Why online retailors need an advanced analytics and monitoring solution
It is no secret that in 2023, consumer expectations for brands are on the rise. Businesses worldwide are actively seeking ways to deliver personalized and immersive experiences that exceed customer expectations. As the number of online shoppers continues to grow, the e-commerce industry thrives, with eCommerce experts predicting a 50% increase by 2025. This surge brings abundant opportunities for sellers globally but also intensifies competition for customers.
Now that a lot of businesses are going online and everything can be bought and sold on the Internet, e-commerce has leaped to a completely new level, winning the competition over traditional brick-and-mortar stores. In such competitive conditions, e-commerce analytics is an absolute necessity for e-businesses to stay afloat.
E-commerce analytics plays a vital role in a wide range of tasks, including monitoring customer behavior data, optimizing conversion strategies, and evaluating product performance. The absence of accurate and dependable data can lead to customer and revenue losses as companies miss out on crucial business metrics.
Through marketing data analysis, online store owners gain valuable insights into their actual business performance, empowering them to make well-informed decisions. In this article, we will delve into the primary types of e-commerce analytics, discuss essential business performance metrics for e-commerce operations, mistakes made by businesses while analyzing data, and showcase the ultimate e-commerce analytics tool you need. Stay tuned for a comprehensive understanding of how to leverage analytics effectively!
What is E-commerce Analytics?
E-commerce analytics encompasses the process of discovering, analyzing, and harnessing extensive data to measure consumer behavior, track performance, identify trends, and demonstrate the return on investment for campaigns. Brands and marketers rely on e-commerce analytics to make data-driven decisions that enhance business performance and drive sales. It entails a thorough examination of diverse datasets, including marketing data, traffic sources, audience behavior, and customer demographics.
By using various analytics tools such as web:eyez session recordings, lost revenue dashboard, real-time alerts, and more, online store owners can effectively collect and analyze data, leading to improved performance and increased sales.
Different Types of E-commerce Analytics
The first and foremost step is to delve into audience data analytics, as it provides invaluable insights about your target demographic. This includes detailed information about their gender, age, income, occupation, geographical location, and preferred language.
Furthermore, audience data should enlighten you about the devices your customers use. Are they predominantly accessing your store through mobile phones or desktop computers? If it’s the former, do they favor Android or Apple devices? This knowledge provides valuable insights into how customers interact with your online store, allowing you to tailor your efforts accordingly.
Audience data empowers e-commerce owners to optimize shipping options and tailor advertisements based on their audience’s locations. Additionally, it enables you to reassess the topics you cover and how your marketing content is displayed on different devices. This is where technology usage and session data of your audience come into play, guiding you in refining your marketing strategies and optimizing content presentation.
Customer acquisition data provides valuable insights into your customers’ journey, encompassing their path to discovering your business and the factors that motivated them to visit your website. This data holds immense value as it provides insights into how your visitors discovered your online presence and ended up on your website.
By utilizing acquisition data, you can gain a deeper understanding of the online marketing channels that drive the most traffic to your website.
This data also allows you to assess the effectiveness of your online marketing channels. You can determine if social media posts are the primary source of visitors, measure the website traffic generated by email campaigns, evaluate the conversion rates of your blog posts, and gauge the impact of paid ads on your audience.You can make informed decisions about which marketing channels are the most profitable for your business. This enables you to allocate your resources strategically and focus your efforts on channels that yield the best results.
Understanding the behavior of your audience once they land on your website offers valuable insights that can drive improvements in your online store and enhance user experiences. This knowledge enables you to better cater to the diverse ways people interact with your business and make informed decisions to optimize their overall satisfaction. By examining their behavior, you can gain insights into various aspects:
- Identify which products customers are most inclined to purchase.
- Analyze the bounce rate to understand the percentage of visitors leaving your website without further exploration.
- Determine the initial page that attracts the highest clicks.
- Evaluate the effectiveness of your marketing content by examining viewer click-through rates.
- Identify products with high levels of interest but low conversion rates.
- Measure the average duration of time spent by visitors on your website.
Answering these questions helps you uncover user patterns and the typical journey users undertake when engaging with your online store.
Identifying issues such as low engagement or high bounce rates can prompt further investigation. For instance, slow page load times may contribute to visitors leaving the site quickly. Additionally, a quick exit from a page might indicate a mismatch between your business type and the keywords targeted in marketing campaigns. It could also indicate that the content you provide is confusing to users.
Leveraging behavior analytics empowers you to identify areas of improvement within your store, leading to increased engagement rates and higher conversion levels. By making data-driven enhancements, you can optimize user experiences and drive greater success for your online business.
Conversion analytics provides insights into the timing and process through which your audience transforms into paying customers. Understanding when and how online users transition into actual customers is vital for shaping your marketing strategy and driving growth.
Delving deeper into conversion analytics unveils a wealth of valuable information:
- The typical time it takes for a user to convert into a paying customer.
- The frequency at which customers tend to make conversions—whether it’s once a year or multiple times.
- The number of visits required for customers to make a purchase, and if repeat visits are common.
- The rate of cart abandonment indicates the number of customers who leave without completing a purchase.
- The frequency of repeat purchases by customers.
Gaining insights into these specifics empowers you to tailor your marketing messaging effectively, engaging with users and potential customers in ways that resonate with their behavior.
Additionally, understanding factors such as the average revenue per transaction and the average number of items customers purchase in one transaction is crucial. This data informs the strategic planning of discounts and deals that will appeal most to your existing customer base.
