Creating a product that solves customers’ problems is not just a matter of intuition, expertise, or brainstorming. Often, marketers get so overly confident in their knowledge of the market. A marketer may believe that there’s always the option to look at the state of things. Instead of imagining what the options might be, sales and marketing need to be analyzing and leveraging the data. Here is leveraging big data that data websites should track.
Thanks to Big Data and the abundance of analytical tools, you don’t have to rely on your insight. You can gather information about your website visitors and draw powerful conclusions from it. These are findings that may make or break your success as an entrepreneur.
Any analysis requires a set of data. Here is what data you need to gather to have the full picture laid out before you.
The basic ecommerce metrics.
Even though you plan to shape your vision of the business with advanced analytics, you need to measure the basics first. These metrics alone can become your most potent tool, even without going as sophisticated as using AI in your marketing campaign. Here’s what every online business should track.
Number of orders.
The number of orders is the fundamental statistic you can gather. Most customer management systems show this number. It’s not a complex set of data, but it will serve as a basis for many other stats. Combine it with the website visits, and you have a conversion rate. Divide the gross revenue by this number, and you have the average order number.
You can use this dataset alone, too. Take a look at how the number of orders fluctuated throughout the year. From this finding, you can predict how many items do you have to stock for the season.
Cost Per Click.
CPC is crucial for any marketing campaign because it shows you the amount of money you spend on each ad click. It’s a bit more informative than calculating cost per impression or cost per acquisition. CPA is more related to your website’s effectiveness than to the ad campaign, and a massive number of impressions may lead to nothing. Both these stats matter in context and need CPC to be interpreted.
Measuring CPC helps you flesh out the next important metric.
Return on investment.
ROI is crucial for any decision you make as a business. Do you invest your marketing budget into paid advertising or a content marketing campaign? What keywords do you focus your campaign on? Do you work with an influencer or pay for Instagram ads? The answer is simple; look at ROI.
Even though email marketing is deemed to have the highest ROI, each business is unique and will show slightly different numbers. If your ROI on a particular marketing channel is far lower than expected, it’s a sign you’re doing something wrong.
Why do businesses spend so much on cross-channel advertising and making customers return? Because the overall sum a customer is going to spend on the website outweighs the cost of their acquisition.
Measuring LTV can be a tricky thing for a small company that has a limited dataset. For a perfect calculation, you need to know the number of years a customer would stay loyal to you. When all you have is an estimate, you can substitute this metric with customer value, which can be weekly, monthly, or annual, depending on the type of business you have.
Increasing LTV is one of the main ways of making more profit, and the metric helps you monitor your progress.
Average order value.
What’s the other way of making more money as an ecommerce store? Work towards increasing the average order value. Calculate this metric by dividing your profits by the number of orders, and keep a close eye on how your strategic decisions impact users’ shopping habits.
Conversion rate is another metric that is key for measuring your website’s success. It’s a percentage that represents how many people who enter the website go on to make a purchase.
According to MarketingSherpa research, most websites show a conversion rate that doesn’t exceed 5%. That means only five out of a hundred people who visit the site buy anything. Work on improving that number, and more money is a direct result.
While measuring it is a no-brainer, the response to a low conversion rate can be very different because of how deceptive the number can be. Does your main landing show a terrible conversion rate? Then you have to include more information and make CTA more attractive. Does your website as a whole have a low conversion rate? That can mean nothing if you have a blog that attracts many people who’re not interested in buying yet.
Shopping cart abandoned rate.
It’s a sad fact, but most shopping carts are abandoned. This metric on its own doesn’t tell you much about the reasons, but measuring it helps with attribution later on.
Email engagement rate.
Email marketing is an excellent tool in your arsenal. But you have to perfect it to make it thoroughly work for you. Measure metrics like the email opening rate and click-through rate to improve each stage of the customer journey on this marketing channel.
Customer Satisfaction Score.
CSAT is one of the most straightforward metrics to measure, yet one of the hardest ones to attribute. Estimating it can be as simple as including a pop-up with a 1 through 10 satisfaction scale right in the website builder
A low score is a sign that you need to improve something. But what exactly do you have to improve? That’s the question you can only answer with complex attribution models or extensive experimentation.
Net Promoter Score.
NPS is another stat that is super easy to measure. All you need is a 10-point system that reflects how likely is a person to recommend your business to friends and a place to show this score.
Since it requires user action, you have to be strategic with showing people the questionnaire. Consider sending the questionnaire in your company newsletter or showing a pop-up to users who’ve stuck around the website for a while.
The advanced ecommerce metrics.
You need the essential parameters to form an overall picture of how well your website is performing. How do you understand what’s wrong and improve? You measure these metrics.
Revenue by traffic source.
The Pareto principle applies to digital advertising, as well. Learn where the bulk of your income comes from — and you’ll know where to invest time and money. Often, it’s just a couple of marketing channels that generate the most revenue for the business.
Multi-channel attribution model.
Even though some marketing channels do not show that big of a revenue stream, they may be partly responsible for your success. Imagine this: a person has been reading your blog for six months before finally buying the product upon receiving a discount code in the newsletter. Usually, you’d say that it was email marketing that converted him.
But running a multi-channel attribution model will show you all the touchpoints a customer had with your company before caving in and making a purchase. Gather that data on all customers, and you’ll be able to form a realistic view of the customer journey.
There’s another bonus to measuring what makes a person more likely to convert. You’ll have the ability to supercharge your individual approach to customers by implementing a lead scoring system based on user actions. Basically, it’s reversed engineering of the multi-channel attribution. Award points to customers who perform the steps that are likely to lead to conversion, and your sales team will know who to target.
While we’re on the topic of customer actions on the website, here’s another metric you can leverage. Gather data on what products do people buy together, and it will become the basis for your upselling strategy.
Percentage of returning customers.
One of the most critical metrics you could measure is the percentage of customers who return to make another purchase. These returning customers make up the bulk of most businesses’ revenue, and making more people come back is the ultimate business strategy.
But the number itself doesn’t tell you much. Look for ways to attribute returning customers to product features, brand value, or marketing channels. Understanding the attributes of your returning customers will grow your revenue — perhaps even more than other strategies will.
Connect the dots.
There’s one thing that makes the advanced metrics stand out from the basic ones. They try to connect the dots. This is what Big Data is all about. Attribute successes and failures to specific decisions, split test everything to see what works best, look for correlations in data.
It’s the best part of advanced data analytics. You don’t need to guess anymore, you have the way of getting all the right answers, the scientific way.