This is a guest article by tech writer Dean Chester
With access to massive amounts of data, it's a great time to be in business, but only if you take advantage of it. There is no room for guessing and making assumptions about customer behavior and business success.
With the help of data, you can find out who your customers are and what they want or like. The decision-making process is no longer stressful: You have a big picture written by analytics and you are more likely to make a more informed decision. You can also significantly reduce your costs by cutting off the channels and strategies that do not work and investing in stronger and more effective efforts.
At the same time, data is often overwhelming. There is too much to track. That is why many businesses, especially small ones, avoid using big data.
In this article, you will learn about the most significant analytics for an eCommerce website. You can start with tracking some of them and add metrics as you go to make data even less stressful.
7 Metrics for an eCommerce Website to Track
#1 Conversion Rate
Conversion rate shows what percentage of visitors actually bought from you. In order to discover the conversion rate, divide the number of converting visitors by the overall number of visitors.
Conversion rate is the most important metric eCommerce should track and that is why it is the first one on our list. With the help of conversion rates, you can easily measure the effectiveness of campaigns and advertising channels.
As they say, data is useless without analysis. If you want to get the most out of conversion rate analysis, compare campaigns and channels. You will be able to find similarities in the campaigns that have performed the best to use them in future advertisements. You can also find what channels need more investment, which ones should be improved or cut off altogether.
The average conversion rate in eCommerce is 3.2 percent according to the Unbounce Conversion Benchmark Report. If your rate is significantly lower, try to:
- add testimonials and reviews
- make navigation easy by removing excessive design elements
- experiment with headlines and CTAs
- offer a discount
- add a time limit
However, keep in mind that a good conversion rate is the one that is better than yesterday. Do not be upset if you do not reach 3.2 percent straight away because it takes time and effort. Move at your own pace.
#2 Email Subscriptions
Email subscriptions show how many visitors gave their email willingly to get to know your business better and get updates about the eCommerce store.
Since email marketing can potentially return you $42 for every $1 spent, it makes sense that marketers want to grow their email subscription list. Email marketing is also a great tool for building strong relationships because they are customizable (addressing a particular person, sending welcome and birthday emails, etc.)
If you want to grow your email list, try to
- offer discounts or exclusive sales for newsletter subscribers
- use simple subscription forms (email and a name or email only)
- make subscription form visible
- use social proof (for example, join a community of 23,000 subscribers, etc.)
Yet, growing an email list is not everything. You have to regularly check clickthrough and unsubscription rates. It demonstrates whether your list growing and email marketing efforts make sense.
#3 Customer Lifetime Value
This metric determines how much money an average customer spends in your eCommerce store in their lifetime. It involves how much money is spent per one shopping round and how well a business retains its customers.
This metric is especially useful when deciding how much effort you should make while retaining customers. By comparing customer acquisition costs and customer lifetime value, you need to invest more into retaining than attracting new customers or vice versa.
In order to increase customer lifetime value, you can either increase the value of a single sale or increase the retention rate.
To increase the average order value:
- upsell (suggest products of slightly higher price and better quality)
- cross-sell (suggest products that users often buy with this one, for example)
- design a page in such a way that highlights the most expensive products)
- add free shipping for minimum order value
- offer a discount for the add-on item
To increase in customer retention:
- offer discounts to loyal customers
- create a loyalty program
- invest in better customer service
- ask for customer feedback and actually fix the issues
- offer great content to keep customers engaged
We use customer retention efforts for steady growth. Loyal customers mean that in the worst times, we will still have someone keeping us alive. The average order value is for quick profits. It's not possible to speak for every business and say that customer retention is more worthy of the effort. Always analyze Big Data to find an individual approach that works best for your eCommerce store better.
#4 Customer Acquisition Costs
Customer acquisition cost shows you how much money and effort it takes to attract an average customer. In order to calculate that cost, divide your marketing spend by the number of customers.
