The ecommerce metrics every brand should be monitoringby
You can’t monitor what you don’t measure. But with so much easily accessible data in the digital channels, the challenge isn’t so much wanting to measure, as it is knowing precisely what you should be measuring in the first place.
And so it is for ecommerce. Thanks to free analytics packages such as Google Analytics, anybody can quickly and easily access all manner of statistics about their sites. But without a clear idea of what you’re looking for, you can very quickly become blinded by the sheer volume of numbers.
“The number one question you need to ask yourself before you log in to your website analytics is ‘what question am I trying to answer?’” says Chloe Thomas, author of the eCommerce MasterPlan. “Logging in to try and find answers to questions you haven’t yet found is fascinating, but it’s not going to benefit the business. You need a hypothesis you want to test or a question you want an answer to, otherwise you’ll spend an interesting afternoon in Google Analytics but you may not actually learn anything you can use to improve the business or improve the customer experience. And in that case it’s not worth looking at.”
With that in mind, let’s look at the stats that you should be analysing to help you optimise your site’s performance, and how you should be monitoring them.
Comparisons and tracking
On its own a number means nothing – a conversion rate of 2% might sound interesting, but taken alone it is a fairly meaningless statistic.
The key thing is to track performance over time, how did you do this month compared to last month? How did you do this month compared to this month last year? Start tracking them monthly, then when you’re happy with them and want to be more reactive move it up to weekly monitoring.
Thomas notes: “You have to look at how your figures compare to last month, and how they compare to this time last year. Why has it changed? What change has happened and why has that change happened? Are we happy with that change, do we know why that change has happened, and what impact has it had on our figures?”
The other comparison that needs to be done as a matter of course is to examine the key KPIs between the traffic sources to your site.
Thomas explains: “For me, the first thing is to look at what traffic is coming in. If you’re only sending one email every other month, and that email makes up 20% of the traffic in the month that it’s sent, then the months without an email are going to have a poor conversion rate, simply because email should be bringing you a better conversion rate than your other channels.
“Likewise, if you’ve got a lot of Google adverts being badly managed and not well optimised then that might have a poor conversion rate. You might have one traffic source that’s performing very badly, but actually your website’s doing well. So you’ve always got to do these comparisons within analytics - look at the different traffic sources, look at the performance over different time sets and try and work out what the real story is, not just the big bold number that sits on the first page.”
There’s no point in compiling reports if you’re not learning anything from them – reports for the sake of reports is a waste of your precious time. And without comparing statistics, your reports are full of numbers that tell you nothing. With that clear, it’s time to turn our attention to what numbers to look at.
The key KPIs
Thomas suggests that there are two sets of KPIs that are most valuable – business numbers and website/traffic numbers.
Business numbers are the core items within the central equation in ecommerce:
Traffic x Conversion Rate x Average Order Value = Success
This gives us the three levers we can use to increase performance – more traffic, higher conversion rate, higher Average Order Value (AOV). These are the make or breaks – the ones you need to keep an eye on to stay in business and in profit:
- Total Sales
- Total Orders
- AOV = Average Order Value
- Conversion Rate
Website/traffic numbers are all about the traffic sources – NOT the website as a whole. The traffic mix is what we care about – because that’s what we can change.
“For each of these metrics look at the top 10 traffic sources to the website (by volume),” says Thomas. “Traffic sources are your emails, Google Adwords, a referring website, the Google search engine, Twitter, etc. All this data is readily available in Google Analytics and you can set up a custom report to email this direct to your inbox every month/week.”
- Visits (sessions)
- Pages per visit
- Conversion rate
- £s per visit
Thomas continues: “By looking at the top 10 you can compare the performance of each traffic source against the previous month, and also look at how they compare to each other. So when one drops off you know to make it work harder. The first time you look at these reports I suggest you go back a few months so you’ve got some history to compare against. You’ll probably find some results that shock you a bit – that’s fine, so long as you do something about it now you know.”
Outside of these fairly obvious KPIs, there are other metrics that you might want to pay attention to. Three metrics recommended by James Dunford Wood, COO of Ometria are:
- Repeat customer rate and customer lifetime value (CLV) per channel, as this enables you to see where your best customers are coming from.
- Revenue per product views, as this can help you optimise your merchandising.
- Stock availability weighted by page views, as this lets you prioritise where to restock.
Elsewhere, Chris Fletcher, research director at Gartner, also advises that brands shouldn’t forget to look at measures of activity that happen outside of the website, which may also have implications for the performance of your ecommerce operation.
“The whole area of marketing automation is adjacent to ecommerce, but it is one of the areas that is pretty critical to success,” he explains. “It has an impact on everything from shopping cart abandonment to getting the right type of traffic to your site, which then has a trickle down effect in terms of the total success of your ecommerce site.
“However, how marketing affects an ecommerce is frequently overlooked. If there’s an area that I’m continually having to remind clients that they need to pay attention to, it’s the broader topic of digital marketing and marketing automation. Some of that is clearly analytics driven with search terms and the amount of time a person spends hovering at your site, but a lot of it also happens outside the ecommerce environment. So making sure that you’re sending relevant emails, with permission from the consumer and that are about topics or products that they are actually interested in is really a critical part of driving the right level and quality of traffic to your site.”
Having visibility into this kind of activity is, however, beyond the capabilities of most web analytics tools, so to shed light on things that are happening off-site – even if they have a bearing on ecommerce performance – in all likelihood you will need to invest in additional solutions. But this is something worth considering, adds Fletcher.
He notes: “There’s no shortage of products out there that provide web analytic capabilities. The challenge, of course, is that you can watch traffic, you can look at the sites people have come from, but what you can’t always do is draw correlations between those and the amount of traffic and the actual transition volume on the site. Likewise, it tends to not provide any visibility in terms of all the other marketing interactions you’ve got with that customer - things like email and campaigns through social sites and mechanisms that are driving traffic through that site. Unfortunately, some of the web analytic tools don’t provide much visibility there at all.”
Nonetheless, with these statistics and measurements for most part at your fingertips, there is no excuse for being unable to monitor and optimise your ecommerce operations.
Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 20 years, including Internet Works, CXO magazine and Business Management. He joined MyCustomer in 2007.
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Now-a-days there are many online business and most of the people prefer to buy the products online. So, monitoring of e-commerce metrix is become essential.
yes i agree with sitewired, the proper monitoring should be there inorder to get return on investment ROI
Ahhh yes so much can be said for marketing automation. I am learning that in my experience with several eCommerce stores. Abandoned carts are a huge problem, but I believe recovery rates are around 30% when you send follow-up emails. Thanks for the awesome, in-depth article!
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