Back in the year 2017, the e-commerce industry showcased sales worth $2.3 trillion, which is expected to go as high as $4.5 trillion in the year 2021, according to a report by Statista. What does this tell you? The market is there for all to see, you just need to know how to tap it right.
We’re in a world where data drives most of our daily activities. This is why data analytics is on the rise and slowly but surely, every organization is reaping the benefits.
Be it small, medium, or large-sized online enterprises, the key to being successful is knowing how you can improve month on month, year on year. This is where recording, tracking, and analyzing customer data enters the fray. Ergo, before you go on to hire Magento 2 developer, the matter of data analysis demands your attention.
Why? Let’s find out:
a. Know What’s Working and What Isn’t:
Analytics will tell you which channels are working for your business, which marketing strategies are paying the most dividends, what type of leads are converting into customers, and a lot more. If you don’t know the intricacies of this, you will waste invaluable time, effort, and energy over unprofitable channels.
b. Because Knowledge is Power:
Fostering such critical bits of information that encapsulate not just your website, but business metrics as a whole will give you that much-needed edge over your competitors. This will allow you to understand rising trends and any shifts in consumer behavior that may appear. In turn, you can modify your business strategy accordingly.
c. Welcome Aboard Better Conversion Rate:
All of this leads to a better conversion rate because you have key data on the basis of which you can indulge in experimentation. This will form the basis of every strategy you’ll execute.
There is no one rule that will help you optimize your business strategy; you’ll have to put every underlying rule in context to paint a proper picture. Here are the data bits which need your consideration:
The Rule:
Before we get into the nitty-gritty though, compare all recorded numbers to the past month, the same month last year, and the overall goal.
1. Sales & Returns:
You ought to keep a close eye on the overall sales and returns by a way of 2 parameters – the marketing sources and product categories. This one’s kind of an obvious one, as without sales, a business can’t breathe. And you need to know what’s coming in to figure out what’s going out.
Track returns as a % of sales as well for each product category, to know which products and lines are working better for your brand. Also, take note if there’s an increase in the return %, as it’s a cause for alarm.
2. Transactions Per Hour:
This is a measure of the number of successful transactions your business is receiving on an hourly basis. This will help prepare you for any promotions, discounts, or heavy periods in terms of sales such as festivals, the new year, etc. The higher the number, the better it is for your business.
This will help you segregate conversions from window shoppers as well. Also, it will act as a barometer of your sales and marketing campaigns, how well they are being executed, and if at all your targets are being met.
3. No. of Orders:
You can’t just base everything on the amounts being received by your business. For eg. Imagine generating over $20,000 on 2 separate days wherein on the first day you received 20 transactions of $1000 each, whereas, on the second day, you generated 2 transactions worth $10,000 each. Now, day 1 might prove to be impressive reading for your business but getting only 2 transactions will never float your boat, will it? Hence, you need to track the no. of orders based on the marketing channels being used and the active product categories.
4. Average Order Value:
Once you’re done tracking the total number of orders and sales, you can then monitor the average order value you’re generating. This depicts the average amount you receive from each sale.
Average Order Value = Sales/No. of orders (Divided by)
5. Customer Acquisition Cost:
Looking for new customers is one thing, but looking after your existing customers is just as important. CAC or customer acquisition cost is a metric that is a measure of the amount spent on acquiring a new customer. Having said that, this number needs to be as low as possible.
How to keep it down? Well, there is a wide array of practices you can follow which include the likes influencer marketing, social media optimization, search engine marketing, and more.
6. Gross Profit Margin:
Gross profit margin is basically a measure of sales minus direct costs. By dividing gross profit by sales, you’ll arrive at this. This is the amount of profit every product is producing.
Track these numbers for the overall store as well as for every product category. A decrease in this is very alarming for your business, so keep your eyes and ears as open as you possibly can.
