Consumer Chain Value Measurement

Measuring the value that is derived from your consumer chain is difficult due to the nature of the network and the collaboration.  This does not mean that you cannot or should not measure the value derived, in fact you must be able to measure the value of any business initiative to justify the investment.  Your consumer chain collaborative network is no different than any other business initiative, the challenge though is in determining how to measure the value.  Much of the value returned by the consumer chain starts with soft values, such as the customer spending more time on the site.  These soft values though should lead to a measurable value such as increased sales.

This exercise starts with the question, what should you measure?  On the surface the question has an easy answer because there are generally two meaningful measurements in the retail business;

1. Increased sales - this simply measures the overall change in the sales over a period of time, either positive or negative.  Every retailer maintains a history of their sales for measurement and comparison.
2. Decreased costs - this too is easy to measure and is the overall change in expense over a period of time, again positive or negative.  Again every retailer maintains a history of their expenses for measurement and comparison.  The cost analysis though must also take into account the sales volume and measured as a percentage to sales in order to perform an accurate analysis.

This is not a discussion on measuring sales or expenses though so I will leave it at the simple definitions.  

The difficulty in measurement comes into play from trying to define the type of impact the function and capabilities provided in your consumer chain will generate.  As a comparison; I would say that an increase in time the consumer spends in the store or on the web site would translate into an increase in sales.  The online portion of the equation is easy to measure because of the data capture every step of the way where the in store activities are much more difficult.  I would also say that consumer reaction to online product display and offerings will lead to improved demand forecasting which in turn will lead to reduced cost of inventory and reduced overstock.  This is a little more difficult to measure and understand but again, the online tracking can provide the data to support the measurements.

The online portion of the consumer chain and especially the extended consumer interaction generated by the consumer community can be used to provide a wealth of data to analyze and measure performance and value relationships.  This online analysis and the resulting findings and improvements can then be extended into the physical store environment to improve the customer experience which should translate into increased sales and reduced costs.  It is time to use the online experiences to measure and experiment with changes and improvements that can be extended through both physical and electronic sales channels.

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?