As we are consistently delivering more and more ecommerce projects, in the process we are gathering a lot of knowledge of how our client counterparts are running their ecommerce business. It’s fascinating to be able to have access to a wide array of ecommerce businesses in different industry sectors and see how each of the businesses is run, what they see as important, what data they monitor regularly, what they report on and how they make commercial decisions.
It probably comes as no surprise that the most ‘switched on’ are our fashion e-tailers. Whereas companies from other sectors still rely heavily on their offline sales to generate the majority of revenue and their online sales account for maybe 10% of the total revenues – for e-tailers online sales are pretty much the only source of revenue.
Our online retailers are far ahead of the curve and rely on optimising their online presence, gathering and analysis of sales data and making sound decisions for survival. They had to get smarter about what they do online or be outsold by competitors… Other ecommerce companies, especially in non-fashion industries can therefore learn a lot from them. In the process of writing this blog I had a discussion with Guusje Wentrup who is the Ecommerce Manager of MiH our online retailer client producing “best jeans on the planet”. I’m providing Guusje’s opinions in quotes.
How do you check if you are on track?
What type of data/information do our ecommerce managers regularly check to see if they are on track? How do they assess if the company is doing well or not?
- Google Analytics stats. ‘Google Analytics is my best friend. I check in almost everyday to see the previous week performance, compared to the year before. I also constantly monitor the conversion and bounce rate comparisons and try to understand why changes may have happened’. You can employ a sophisticated data engine to do this work…but Google Analytics does this for free. GA is perfect for smaller ecommerce companies as it is both free and gives you quite a lot of insight about products purchased, the way that customers navigate through the site and programme and track actions that will increase sales. Key statistics to track here are the number of visits, revenue and conversions, bounce rates and exit pages, social media integration, and desktop/mobile ratio. More sophisticated areas are revenues per keyword, revenues per landing page, promotions and campaigns. All of this information can be interpreted and used to find reasons for customers abandoning their carts or leaving the site and can be used to ‘remove any obstacles’ in the sales process – improve the technical quality of the site, replace or edit pages that don’t work, improve stickiness and customer experience. This information can also be used to make sure that at any point in time the retailer has enough stock of the popular products that sell well.
- Email marketing stats. Many e-tailers engage in direct dialogue with past and prospective customers using newsletters, seasonal email promotions, seasonal greetings etc. Many of them automate the process by using a specialised email marketing company or product like Pure360, InfusionSoft, GetResponse or MailChimp. The most important statistics worth tracking are sign ups and opening rates and click throughs. This allows the ecommerce managers to assess the quality of the content that has been sent out and helps constant tweaking of the messages so that irrelevant messages are weeded out.
- Checking sales and refunds stats. Checking sales is self explanatory – it’s always good to look into the totals of the stock management and the sales system to know what types of products are selling, whether we are on target in terms of the sales forecast. But there is also another angle to this. With buying online goods a customer does not have the same experience as when buying these goods in a shop. It is not possible to test or try the product out before purchase. Some level of ‘trying out’ can be done e.g. for Cubitts we developed a system that lets you try on glasses, others use augmented reality. However, many of such solutions are still in ‘beta’ phase and can hardly be compared to the full offline shopping experience. This normally results in customers buying more that they need – e.g. a few different models, a few lengths, a few sizes – and returning the unwanted and unsuitable items. However, such refunds are normally tracked offline and not linked back to Google Analytics. Many ecommerce managers are not satisfied with the revenue numbers from Google Analytics – they want the REAL revenue – so the revenue minus the refund. This typically can either be done in the ERP system or in an Excel spreadsheet that compares the revenue numbers from Google Analytics and the stock management and sales system. This can also help with tweaking product descriptions – e.g. if one product is consistently being returned, perhaps something needs to be amended on it’s product description.
What else would you love to have access to?
What data/information they would like to have – but don’t have the answer to.
- Combining the Google Analytics data with product stock and cost price information. ‘It would be super helpful to have in one place what products are selling well and what margins we’re making. Understanding the most profitable products vs the bestseller where we are earning the most on‘. Normally such analysis needs to be done as a regular exercise as it compares ‘anonymous’ Google Analytics data with live transactional data in the ERP systems. Such analysis is easiest done if you are working on an extract of data from both GA and ERP. However, this may result in your analyses being stored a multitude of different analytical tools and spreadsheets. If you want to get an updated version – you need to run the extracts again and often do the analysis again as well. Some ecommerce systems have attempted solving this conundrum e.g. Magento ecommerce offers a reporting suite – however, the quality and ease of use of such reports leaves a lot to be desired. On the other hand, fully customised pieces of software written specifically to satisfy this need may be very costly to write.
- ROIs on campaign, on customer, lifetime value of a customer. Measuring the effectiveness of marketing campaigns can be extremely difficult. Many ecommerce retailers would love to track the cost of certain promotions when setting up campaigns and it’s not always possible. Similarly, it would be very valuable to the ecommerce retailers to be able to identify and track cost of advertising and converting each customer, project how much he will buy in his lifetime and assess the ROI on such a customer. Then more effort can be spent on advertising to customer types that generate the best lifetime value.
- Understanding the relationship between search engine positions for certain keywords and sales that relate directly to these keywords. If you knew that the difference between position 1 and 10 in Google for a certain keyword gives you £xxx difference in sales for a particular product then it makes it possible to assess ROI of investing heavily in advertising and optimising for a particular keyword – e.g. particular campaigns or advertising methods. This is easily done for PPC (Pay Per Click) campaigns but it is not currently possible to unpick what exactly impacted the current position in the search engines – so it makes it difficult to calculate ROI of any particular organic activities or campaigns promoting certain keywords.
It looks like there are a lot of tools available to ecommerce retailers that can help them with evaluating the health of their ecommerce business. Some are also relatively easy to introduce. It also seems like some sophisticated e-tailers have much more specific and detailed reporting needs that are not currently served so there is a gap in the market to provide such in-depth and focused analytical tools. However, there is also a whole other world of ecommerce retailers that do not even realise the need for measuring their ecommerce business health and would not know even where to start. This is probably because there are hardly any barriers to entry to become an ecommerce marketeer. I see that in future more and more ecommerce retailers would become increasingly savvy about measuring , monitoring and improving their performance.
I see this article as an introduction to a wider conversation where many parties could participate and learn from each other in a non-competitive environment where everyone benefits. The articles lists only a few ideas for evaluating the health of your ecommerce business, however, there could be many more useful ones that could be suggested and shared in comments under this blog. If you have good ideas, please share below!
I also see this article as a prelude to LogicSpot Academy that we are thinking of launching. The purpose of the Academy would be to create a forum for people around topics interesting for ecommerce retailers like optimising the ecommerce analytics, optimising conversion, user generated content, creating site stickiness, increasing customer loyalty etc. and then for people to exchange ideas, tips, engage with experts, etc. LogicSpot could facilitate and contribute to the conversation by sharing what we have learned already from the e-tailers we have worked with.
If you would like to be kept in the loop as we are progressing with the LogicSpot Academy, please get in touch with Karolina at logicspot.com.