Using Your eCommerce Analytics Successfully
With every new analytics program that appears, e-commerce marketers can quickly find themselves buried under data and statistics that really can’t help them develop a solid plan. I can’t count the number of times I’ve noticed an e-commerce company miss out on a fantastic opportunity to expand their business because they didn’t understand what they needed from their data gathering.
Too often, companies simply report the weekly numbers because it’s “what we’ve always done”; there’s no thought or understanding of how to turn that data into a goldmine of opportunities that could lead to some significant income growth – carting ratios, for example, are blandly recited with no potential impact analysis having been performed nor any examination of the root-cause of any changes.
You must, at all costs, avoid this danger. Metrics are about more than just seeing how you’re doing – smart metrics are about a deep understanding of the why of your company’s performance. All those numbers and ratios should be able to point you towards a plan that with greatly improve your overall performance. Look beyond that “aren’t we doing great” notion and start asking some tough questions about what your data is telling you:
Learn the Typical Ratios for Your Market
You may be feeling pretty good that your cart-to-visit ratio is 6%, but if that ratio is, on average, much higher for others in your industry, then you’re not capturing all the business you could be. This can also apply to checkout-abandonment ratios – if yours is 70% and the industry average is much lower, then you need to start asking why yours are so high. Remember, numbers are nice, but they can’t help you until you place them in the proper context.
Why are My Metrics Where They Are?
Once you understand that your metrics are higher or lower than the industry average, you need to ask “why” your numbers are better or worse than your competition – it may be a reflection of the lead-generation technique you used, the construction of your website, the types of offers you have, or some combination of these factors. Let’s say you notice that your checkout-abandonment rate is quite a bit higher than average – before you can resolve the problem, you’ll need to determine if it’s a slow server response time, high shipping rates, lack of payment options or some other issue that has led you to this point. It’s a lot like being a doctor – before you can develop a cure, you need to identify the problem.
Why is This Metric Changing So Dramatically Over Time?
Understanding any significant changes to a metric that occur over an extended period is one of the important elements in building a successful company. For some markets, if you see a dramatic increase in your orders-to-visits conversion rate, it may mean that there’s been a shift in your competitor’s pricing, and you may be losing out on an opportunity to bring in more money by charging too low a price. Or if you start to see a large decline in your cart-to-visit ratios, you might be experiencing an increase in unqualified traffic; this could be a real sign of trouble if the source for this traffic is a paid source.
How Can I Turn My Metric Research into a Sustainable, Profitable Plan?
The first step in creating profitable, system-wide improvements for your business is to understand the real reasons behind the changes in your metrics and each of the elements that can impact the data. Let’s take a look at the high checkout-abandonment rates again, and say that six possible causes have been identified. Beginning with the easiest and least costly problem to solve, you can work your way through the list to find the real problem.
One of the best features of e-commerce is that it’s very easy to measure successes and failures. But all that measuring and data gathering can’t help you if you don’t understand how to use it – if you don’t identify problems and opportunities, you’ll never be able to fully develop your company’s potential.