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How can you possibly know how your business is doing if you don't track and measure very specific metrics? Without it, it's like navigating a desert without a compass. If you can't measure it, you can't manage it. And in the online world where consumer behavior data is available so quickly that metrics can really shine.
How Can You Measure Your Ecommerce Metrics?
Most online retailers use Google Analytics as a first step to measure and track their metrics:
Step 1: determine your top metrics
Step 2: set it up in Google Analytics
Step 3: Monitor Your Results Regularly
Related Topics: How Google Analytics Helps Small Business Owners Make Better Business Decisions
However, this data is limited in that it does not explain why the user is behaving in a certain way, it just provides the quantitative data – the what. A useful tool to better understand your user behavior is a heat map, which shows the user's journey in a visual, intuitive way.
A hybrid metrics measurement strategy will therefore not only help you understand what your users are doing on your website, but also why they are doing this. Ultimately, this can help you improve the user experience, which leads to more sales and higher profits.
When your business is at a stage where you can budget for an in-house or outsourced data analyst, that expert insight and analysis can prove invaluable to your online business, whether it's product or service-based. We do this in my company – we employ a full-time data intelligence officer who regularly analyzes user behavior and provides qualitative insights and advice to consistently optimize and improve the user experience based on these key metrics:
Ecommerce businesses should measure all of these metrics and more, just like a business selling physical goods should.
The most important e-commerce metrics
1. Sales conversion rate
The conversion rate is simply the number of website visitors divided by the number of sales, or in other words, the percentage of visitors who shop in your store.
You can improve your conversion rate and generate more sales by:
Improvement of the page loading speed
Prominent display of customer ratings for each product
Use of high quality product images
Add trust badges to show payment and website security
Offer live chat as a customer service option
Simplification of the ordering process without login data
Related Topics: How To Make Your Ecommerce Website More Trustworthy
2. Website traffic
Once you've improved your conversion rate, it's time to focus on driving more visitors to your website so you can convert them. This is your website traffic.
Methods of increasing website traffic include:
Use keywords to optimize your website for Google search
Use influencer marketing to get social media influencers to promote your website
Advertising on social media such as Facebook and Instagram
3. Customer acquisition costs (CAC)
This is the cost of customer acquisition and is vital as you need to understand what you are costing to acquire customers and how much they are spending on your website.
When calculating for CAC, essentially all marketing costs are divided by the number of customers acquired during that period.
My company was able to reduce our CAC by 20% by lowering the cost per click (CPC) of our Facebook ads. The marketing and design team achieved this reduction by implementing Facebook's best practice of creating video ads in the first three seconds and optimizing the customer funnel.
“When you tailor your creative to the platform you're advertising on, you'll get the most impact. This leads to lower costs per quality lead (CPQL) and ultimately to an optimized CAC. ”- Michael Miler, Marketing Director at Become.
4. Average order value
The average amount customers spend per order on your website is the average order value. This metric is important because if you can increase the amount each customer spends, you will make more profit without incurring additional customer acquisition costs because the customer is already mature and ready to buy.
You can increase your average order value by:
Upselling: Entice your customers to buy a higher-quality or additional item
Discount: Motivate your customers to increase their order size by offering free shipping on orders above a specified value or a discount on large orders
Bundling: An attractive price for bundled products. For example, buying two complementary items bundled together will be cheaper than buying them separately
Suggestions: Make sure your website has a Recommended Products tool, which you can use to offer customers product suggestions based on their browsing history and what similar customers have bought
5. Customer Lifetime Value (LTV)
The amount you predict each customer will spend on your online store is known as the LTV. It's important that you figure out how much you should be spending on customer acquisition and retention.
Tips for increasing the LTV are:
Excellent in customer service
Building customer relationships
Conduct regular surveys to gain insights into your customers' wants, needs, and challenges
Related Topics: Ecommerce Analysis: 4 Metrics That Are Commonly Overlooked
How long is a piece of string?
Don't let this be your company's motto. No company can be successful without specific, measurable, achievable, relevant and time-based metrics. And with data available to you as an ecommerce business owner, there is no reason not to degrade the wealth of those extraordinary customer insights.