Tuesday, December 23, 2014

Metrics of Key Performance Indicators

Key Performance Indicators

Key Performance Indicators or KPIs provide summary statistics  for evaluation of operations in any number of business settings. Understanding a business' KPI helps managers focus on areas most in need of attention and these are easily communicated.

Affiliate Programmes

Affiliate programmes fall into the B2B marketing category. The affiliated companies are different businesses active the same sector which do not necessarily compete. The Affiliates programs aims to market to other companies' client base where the companies are not in direct competition. These programs' business model work based on incentive schemes derived from revenue sharing, either one time or over the life time of the client. The advantage is to allow strategic alliances between companies while  reducing costs of marketing and advertising.
  • sales (revenue)
  • leads
  • registrations 
  • cost of acquisition
  • number of affiliates
Other common KPIs include:
  • traffic
  • clicks
  • e-mail registrations
  • shares
  • impressions
  • conversions

In affiliate programs the client are not be exclusive which can make projecting their statistics more complicated.

Loyalty programs

Loyalty programs differ from affiliate programs in two respects they are a B2C activity where the marketing works directly with clients. Also they are primarily a retention marketing strategy. Again the logic is based on considering the life time value of the customer and derive from it some kind of revenue sharing scheme aimed at retaining the client over time. Loyalty programs are a precursor to what is now called gamification. Conversely techniques from gamification can and should be considered in design better loyalty programs in modern business settings.

  • Volume indicators

  • total number of clients  

  • total number of sales 

  • total purchases of a product or service

  • Percentage of sales made by participating customers 

  • by money 

  • by purchases  

  • by number of customers participating customers' purchase frequency (usually not so easy to compare to regular customers)

  • Average purchase amounts
  • Customer defection rate
  • Customer lifetime value

  • Of these the customer lifetime value requires some sophistication to estimate - particularly since the member of the affiliate program. Also if marketing activities include more specific focus such as cross-selling or upselling, these should also be included.

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