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November - 2013 - issue > In My Opinion
The Metrics of an E-Commerce Success
Ajay Kumar
Wednesday, December 4, 2013
Based in Rancho, Cucamonga, California, Monoprice, a Blucora (NASDAQ:BCOR) company is an ecommerce leader specializing in high quality cables, components and accessories for computer and consumer electronics.

One of the toughest challenges facing a business leader is not only creating a successful, profitable company, but developing an open and thriving company culture to sustain it over time.

This is why the frequently-used business concepts of metrics, company vision, leadership, and teamwork are so important to not solely measure a company's success, but to foster it.

Taking over in 2011 as CEO of Monoprice, an emerging consumer electronics e-commerce company, my challenge was to figure out how to transition from a company where the owners made all the decisions and employees mainly executed them to one where the employees think like owners and have the freedom to make the best choices for our business.

When Monoprice was a small company, the owners could personally control every aspect of the business. Now that our company is generating about $140 million a year in revenue and growing quickly - traffic has increased 81 percent and revenue has surged 141 percent in the past three years - we needed to implement the appropriate organizational structure, accountability, metrics and incentive plan in order to maintain the proper controls over our business. This has been an ongoing process that we consistently maintain and calibrate to determine the efficacy of our business procedures and its success as a result. Consequently, our company's rapid growth can be tied directly to matching our people and their expertise with our ongoing metrics and overall company vision.

Start with a Vision

Every organization needs a shared direction. If all employees are not heading in the same direction, you generate a lot of inefficiencies. These inefficiencies will make it difficult for an organization to meet its goals. As a CEO, it is critical that you create a vision for the company, communicate that vision to the employees and obtain buy in from them. This vision then leads to building the culture, organizational structure, type of employees required, metrics and incentive plan to drive accountability and performance.

Company Culture: CEO's Influence

The company culture is important in creating a team-oriented environment, and it can be formed and nurtured through a few steps. First, the culture of the company starts with the CEO and will emulate their personality. For example, if you want a team-driven company culture, but it is not the CEO's management style, this culture will never happen. Next, every person you hire needs to match the culture of the company you want to create. You can't make the assumption that the person will change to fit your company culture. Finally, the rewards system of the company also needs to reinforce the company's culture.

Organizational Structure and Employees

The organizational structure then needs to align with the company's vision and culture followed by ensuring you have the right employees in place. Employees transitioning from executing other people's decisions to making their own can be exciting for some and overwhelming for others. This is where providing coaching and mentoring is important to help those employees that are capable of rising to the occasion and stepping up their performance. Then the remaining holes in the organization will need to be filled from the outside.

Metrics Incentives: Think like An Owner

One of the keys I have stressed at Monoprice is in having the employees help drive our company by thinking of themselves as owners of our business. Therefore, we set up a bonus plan based on the metrics most important to an owner: sales, profit and cash flow. Every employee in our entire company is under the same bonus metrics. The warehouse worker, the customer service rep, the IT programmer, the marketing manager and I all have the same bonus program. With this approach, we are all pulling in the same direction and minimizing cross functional fighting among departments.

Each month we publish how we performed on the specific bonus metrics. This provides employees with feedback on their efforts and instills a sense of motivation to keep them pushing to improve upon their performance. In addition, I meet with my management team weekly and most departments monthly to discuss any issues and leverage all opportunities. This encourages our employees to get involved in shaping the future direction of our business. I tell every employee in our meetings that I attend that it is OK to disagree with my ideas. My ideas by themselves will not necessarily result in the best approach for the company. It is only through debate and discussion that we can formulate the best idea. Once this is done, I finalize the decision and then we move forward.

Company Vision: The Importance of Setting Goals

Setting goals that are challenging, but still achievable, is very important as is making sure employees are on track to reach them through frequent review and measurement.

However, creating goals is a tricky process and you have to be realistic about expectations. You don't want a goal that is almost impossible to accomplish or the employee will be unmotivated. You also don't want to set too easy of a goal since you will not get the best work performance out of your employee. Goals that have an 80 percent chance of being achieved are best. To ensure you achieve the goals, break them down into smaller goals and evaluate them on a frequent basis to guarantee you are on track and can take corrective action as needed.

My ultimate definition of success is setting goals and achieving them. If the company is not successful, employees will get discouraged and the effective ones will leave, so company performance is significant. At the same time you want to create a great work environment. Happy, motivated employees are the key to our company's success. These two company characteristics are connected.

Most people want to be on a winning team. The best leader is one who can inspire his or her employees and connect what the team is working on to the overall company vision. Leaders set a high bar for performance. Instead of using fear tactics to achieve, leaders mentor them to accomplish that performance. Leaders are those whose employees feel like they can learn from and who help their employees grow professionally. Leaders also can't be afraid to give employees negative feedback when needed, but rather than scold them, leaders coach them and help guide their careers in the right direction.

As a company leader, I believe that what you don't work on is as important as what you do work on. Prioritization is the key. There are always more improvement opportunities than there are people to fix them. Leaders need to walk a fine line between getting stuff done and being liked.

Fostering Success and Looking Ahead

Since Monoprice's founding in 2002, we have strategically expanded into greater growth and higher margin product categories without losing focus of our mission to deliver the best quality products at the lowest price. Monoprice brings customers a value proposition they can't find anywhere else. Customer service is truly the cornerstone of our business and has led to our rapid growth as a company.

Our company, which made the Inc.5000 list for the fifth straight year, was recently acquired by internet services provider Blucora, Inc. (BCOR). Blucora brings decades of experience managing and investing in digitally-enabled businesses, and we believe this combination will help elevate the Monoprice business into a mainstream brand. This opportunity secures a bright future for Monoprice as we currently do not see any limit to how big we can get. Our goal is to become a dominant player in our industry, and Blucora will help us get there.

Ultimately, a company's leader always needs to keep looking ahead and building upon its recent and past successes. With the Monoprice and Blucora partnership, we are increasing our expectations of our employees, magnifying our road map of goals to accomplish, and enhancing our company vision. At the same time, we are expanding our resources, nurturing our healthy company culture, and rewarding our employees for their individual and team success. These elements keep our company thriving and moving forward.

Ajay Kumar is the CEO of e-commerce company Monoprice. Prior to joining Monoprice, Mr. Kumar had significant experience in consumer electronics in executive roles with Targus Group International, Belkin Corporation, AT & T Wireless and Circuit City. Prior to these roles, Mr. Kumar held senior positions with Accenture and CSC Consulting where he advised Fortune 1000 companies on how to significantly improve their end-to-end supply chains while enhancing customer service.

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