow, which oversees ShopperConnection. She points to the network’s recent emergence on Media Metrix’s radar, with 614,000 unique visitors (1 percent of the online population) in October, but has no other benchmarks for the partnership’s success. “We do not have metrics by which we are evaluating ShopperConnection right now,” she says, adding that writing a business plan for the alliance will be handed off to a “third party” later this year.
“There’s a terrible myth in the marketplace that you can’t measure an alliance,” says OnTarget’s Lea. In addition to obvious metrics such as revenue and customers generated, Lea points to increase in market awareness, market share per employee, and the impact on stock price. Carolyn Groobey, principal partner for McKinsey & Company, looks at the advertising revenues that can be derived from a partnership’s collective customer base. As for evaluating a partnership’s internal performance, document each partner’s contributions, keep meeting attendance, and count missed deadlines.
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