7. PPC & Other Marketing Channels:
Keep track of the Pay-Per-Click and other marketing channels that you’re using i.e. Facebook ads, Instagram ads, and more. Here’s the list of terminologies you should know:
a. CPM – CPM is the cost per mile or cost per thousand impressions, a channel wherein you’re charged for every thousand impressions.
b. CPC – CPC or Cost-Per-Click is a model wherein you’re charged for every ad click.
c. CPA – With the Cost per action model, you get charged when a visitor fulfills a specific action that you’ve chosen.
d. CTR – Click-through rate is the measure of the no. of times your ad was clicked divided by the no. of times it appeared.
8. Visits per marketing channel:
Well, this is what you’ll use to keep your professional SEO marketing in check. Knowing what kind of customers, and at what frequency are reaching your website via which marketing channels. This will help you to boost adequate resources towards the channel that is paying the best dividends. In the third quarter of 2018, smartphones accounted for no less than 61% of e-commerce websites internationally. Hence, the dissection of numbers over the marketing channel is critically important.
9. Conversion Rate:
Well, this is the holy grail of all numbers involved. This marks the % of visitors who get converted into customers i.e. they fulfill a transaction on your website. You’ll be surprised to know that there were over 1.66 billion online buyers in the world back in 2017 which means that around 21.8% of the world population shops online (or at least used to).
Conversion rate = No. of orders/No. of visits
The higher the number, the better it is. This is where regular ecommerce website maintenance comes in handy as well. As of the second quarter of 2018, 2.86% of online website visits got converted into sales. Hence, don’t be too bogged down if your number isn’t providing good reading at first. There’s ample room to improve.
Also, this isn’t just about the new customers; you ought to cater to the existing ones as well. Unless your domain is a very unconventional one like a car dealership wherein you can’t expect monthly or even yearly sales from one single customer; you should be up for targeting and remarketing. In any case, according to a survey, it is 5 times costlier to get new customers than it is to acquire an existing one.
10. E-mail Marketing Channel:
E-mail marketing should be a part of your overall business strategy just in case you’re at the opposite end. It’s clean and simple and very targeted. You should know the terminologies and the metrics that matter though when it comes to e-mail marketing. Here they are:
a. Sent – the no. of e-mails sent.
b. Delivered – the no. of successfully delivered e-mails to the list you’ve chosen.
c. Unique opens – the % of individuals who checked the e-mail out at least once.
d. Unique clicks – the % of individuals who clicked on any of the links present in your e-mail at least once.
e. Landing page visits – the % of individuals who clicked to reach your landing page.
f. Performed action – the % of individuals who performed an action i.e. newsletter subscription, buying a product, etc.
11. Overhead Expenditure
This is one thing that is often overlooked, however, plays a key role in defining your profit-loss sheet as a whole. These expenses include the likes of payroll, rent, electricity, design costs, etc. Hence, it is for you to decide which overheads are worth it and which aren’t.
12. Social Media Analytics
Social media is the king in today’s world and this is one superpower we just can’t ignore. Be it Instagram, Facebook, Twitter, LinkedIn, or any other social media platform, you need to analyze every bit of data in order to know how fruitful your online efforts truly are.
And the best part is most of these platforms have a detailed and comprehensive insight or analytics section which is easy to comprehend. There are multiple filters like age, demographics, location, interests, and more.
13. Shopping Cart Abandonment Rate
No matter how hard you work to avoid this, some things are inevitable. And shopping cart abandonment is one such thing. This is the % of shoppers who abandon the purchase after adding item(s) to their shopping carts. Ouch!
Surprised that a phrase like this exists? Well, over 68% of visitors abandon their shopping carts. Woah!
Why do they do that? Lengthy checkout process, design is unattractive, internal linking is off, and more. This is why investing in professional ecommerce website design is the need of the hour, so this number stays as low as possible.
To sum up, knowing your e-commerce data is as good as knowing your customers. And always remember: Numbers don’t lie!
