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Effectiveness

 is ‘doing the 

Efficiency

Minimising resources or 

time needed to complete 

a process: ‘doing the 

thing right’.

Effectiveness

Meeting process 

objectives, delivering 

the required outputs and 

outcomes: ‘doing the 

right thing’.

Chapter 5  Digital business strategy

Table 5.6

Goals, strategies and objectives, performance indicators for an example B2B company  

(in order of priority)

Goals

Strategies to achieve goals

Specific objectives (key performance 

indicators (KPIs))

1  Develop revenue from new 

geographical markets

2  Increase revenue from  smaller‑ 

 scale purchases from retailers

3  Ensure retention of key account 

customers

4  Improve efficiency of sourcing raw 

materials

5  Reduce time to market and costs 

for new product development

6  Protect and increase efficiency of 

distributor and partner network

1  Create e‑commerce facility for 

standard products and assign 

agents to these markets

2  Create e‑commerce facility for 

standard products

3  Attain soft lock‑in by developing 

extranet facilities and continued 

support from sales reps

4  Develop e‑procurement system

5  Use collaboration and project 

management tools

6  Create partner extranet and aim 

for paperless support

1  Achieve combined revenue of £1m by 

 year‑  end.  Online  revenue  contribution 

of 70%

2  Increase sales through retailers from 

15% to 25% of total by year 2. Online 

revenue contribution of 30%

3  Retain five key account customers. 

Online revenue contribution of 100% 

from these five

4  Reduce cost of procurement by 5% 

by  year‑  end, 10% by year 2. Achieve 

80% of purchasing online

5  Reduce cost and time to market by 

average of 10% by year 3

6  Reduce cost of sales in each of five 

main geographical markets by 30%

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Part 2  Strategy and applications

Mini Case Study 5.2

Arena Flowers (Figure  5.13) is an online florist based in London. The business was incorporated in 

July 2006 and went live with a transactional website in September 2006. The company delivered £2 million 

net sales in year one and broke even within the first 12 months of trading. At the time of the interview it is 

forecasting sales of £4 million in year two and making a healthy profit. The head of design and development 

Sam Barton sees opportunities to keep growing both sales and profitability at a similar rate going forward 

through various initiatives. For example, the company has developed a Facebook application that provides 

15% of the site traffic – an opportunity that has been missed by many of its more established rivals.

Average order values (AOVs) have developed from an initial £30 and have grown month on month. The 

current level is £42. Ways of increasing AOV have included options to add a vase, make a deluxe bouquet 

and buy Prestat’s chocolates alongside the flowers.

The essence of the Arena Flowers proposition is to cut out all middlemen and buy direct from growers. There 

are no ‘relay’ fees and, because of its high stock turnover, it gets fresh flowers in daily and they go straight to 

the customer, rather than sitting in a hot shop window. Arena Flowers offers free delivery on all its products and 

was the first online florist in the UK to offer  FFP‑  accredited, ethically sourced flowers. That has been a good 

‘unique selling point’ and enables Arena to offer something different from other suppliers such as supermarkets.

Source: E‑consultancy (2008b) Digital business Briefing. Arena Flowers’ Sam Barton on web design and development, E‑newsletter 

interview 12 March 2008. 

Arena Flowers controls its growth through key performance 

indicators

right thing’ – conducting the right activities, producing the required outputs and outcomes, 

and applying the best strategies for competitive advantage. When organisations set goals for 

digital business and e-commerce, there is a tendency to focus on the efficiency metrics but 

such measures often do not capture the overall value that can be derived. Effectiveness meas-

ures will assess how many customers or partners are using the digital business services and the 

incremental benefits that contribute to profitability. For example, an airline such as BA.com 

could use its digital channel services to reduce costs (increased efficiency), but could be facing 

a declining share of online bookers (decreased effectiveness). Effectiveness may also refer to 

the relative importance of objectives for revenue generation through online sales and improv-

ing internal process or supply chain efficiency. It may be more effective to focus on the latter.

Some examples of  sell-  side e-commerce SMART performance indicators for an online flower 

business are shown in Mini case study 5.2.

Box 5.3

Setting SMART objectives

SMART is used to assess the suitability of objectives set to drive different strategies or 

the improvement of the full range of business processes.