Customer acquisition cost is a solid indicator of how stable your business is. If your customer acquisition costs are higher than customer lifetime value, it means that you spend more than your profit. So you may face serious challenges or even have to close the store soon.
In order to avoid such consequences, try to decrease customer acquisition costs by
- defining your target audience and narrowing down your efforts to acquire them only
- testing ad copy
- improving customer conversion and retention
- offering great content for organic reach
Customer acquisition costs are tightly connected to other metrics like customer lifetime value and conversions. Therefore, all the tips applicable to these metrics are also applicable for the customer acquisition cost.
#5 Shopping Cart Abandonment Rate
It is a common practice among customers to add products to the cart and then leave the site without buying anything. In fact, 84.27 percent do so. You can calculate your cart abandonment rate by dividing the number of purchases by the number of created shopping carts.
There are many reasons for cart abandonment: Some customers enjoy the process of choosing products but have no intention to buy, some do not trust the site, others do not find the payment methods they prefer, or are scared away by additional costs. You can track at which stage the cart is abandoned to find the reason for abandonment and fix the issue.
In order to decrease the shopping cart abandonment rate, you can
- send a “have you forgotten something?” email
- remarket cart abandoners
- create a progress bar for checkout
- simplify forms
- do not force customers to create an account
- add more popular payment options
- add a timer to the cart and checkout
By lowering the shopping cart abandonment rate, you may also decrease customer acquisition costs because your marketing efforts will not go down the drain at the very last moment.
#6 Net Promoter Score
Net promoter score shows how likely your customers are to tell their friends, family, etc., about your brand or products. Net promoter score is not as easy to measure as other metrics because it involves communicating with the customers. Brands have to conduct surveys to find out how many people will promote them and how many will detract.
Net promoter score tells businesses how loyal their customers are, whether the quality of products and customers is satisfactory, and whether they provide a good customer experience.
A typical question for calculating net promoter score is asking “Would you recommend us to a friend?” If a customer’s answer is between 7-10, they are likely to tell others about you and are overall satisfied. If the answer is 6 or lower, there are some issues.
You may ask a single question directly in an email or put it as part of a bigger survey. Bigger surveys will not only tell you whether there is a problem but point at where the problem is. At the same time, it is harder to get customers to fill out a longer form.
If you want to improve net promoter score, try to
- ask promoters to fill out big surveys since they are more likely to complete the form because they are interested in your brand’s growth.
- take detractors seriously and fix the problems that they have encountered. It is the only way you can turn them into promoters
- improve customer service
#7 Customer Service Engagement
The way customers interact with your business means a lot. Some actions that we perceive as neutral may become a sign that we are lacking something. Complaints are room for growth. Positive feedback can and should be used. Basically, eCommerce sites should take into account the good, the bad, and the in-between.
Answering questions is what the customer service team does. However, if customers often ask about the product details or shipping, it may be a sign that you need to sprinkle descriptions with more details, add information to the shipping web page, or create a FAQ to save time for both customer service and customers.
It is essential to keep track of complaints and later analyze them. Sometimes issues are minor but if it is addressed too often, you might want to take a closer look at it. Big Data will help you to prioritize fixing issues and keeping track of everything you want to improve.
Positive inquiries to customer service will give you a glimpse into what you are doing right. Analyze what words are used more often than others and discover the strengths of the business. Use them for marketing later.
Bottom Line
Using big data is not an easy task and analyzing your results is even harder. Yet, your business steady growth depends on the analysis since it allows you, the eCommerce store owner, to face their problems, see possible issues before they blow up, and make needed improvements.
You do not have to start tracking all metrics at once. Begin to gradually implement these 7 key analytics. That way, you are less likely to be overwhelmed and abandon data analysis prematurely.
Dean Chester is an online security enthusiast and now is writing VPN reviews at https://cooltechzone.com/. Actively self-developing, keen on online marketing and new technologies. Writing is his hobby, a way to escape from everyday routine and inspire others.
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