Those online stores that are thriving are doing so because they are obsessed with tracking sales metrics. They use every opportunity to gather data and use it to drive marketing and sales strategy. It is an essential tool for understanding what is in your inventory now and for how long and how much profit and loss you are accruing. However, it should also be used to drive a future strategy, so you can imagine what success looks like and direct your efforts to achieving this.
The high-level strategy
The process for driving growth in your online business requires a three-step process.
- You need to set your measurable goals, what is your success going to look like? This is also known as your key performance indicators or KPIs, which is a term you are more likely familiar with.
- What numbers, or metrics, are going to help you identify if you have met your KPIs?
- How are you going to monitor the performance of this metric and what adjustments would you make to change outcomes?
The best companies work on a quarterly or bi-annually review of the KPIs and performance but will be tracking the metrics constantly. While you don’t want to be course correcting all the time, you do want to be aware of the trends that are emerging and make daily interventions in small ways.
What metrics should you track?
There are so many metrics that you can track. Here are some of the ones that are most useful when looking to grow your online store.
Segmented conversion rate: Your conversion rate is pretty cut and dry. How many people visit your store and end up making a purchase. It is calculated as a percentage of the number of visitors who close on a sale. Consequently, if 14 customers from 150 visitors converted, your rate is 9.3%. While this is a good indication of the success of your store in closing the deal, it doesn’t tell you a lot about the experience and processing of your potential customers.
Conversion by traffic source: Where do your customers start their journey? Is it from a Google search or from social media? Is it thanks to your targeted campaigns or from guest blogs you have paid to have posted? Knowing where you are getting your greatest stream of customers from can help you to direct your marketing funds to where you will get the most return for your investment.
Conversion by device type: It is likely that the majority of your eCommerce comes from mobile devices, but it is good to know for sure. Your choice of images and the amount of text in your description before the call to action will be directly impacted by the view of the item. Too much scrolling on a mobile device before the buy button is going to act as a barrier to purchase.
You should research the user experience on the most common device for your online store and use best practice to make improvements. A lot of eCommerce sites allow AB testing of your listing, and it is a good idea to make use of this when seeking to drive the success of your store.
Conversion of new vs. returning visitors: Ask anyone in sales and they will tell you that winning a new customer is hard work. The root to success of your store will be in the retention of clients. If you are constantly converting new but not existing customers, then there is a drop off somewhere that needs to be addressed.
Conversion by product: An obvious metric is the popularity of the products you sell. It is the way that you manage your inventory. It is a way to spot your popular or trending products – also those products that are underperforming. You should use this data to assess the impact of your price, the product descriptions, images, and more, and make strategic adjustments where necessary.
Cart abandonment: You should be interested most in those customers who put items in the cart and then walk away. Most eCommerce sites track this metric for you, and you can arrange for an automatic response to help retarget these customers. You can also use Pixels to set up ad retargeting for those who drop off from the checkout process.
You should probably also monitor when a customer leaves your site, keeping check on the whole sales funnel. Google Analytics offers a service for seeing how customers behave while on your online store and it can help you see where they face barriers to a sale.
Average Order Value
There are three ways to increase the revenue of your online store. You can win new customers, retain old customers or increase the average order value. Therefore, it is important to calculate this value by taking your revenue and dividing it by the number of orders. Using this metric is relatively free. You can boost it by cross-selling, offer other products that the customer might be interested in, or upselling, suggesting a more premium product. You can also offer discounts for volume buyers, free shipping when the buyer hits a certain value in their cart or coupons for their next purchase, to encourage returning customers.
These top-level metrics, as you can see, can really help you make decisions that will drive your growth. The data is only as good as the response to your analysis. Therefore, collecting the data together and reviewing it monthly, at least, will give you a valid picture of your successes and areas for improvement. However, until you pinpoint immediate and future action, these insights are going to do nothing to your bottom line.
In short, the part of the three step process that is going to have the most impact is the question, “what adjustments would you make to change outcomes?”
Laura McLoughlin is a Digital PR based in Armagh, Northern Ireland. She has previous experience as a website editor and journalist, and currently works with Chorus Commerce.