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Thought Leaders – Should E-commerce Managers Make Decisions from KPI’s Alone?

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Thought Leaders – Should E-commerce Managers Make Decisions from KPI’s Alone?

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Thought Leaders – Should E-commerce Managers Make Decisions from KPI’s Alone?
E-commerce managers and owner managed retail business owners will agree that the competitive nature of retail today, regardless or sector, demands that they have a constant access to internal and external driven data that ensures they make the best decisions for their business at the right time to maximise sales, increase margins and retain customers.

There are undoubtedly thousands of key performance indicators (KPI’s) available to e-commerce managers and owner managed retail businesses that arguably could be deemed necessary by industry professionals across the globe but ultimately, the goals and objectives of the business should determine the key metrics of focus.

Is it sales or gross margin? Average sell through rate? Average customer spend? Rate of stock turnover? These are some internal metrics that influence the core objectives of the average retail business. External metrics could be percentage price difference compared to competitors of key product lines or average price for key product lines compared to competitors. This could provide insight on how competitive the retailers prices are compared to their competitors as well as provide insight as to patterns and trends for price changes across key product lines.

Looking at any additional factors that may influence strategic decisions outside KPI’s, where are some thoughts from industry leaders ……


Mark Ryski: CEO – HeadCount Corp

“KPIs are useful snapshots, and exploratory/predictive analytics have a place too, but this is not an either/or proposition. As someone who has spent more than 20 years analysing store traffic and conversion data, the issue I see is that there is a dearth of expertise in extracting insights from data and in interpretation. Collecting data is relatively easy and there’s never been more at the disposal of marketers, but producing reams of graphs and charts doesn’t necessarily lead to insights. 

In my experience, data interpretation is more akin to meteorology where trends and patterns inform insights and general conclusions about probable outcomes. While sophisticated modelling tools are important and helpful, they need to be used by someone who has the expertise to know how to interpret the output. Rarely are the answers black or white.”


Ralph Jacobson: Global Retail & CPG Marketing – IBM

“This is exactly where retail management needs to look for actionable performance insights today. All too often, the answers you need to make better decision are hiding in a very deep ocean of data. KPIs are still necessary and hold real value, however there needs to be much more information provided to make better decisions. Cognitive-powered solutions help you tap into the extraordinary capabilities to learn, understand and advise.

New AI technologies can help you deliver harder working, better performing marketing campaigns, supply chain improvements and store operations execution. With capabilities like predictive customer analytics and others, you can identify and target the right audiences without going to a data analyst. The cognitive power helps you understand individual customer behaviours so you can create the ideal combination of interactions that drive conversion and build loyalty.”


Doug Garnett: Founder & CEO – Atomic Direct

“KPIs are just a proxy for what’s truly going on in your business. As a result, they are always merely an estimate and too often a weak estimate.

The thing that makes KPIs both useful and misleading is the fact that they oversimplify reality. This makes it critical to avoid managing by the metrics. Rather than being the focus for the way you manage, they should be one item that informs it.

Edwards Deming suggested, in fact, that managing to the metrics leads to the perfectly-managed business … that fails. It’s sadly too true.

It’s also critical to complement KPIs with other input. They should be combined with traditional consumer research (especially qualitative), walking the store, talking with front-line and back-office management and a good sense of the competition.

And this is what makes business fun. Because management can’t be turned over to algorithms — we aren’t slaves to KPIs. Successful business decisions require executives, informed by a wealth of research including KPIs, using their analysis, insights and instincts to make difficult decisions.”


Sean Wargo: CEO – Sen Wargo Marketing

While KPIs are clearly important for helping us understand company performance, the challenge is in the old adage “That which gets metric-ed, gets managed.” Thus if the goal is to lift impressions or some other metric then the business shifts its focus to impacting this variable, sometimes at the expense of others, creating blind-spots for the organization.

The point being, it’s important to look beyond with some exploratory research to see how the market, the consumer or the competitors are changing. This may necessitate a shift in both the tactics employed and the corresponding KPIs. Plus, as noted by others, context is everything and so keeping a lens towards the factors and situations impacting KPIs remains important to helping determine when it’s time to abandon the ship of an existing tactic or metric.”

See original RetailWire article, discussion and comments here.

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