5 Metrics Every Business Should Track
According to the latest analysis performed by the United Nations Conference on Trade & Development (UNCTAD), the current global market is valued at over $22 trillion, and will only continue to grow in the future. By 2019, UNCTAD predicts that 80 percent of Internet users will complete at least one online purchase a year.
Ecommerce offers an incredibly opportunity for small businesses to refine their local marketing strategy to include a global audience. Not only can ecommerce connect your business with new customers and boost your revenues, it can also help improve your brand identity. However, there are a number of challenges that need to be overcome if you want to enjoy success in the emerging ecommerce marketplace.
Attracting the right type of customers to your sites and getting them to consistently complete a purchase while maintaining a profit is a complicated process. You’ll improve your success rate if you carefully track your customer metrics and make continuous improvements based on the available data.
Here are a few of the most valuable customer engagement metrics your ecommerce site needs to track if you want to improve sales.
Pay-per-click (PPC) campaigns like Google Adwords or Facebook Ads can quickly become expensive and erode away at your profit margins if you don’t keep track of the cost of every conversion.
To start, subtract your shipping and manufacturing costs from the retail price of your product. The resulting number will be what indicates your pure profit. As long as your cost-per-acquisition (CPA) comes in under that number, you’re running ads at a profit and can start to consider scaling up your campaign. While your business probably won’t go broke spending $25 a day on an Adwords campaign that doesn’t yield results, marketing budgets are finite. Maximize your chances of success by starting all campaigns at a low ad spend, cut the ads that aren’t generating clicks and conversions, and boost the ones that are directly leading to sales.
You can successfully lower your CPA by:
- Split testing all ad campaigns
- Excluding unprofitable regions from your campaign
- Improving your targeting approach
- Maximizing on conversions when a user clicks through to your site
It’s simply vital that you track your campaign’s conversion rate – the percentage of users that complete a sale after reaching your site.
If you can successfully drive a lot of traffic to your website, but have only a handful of visitors convert into sales, that’s a poor conversion rate. You could stand to make a far higher profit by driving a smaller amount of traffic to your website if every visitor is a great match for your products so that your site enjoys a high conversion rate.
You can improve who you funnel to your site by setting demographic requirements on the sites you advertise on. With Facebook ads, for example, you can exclude different ages groups (e.g. younger people don’t often have the money to purchase high value items), focus on showing your ads in certain regions, and highlight certain interests to ensure your targeting potential customers that have a real interest in your products, rather than people who might not be interested.
If you’re campaign is already successfully targeting the right audience, but you still want to improve your conversion rate, try changing your landing page with these subtle tweaks:
- Add reviews and customer testimonials to add credibility to your products
- Make sure your “Add to Cart” button pops off the screen and is conveniently placed
- Take professionals photos of your products
- Add a countdown timer for special offers
- Make sure your product pricing is clear with no hidden fees at checkout
- Offer a variety of pricing options, the more the better
Average Value of Each Order
While optimizing your conversion rate can help improve your online store’s profitability, getting each customer to spend more per transaction can also help improve your bottom line. Your average order value (AOV) indicates the amount a customer spends during each transaction on average. If you can boost this number, then you don’t need to focus on lowering your CPA as far as possible to still make a profit.
If your Adwords campaign constantly teeters between making a small profit or returning a small loss, improving your AOV will allow you to improve your campaign.
Help boost your AOV by:
- Increasing your online inventory
- Offer cross-promotions and upsell
- Offer discounts when a customer buys in a bundle
Customer Lifetime Value
It’s not uncommon for small business to focus only on attracting new customers when creating their local marketing strategy, while simultaneously ignoring the value of repeat customers. One of the easiest ways to improve your business’ bottom line is by boosting your customer lifetime value (CLV) – the average amount an individual spends throughout their relationship with your brand.
If you can establish the value of a customer in the long-term, you can plan for longevity and grow your business more effectively. If you can successfully attract repeat customers and you enjoy a high CLV, you can tolerate a higher CPA if that is what it takes to initially get a visitor to your website.
Some ecommerce businesses make little to no profit from first time customers; they base the success of their business on repeat customers.
Help boost your CLV by trying to:
- Promote loyalty programs
- Engage your customers with content marketing and email
- Use social media channels to improve customer relationships
- Offer special discounts to previous customers to encourage repeat business
Cart Abandonment Rate
In a case study on consumer spending conducted by Adobe, the company discovered that 30 percent of carts resulted in a sale when started on a desktop, while only 19 percent of carts resulted in a sale when started on a mobile device. This means that anywhere between 70 to 81 percent of shoppers abandon their cart without making a purchase online.
If the abandonment rate of your ecommerce site is above 70 percent, this could be a great opportunity to reconnect with visitors that demonstrated an initial interest in your products, but who didn’t make a purchase. Try the following tactics to improve abandon cart rates:
- Retarget customers who abandon their carts using Adwords or Facebook ads
- Allow visitors to checkout without needing to create an account
- Eliminate unexpected shipping rates or fees during the checkout process
- Increase the number of available payment options to improve conversion rates
While finding the data necessary to successfully track these metrics can be tricky, the time and effort you spend to better understand your customer base will only help to improve your ecommerce business. Use the tools you have at your disposal, and you’ll start enjoy the ecommerce success needed to help your business grow.