Joel Savard leading the debate about business metrics
How happy are you about virtual worlds businesses, let’s say, shops? How likely is it that you would recommend that virtual shop to a friend or colleague? It is a typical discussion on the Metanomics forum these days, where this week we had the second part of the discussion about (virtual) business metrics.
Once again it was obvious that the broader discussions about measuring companies in the offline-world and on the web are not that different from those about business metrics in virtual worlds.
The question about the recommendations of virtual shops is derived from the broader topic of the consumer metrics. Fred Reichheld writes about these issues in his book The Ultimate Question:Driving Good Profits and True Growth .
The above mentioned question “allows companies to track promoters and detractors, producing a clear measure of an organization’s performance through its customers’ eyes – its Net Promoter® Score.”
Of course, on the Metanomics forum we try to discuss more specifically about the situation in Second Life. One of the participants said that there is a real need for a guide for small virtual business owners.
There is a lack of knowledge and of awareness of best practices which can be shocking. One of the many examples: people adding SL listing keywords for products they actually don’t sell in order to increase traffic. Or shops which are poorly designed so you cannot find the products they do sell.
The Second Life environment itself is not always that well organized if you want professional tools for running your business – for instance tools for Customer Relationship Management. People wait for Linden Lab to publish an API so that third parties could provide such tools.
Other metrics we discussed have to do with the Balanced Scorecard strategy development process. There is a great summary and framework available on the Management and Accounting Web.
The interesting thing about this process is that is talks not only about the usual financial metrics for shareholders, but also about customers, internal organization, workers and education and innovation. Again something which is important for all businesses, whether they are brick-and-mortar, web or based in virtual worlds.
Furthermore, a lot of these frameworks can also be used for small and even one person enterprises. It would also be a great idea to introduce students to business by letting them set up a business in Second Life or in another appropriate virtual world, inciting them to use these metrics and frameworks.
Again we tried to apply these concepts in a specific Second Life context, where it makes less sense to talk about shareholders but we could speak about “stakeholders”.
Issues we discussed were for instance “getting the word out”, the process of making a purchase, the process of joining the group and building a community, customer support and upgrade processes and tactics… We went into the shocking details of shop owners which cannot be found or contacted, lacking the most basic SL-communication skills – or maybe they are not really interested in their business?
New Socialism
In the meantime the backchat of the forum was extremely active and many discussions were fascinating, for instance about the “new socialism”. Links were posted to the Wired-article The New Socialism: Global Collectivist Society Is Coming Online.
At the Metanomics forum professionalism in doing virtual business is clearly highly valued. How does this match with an army of people who consider their virtual businesses as just a hobby?
Everybody can be a publisher, but not everyone has the authority necessary to be credible. Everyone can be a web developer, but not everyone can show web metrics that prove their sites deliver results, so participants said during the meeting.
So yes, there is a need for courses which are scaled for small virtual business owners, but no, if people don’t really take their business seriously, they probably won’t sign up for the course.
Of course the whole “new socialism” debate is very complicated and ambiguous. After all, the Metanomics forum itself is not exactly the most capitalist of projects: people participate for free, and everyone contributes to the content with high quality-results.
As always for such community projects, some people are really crucial, and for the Metanomics forum Joel Foner (SL: Joel Savard) is the guy who makes things happen.
Metanomics Community Forum is every Thursday at 12PM SL at the Metanomics Studio.
READING LINKS:
METRICS AND ACCOUNTABILITY
Metrics, Accountability and Other Drugs, post Mitch on Value Acceleration
http://valueacceleration.wordpress.com/2009/07/13/metrics-accountability-and-other-drugs/US Brands Lost Half Their Customers Last Year – More Misleading Metrics
http://byronsharp.wordpress.com/2009/06/23/us-brands-lost-half-their-customers-last-year-more-misleading-metrics/Marketing Measurement and ROI Analysis – Connecting Aspirations With Realities, by Adam Needles (research suggesting a high disconnect in corporations aspirations with regards to marketing ROI analysis and investments required to execute on these aspirations)
http://propellingbrands.wordpress.com/2009/05/28/marketing-measurement-and-roi-analysis-–-connecting-aspirations-with-realities/Do Our Marketing Metrics Undermine Long Term Brand Value?, by Augie Ray
http://thecustomercollective.com/TCC/36316Web Marketing Metrics, by Lee Odden
http://www.toprankblog.com/2006/03/web-marketing-metrics/SOME IMPORTANT METRICS ARE NEGATIVE
Shopping Cart Abandonment Rate
http://www.pinnycohen.com/2008/12/29/marketing-wisdom/shopping-cart-abandonment/Top Exit Pages (typically a web metric, but applies just as well in virtual spaces)
http://www.kaushik.net/avinash/2006/12/standard-metrics-revisited-top-exit-pages.htmlOn Defining A Hurt Metric (a dissatisfaction-based metric “A single metric that could convey the amount of dissatisfaction or hurt, that a product is giving an operator due to its unreliability, difficulty in testing and maintaining, cost of repair etc”
http://74.125.95.132/search?q=cache:O4uWL–1oWkJ:www.mca-ltd.com/divya/ftp/encress98.ps.gz+dissatisfaction+metrics&cd=3&hl=en&ct=clnk&gl=usNET PROMOTER SCORE (NPS)
The Ultimate Question: Driving Good Profits and True Growth, by Fred Reichheld (the book that introduced NPS – “turning customers into promoters who generate good profits and true, sustainable growth”)
http://www.theultimatequestion.com/theultimatequestion/home.aspWhat Is Net Promoter Score (NPS)?
http://www.netpromoter.com/np/index.jspCalculating Net Promoter Score (deceptively simple!)
http://www.netpromoter.com/np/calculate.jspTHE BALANCED SCORECARD CONCEPT
ZDNet’s 2 and a half minute video intro to Balanced Scorecard Basics
http://news.zdnet.com/2422-13569_22-153073.htmlBalanced Scorecard Concepts, by James R. Martin (a nicely done, easy to read and understand introduction to balanced scorecards, how they’re used, and sample metrics)
http://www.maaw.info/BalScoreSum.htmBalanced Scorecard Examples and Success Stories, Balanced Scorecard Institute
http://www.balancedscorecard.org/BSCResources/ExamplesSuccessStories/tabid/57/Default.aspxEntrepreneurs use a balanced scorecard to translate strategy into performance measures, by Lussier, Robert N.
http://www.allbusiness.com/management-companies-enterprises/1185916-1.htmlThe Three Components of a Personal Balanced Scorecard, by
http://www.articlesbase.com/management-articles/the-three-components-of-a-personal-balanced-scorecard-408110.htmlPersonal Balanced Scorecard
http://www.amazon.com/Personal-Balanced-Scorecard-Organizational-Effectiveness/dp/1593115318Relevance of the Balanced Scorecard on Assessing Firm Performance of eCommerce Companies, by Jamshed Mistry and Balgobin Nandram
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=773105Balanced Scorecard Step By Step for Government and Non-Profit Agencies, by Paul R. Niven
http://www.amazon.com/Balanced-Scorecard-Government-Nonprofit-Agencies/dp/0471423289*** THREE SAMPLE SCORECARD SOFTWARE PACKAGES ***
(Note that these are *not* recommendations… just three representative packages… there are *many* available)
Balanced Scorecard Designer
http://www.strategy2act.com/solutions/balanced_scorecard_designer.htmStrategy Map Balanced Scorecard
http://www.strategymap.com.au/Spider Strategies Web Based Corporate Management Suite
http://www.spiderstrategies.com/index.htm
Roland Legrand
