There's no shortage of advice on the internet when it comes to eCommerce and the various metrics every store should track. But a key first step for identifying these metrics is to step back and think about why eCommerce sites need to track detailed data at all. Why track detailed transaction and marketing metrics?
There’s no such thing as too much data, but there is such a thing as too many metrics. You don’t need to fill marketing and sales reports with every metric under the sun. You do, however, need to track metrics that tie marketing efforts to sales. If you can calculate the return-on-investment for your marketing dollars, you can consistently increase profits.
So, how do you measure the success of your eCommerce marketing?
Pair marketing data with transaction data. This allows you to see not just how many leads find your business, but also how many of them become customers. From there, you can calculate how much each lead is worth.
Before you start tracking eCommerce metrics, you must first determine your average order value (AOV). This is the key to figuring out marketing return-on-investment (ROI).
Armed with your knowledge of AOV, you’ll know the potential value of each new website visitor. This will allow you to determine the financial impact of your marketing efforts.
If an advertisement brings in 100 visitors in a week, the ad may be worth 100 times (AOV) in potential revenue. However, not all website visitors intend to make a purchase. That’s why you must separate qualified leads from junk leads.
The only thing worse than not collecting data is misinterpreting data. In the aforementioned example, not all 100 website visitors will end up making a purchase. Some people will be solicitors trying to sell you B2B software. Some will be spammers filling out your forms and calling your business. Some will be real customers ready to make a purchase; those are qualified leads, and they must be separated from the aforementioned disqualified leads.
You can’t judge ads on transactions; ads drive leads to your website, and your website should be optimized to produce conversions in the form of purchases or form-fills. Ads, on the other hand, should be judged by how well they drive qualified leads to your site.
If your ad is delivering qualified leads, it’s doing its job. If it’s attracting solicitors, salespeople or spammers, (non-qualified leads) it’s ineffective. This is why you must dig into the data behind your website visitors and conversions in order to disqualify bad leads before they skew your data.
Separating metrics into different categories allows you to accurately measure different components of your eCommerce marketing. Don’t use website metrics to judge ads, and don’t use ad metrics to assess your web pages.
For an eCommerce site, sales are everything. However, sales aren’t the only thing. Measuring leads is a great way to measure marketing effectiveness independent of other factors.
First, you’ll have to answer some questions about your business. Do customers generally buy your product immediately upon arriving on your site, or do they shop around for a while then circle back? Does it take people a couple days to decide? The longer your buyer consideration period, the more important it is to measure leads vs. sales.
While sales metrics are the indicator of a successful eCommerce business, they present a few problems. For one, you can’t track sales until the sale is complete. Sales data feedback might not get into a report for a while. The longer you wait, the less time you have to make adjustments to your marketing efforts or web pages.
The second problem is one that we’ve mentioned previously; sales metrics are indicators that your website is converting well, but don’t reveal much about advertising effectiveness.
Think of your website as a salesperson, and your ad as the marketing team. The marketing team can provide a salesperson with good leads, but if that salesperson isn’t good at their job, they won’t be able to convert those leads to sales.
There’s a flip side to this coin too; If ads deliver junk leads, the website isn’t going to be able to convert the leads to sales. Measuring leads and sales allows you to measure the effectiveness of your ads and your website.
Conversion rate is a tricky metric to measure correctly. On one hand, you can easily calculate your website’s conversion rate by dividing the number of visitors by the number of transactions. On the other hand, not all conversions are equal. An ad that attracts a customer who places a $100 order is more valuable, than an ad that attracts a customer placing a $10 order.
In general, conversion rates for eCommerce sites are low. Only 2.86% of eCommerce website visits result in a sale. Tracking the conversion rate alone doesn't’ reveal much in terms of actionable insights; you must also measure the value of each conversion and tie it back to your marketing source. That’s where the next metric comes into play.
Ads that attract repeat customers are more valuable than ads that attract a one-time purchase. By understanding what different customers might be worth over the long-term business relationship, you can identify which leads have the most value. Tying every lead to a marketing source allows you to identify the marketing that delivers leads with the highest CLV.
Metrics like ‘conversion rate’ and ‘qualified leads’ provide indicators of short-term success, but most SEO metrics should be viewed through a long-term lens. As any SEO marketing agency will tell you, moving up in search rankings takes time. Investing in blog content and targeting keywords with new pages will payoff, but it might take awhile.
One metric that can give you short-term insights is “Leads by Landing Page.” Your conversion tracking tool should provide you with insights about which pages your customers land on before making a purchase on your site.
The landing page data can help you figure out which keywords your customers are using to find your business. While Google doesn’t reveal which keywords organic searches used, these landing page reports can give you a clue.
For example, if a lot of customers land on a bike shop’s “mountain bike” landing page, it’s reasonable to assume many were using the keyword phrase, “mountain bikes.”
You can also take landing page data a step further by cross-referencing it with sales value or lead value information. Which landing pages are delivering your most valuable sales? Which are delivering lots of leads but few sales? You’ll be able to figure out which keywords are worth targeting moving forward.
Last but certainly not least, we have customer service metrics like response time and shipping speed. Often lost in the shuffle of marketing and sales is the third component of any successful eCommerce site. How fast are your customers getting their products? How quickly are your customer service representatives responding to customer service requests? These metrics might not affect your spend or revenue as much as marketing and sales metrics, but they impact your business nonetheless; when businesses follow-up with online leads in less than 5 min., those leads are 9x more likely to convert into customers.
But don't just rely on your own internal metrics when it comes to measuring customer satisfaction; ask your customers directly. You can (and should) add feedback forms at every stage of the customer's journey.
Whether it's a popup to collect feedback on your website, a post-purchase form to track how your customers found the browsing to payment process or a post-shipping feedback form that measures their satisfaction with the product itself, all these avenues of feedback will help you better understand your customers and in turn, keep them coming back to your store.
Consider using a form builder like Paperform to make this process as accurate and fast as possible.
The list of metrics you could measure is endless. It’s your job to identify the metrics that matter so your reports make sense. Don’t make your CEO, clients or stakeholders sift through mounds of data; show them the metrics that matter to your business bottom line.
We've put together a list of DIY tips and tricks to make your ecommerce product photos stand out—without breaking the bank.
In light of COVID-19, many businesses will increasingly rely on online solutions to make sales. Now might be a good time to move your bakery business ...
In this guide, Rob Press from Deputy covers seven practical ways to boost productivity and build a better, happier, workplace.
Looking for an alternative to Etsy? In this guide, we'll look at the best sites to sell your handcrafted goods in 2021.