Online Marketing Specialist
You switch on your computer and realize that you have several new followers on Facebook. You smile.
However, when you check whether you have new orders or not… nothing. You are not worried about it because every day you get more and more followers. The sales will come.
An eCommerce is an online business whose main goal is to generate profits. That is crystal clear. Then, why are you checking metrics that have nothing to do with what you earn?
You are looking at the so-called “vanity metrics”. They are interesting, but not relevant – statistics that are nothing by themselves.
That is why in today’s post, we provide a guide about which eCommerce metrics you should check — no matter what. This is the information that will tell you if you are on the right path.
Table of Contents
First of all, let’s clarify what we are talking about.
“Web analytics” is collecting, processing and analyzing data in order to draw conclusions which will allow us to optimize our business strategy.
This definition presents some key points:
We will look more into this later. But first…
Let’s be clear about one thing: if you don’t keep track of what is happening with your eCommerce, you are blinding yourself.
A good analytics process allows you to:
In short, thanks to web analytics, you can improve both your sales and your eCommerce’s profitability.
Not bad, right?
There is a fundamental idea that you need to understand before starting to check your website’s data:
Data alone, no matter how complete or varied it is, is useless. The key is to know how to extract real information out of it.
Here you have one example: imagine that you notice that the average bounce rate for the different browsers is 60%.
However, one of them, let’s say Firefox, has a 91%. The figure by itself means nothing, but it hides a very important detail: it is possible that there is a design and usability problem with Firefox that is making visitors bounce.
Our web analytics’ job is to look at what’s hiding behind that information to notice problems to be solved or positive aspects to be improved upon.
Once you have understood all this, we can move on to the types of metrics that we should track and avoid.
You can’t have too much of a good thing; it is normal to get excited when you see likes on Facebook or Twitter retweets.
The problem is when we focus the whole analysis on those metrics that mean nothing more than a pat on the back, a thankful glance to the audience. This type of metric is known as a vanity metric in the eCommerce field.
These are some examples:
These metrics look awesome on paper, but don’t add any value to the analysis. What’s the point of knowing the number of visits to the shop, if we don’t know where they are coming from or the percentage that end up buying? On the other hand, there are important metrics that actually interest us. The so-called actionable metrics:
We already know that the “vanity metrics” are dangerous and that what we really want to analyze is the information that gives us real value. Let’s find out then, what those metrics are.
In order to be able to see everything that we are going to explain, you need to have Google Analytics.
Every online shop that sells products should monitor and analyze, at least, the following data:
ECommerce relies on traffic.
The more visits you get, the more likely you are to attract new clients and improve your sales.
But look out.
The goal is not getting views indiscriminately, but to find qualified traffic.
That means bringing to your eCommerce users with a profile akin to your ideal client’s, who, therefore, could have an interest in your products.
Web traffic can be classified in two main categories:
Ideally, you would keep the balance between both kinds.
“Wait a moment. You said the number of views a web has is a vanity metric.”
On its own, this metric will not tell you whether your eCommerce is working out or not. But, combined with others like the ones we will talk about now, you will be able to draw useful conclusions.
It is like building a house: you can’t do it just with bricks… But you can’t do it without them either. 😉
Imagine if 1000 people visited your eCommerce web page every day.
Among them, some end up making a purchase… But many others don’t. Maybe they only wanted to read a post, or to contrast two products from two different brands.
The problem is that, if that person leaves without leaving their information (without subscribing to your newsletter, for example), who can guarantee that they will come back to your store?
That is where lead capture comes in.
Leads (also known as potential clients) are visitors to your web who left their contact information. Like their e-mail or phone number.
Once they are in your database, you can use different strategies like e-mail marketing in order to get those potential clients to make a purchase.
However, a person typically will not just give you their e-mail. Because of that, it interests them if you offer some kind of lead magnet.
The main metric for eCommerce is the percentage of visits that end up buying. As we have seen, vanity metrics on their own don’t add any value, but when crossed with another, they do (in this case, visits/sales).
In Spain, the average conversion rate is about 1%, depending on the field. That is to say, one out of a hundred visitors ends up making a purchase.
We often spend too much effort on increasing traffic when the actual key factor is optimizing the conversion rate.
How much money does a person spend on average from your eCommerce?
This is a piece of data that not many people take into account, but it is crucial. For example, we need it to measure the return of marketing actions.
By crossing the average checkout price with the conversion rate and the cost of every campaign we can optimize the cost on advertising.
This is what we pay, on average, to get a new client. It is obtained by adding all the SEO, SEM, content marketing, and advertisement expenses and then dividing the figure by the number of new clients obtained through those strategies.
Acquisition expenses/New clients = CAC
Notice that all these metrics are even more valuable when combined. If we know both the average checkout price and the CAC of every traffic source, we can optimize the attraction expenses.
Let’s see an example so you can understand it better:
Imagine that the CAC for every new client that comes from Facebook Ads is €15 and the average checkout price is €20.
It will depend on your profit margin and taxes but it seems like this is not the best traffic source since the clients are costing you more money than what they spend.
On the other hand, if the CAC for Google Adwords is €5 and the average checkout price is €20… it seems pretty obvious that you should invest more in Adwords than in Facebook Ads. We want every cent we invest to generate as much as possible!
Everyone always talks about getting more views and attracting new clients, but what about the ones you already have?
How many of them make another purchase?
That is exactly what the retention rate measures: a metric that lets you know whether you are managing to retain your client’s loyalty over a given period.
Because a recurring buyer is much more profitable than a new one. A person you already attracted, who is familiar with your business and buys from it over and over. That way you gain back what you spent in order to make them your client.
This has a lot to do with our next item.
Customer Lifetime Value is the net economic value contributed by a person to your eCommerce during the period of time in which they buy from you.
That is to say, this metric tells you the average benefit a client leaves you (deducting the investment needed to attract and keep them or even get them back).
The more time a client spends being loyal to your business, the more profitable they will be and the higher their CLV.
A buying process that takes too long or has hidden costs normally turns into an abandoned cart or, in other words, in a non-completed sale.
Even though the checkout is becoming easier and easier, there will always be someone who will not complete the purchase. We can’t avoid it, but we should know the percentage. An abandoned cart rate that is too high may mean that the buying process is too difficult or that there are distracting elements in the way.
In addition to detecting this kind of problem, it allows us to implement remarketing actions. This is about sending or showing the clients a new offer to incentivize them to complete the purchase. It is sometimes more profitable to invest in remarketing than in getting new clients.
One of the most important metrics for an eCommerce.
Return On Investment tells you what benefit you have obtained thanks to a specific marketing action at a given point in time.
Ideally, when calculating this, you should also consider the Customer Lifetime Value, in order to weigh up the profitability of your marketing strategies over a period of time. This is explained in depth in this article.
Although all the metrics that we have seen are very important, you will have to value some of them more than others depending on your eCommerce’s stage.
A newborn shop is unknown. There are no sales without traffic, therefore it is time to grow and gain visibility. Growing strategies will mean social networks, content marketing, and so on. Therefore, these are the metrics that you should take into account:
Don’t forget that most of them are vanity metrics. We have to work on them at the beginning, but we shouldn’t forget the actionable ones.
Once we have generated some good traffic, we have some sales, and we are tracking and analyzing the basic metrics, it’s time to add some new ones that will allow us to grow faster:
As always, by using Analytics we will monitor all these metrics with the different traffic sources, devices, or even browsers. This way we will be able to get all the information hidden behind the data.
Once our shop is already up and running and the sales funnel is working, we should focus on optimization. These are the metrics for this stage:
Google Analytics lets you analyze and combine hundreds of metrics, but don’t forget that you should first define which ones are relevant for your business. If you don’t, you will be wasting your time.
Last, but not least, we are going to take another step forward when analyzing an eCommerce by analyzing cohorts. A cohort is a group of clients that have some characteristic in common. For example, those who bought the same day, during a sale, on Black Friday…
The cohort analysis is about carrying out a follow-up of that group of clients during a period of time:
Although this is just in the Beta phase, Analytics allows you to analyze cohorts by date of acquisition. It is really useful to evaluate the offer you gave them.
Imagine that you offered a 40% discount on Black Friday, selling almost without a profit. The cohort analysis will let you know if the sales on that day brought new sales during the following year. If the income obtained through those new clients is bigger than what you lost that Black Friday, it was worth it.
We have already seen Google Analytics offers many options.
The issue here is, Analytics doesn’t work for everyone.
Because of it, if you want a global vision of what is going on in your eCommerce web, here are some other web analytics tools you can use.
Google Search Console (another free tool by Google) tells you:
Here you can find a complete tutorial for this tool.
Thanks to a heat map, you can learn which elements in the page the user interacts with. That means:
This tool is very useful to check whether your web’s navigability is adequate.
A good internal search engine not only helps clients find the product they want, it also gives you useful statistics. For example:
But watch out; there is a catch.
Only advanced or “smart” search engines, like Doofinder, can give you this kind of statistics.
By having these statistics along with other functions, such as customized search results according to the users’ preferences, your sales will rise (10% to 20% higher for Doofinder’s clients).
Check it out yourself.
Install Doofinder to your web for 30 days free of charge.
Having an online business and not measuring it is like going through the desert without a compass. You have no goal, no guide.
In order to know if your strategy is a good one, you should measure the results so you can make up for the possible mistakes. If you don’t do that, you are spending money without knowing if you are making any.