5. Paid Campaigns
Analyzing paid marketing analytics provides insights into the ROI generated by your paid marketing activities. It allows you to quantify the revenue generated specifically from your paid ads and evaluate their effectiveness.
Questions to consider include:
- How much revenue have your social media advertisements generated?
- Has the revenue generated exceeded the costs incurred for creating and promoting the ads?
- What is the revenue generated as a result of pay-per-click (PPC) ads?
- How effective are your email marketing campaigns in driving revenue?
By assessing your current paid marketing campaigns, you can avoid spending money on marketing efforts that do not contribute to your bottom line. This analysis enables you to make informed decisions, optimize your marketing budget, and focus on strategies that yield positive ROI for your business.
Most common mistakes in E-commerce analytics
- Quantity over quality –
While high-volume website views may initially seem promising for increasing sales, it’s important to note that these statistics do not always yield the desired outcomes. Simply having a large number of visits does not guarantee a proportional increase in product or service sales.
Imagine Shop A receives 10,000 visitors to its website, but only 50 of them convert into paying customers, resulting in 50 product sales. On the other hand, Shop B receives only 2,000 visitors, but out of those, 100 visitors make purchases, leading to 100 product sales.
Despite Shop A having a higher number of overall visitors, Shop B outperforms it in terms of sales effectiveness. This demonstrates that the quantity of website visitors alone does not guarantee higher conversion rates or sales numbers. The focus should instead be on attracting the right audience and delivering a compelling user experience that encourages conversions.
The discrepancy arises from the focus on traffic quantity rather than its quality. For online shop owners, metrics such as the time users spend on the website and the number of pages visited during a single session should serve as crucial indicators of sales effectiveness. Additionally, it is important to analyze conversions generated from specific traffic sources.
By shifting attention toward these qualitative factors, businesses can gain deeper insights into their sales performance and make informed decisions to optimize their online strategies.
- Misinterpretation of Data
Merely collecting data is insufficient. Drawing incorrect conclusions from the data is a common mistake. It should not be assumed that the time spent on an online shop’s website directly correlates with the engagement of a potential customer. Even if a visitor spends several minutes on the site, it does not guarantee that they have thoroughly browsed the products or read their descriptions. Many e-commerce analysis metrics provide average results that may not accurately reflect the actual situation in an online shop. Misinterpreting the data can also lead to a misconception of the underlying concepts represented by various indicators. Therefore, it is important to familiarize oneself with terms like session, page view, and entry rate when conducting data analysis.
- Missing Context
When examining indicators like session numbers or shopping cart abandonment rates, it is important to assess them in the context of their surrounding conditions. Simply relying on these metrics without understanding the external factors at play can lead to misguided conclusions. For instance, a sudden surge in website traffic may not necessarily be the result of marketing efforts, but rather due to mentions of a popular thematic group or the endorsement of a renowned influencer.
Attempting to establish direct correlations between certain indicators may not always yield meaningful insights. While some values may be interconnected, others may not exhibit any discernible relationship. Rather than investing time in deep analysis and drawing erroneous conclusions, it is more effective to adopt a holistic approach to data interpretation. By considering the broader context and examining the data comprehensively, one can gain a more accurate understanding of the underlying trends and patterns.
- The Neglected Importance of Competitive Analysis
Understanding your competitors, their strategies, strengths, and weaknesses can provide valuable insights and opportunities for your business growth. Failing to prioritize competitive analysis may result in missed chances, ineffective decision-making, and being left behind in the market. Stay ahead by consistently evaluating and learning from your competitors to drive your business toward success.
Some Crucial Ecommerce Metrics You Should Be Tracking
Average Order Value (AOV) :
Average Order Value (AOV) quantifies the average amount of money that customers typically spend on an individual order within your business. It serves as a valuable metric for understanding the average transaction value and can provide insights into customer purchasing habits. By calculating AOV, you can gain a clear understanding of the typical spending level per order, allowing you to optimize pricing, promotional strategies, and upselling opportunities. A higher AOV indicates that customers are more likely to make larger purchases, while a lower AOV may indicate potential areas for improvement. Monitoring and analyzing AOV empowers businesses to make data-driven decisions aimed at increasing revenue and enhancing the overall profitability of their operations.
Customer Lifetime Value (CLV)
As your Customer Lifetime Value (CLV) increases, your reliance on acquiring new customers through costly means decreases. Building enduring relationships with customers is key to the growth of your e-commerce business, allowing you to avoid unnecessary expenditure on customer acquisition.
It represents the projected revenue that a customer is expected to generate over their lifetime as a patron of your products or services. CLV takes into account not only the initial purchase but also factors in recurring purchases, cross-selling, upselling, and customer retention.
By calculating CLV, businesses gain insights into the long-term financial impact of acquiring and retaining customers. It helps in determining the optimal allocation of resources for customer acquisition and retention strategies, as well as identifying high-value customer segments. A higher CLV indicates that customers contribute more revenue over time, making them highly valuable to your business. On the other hand, a lower CLV may suggest the need to focus on increasing customer loyalty and maximizing their lifetime value.
Customer Retention Rate (CRR)
When you observe that customer attrition is occurring at a similar pace to customer acquisition, it indicates a significant issue with your products or customer relationship strategy. Retaining satisfied customers is not only cost-effective but also holds greater importance compared to acquiring new ones. The Customer Retention Rate (CRR) metric specifically measures your proficiency in retaining customers after their initial acquisition.
A high CRR is indicative of a strong customer base that consistently chooses to stay engaged with your brand, resulting in repeat purchases and long-term relationships. By retaining existing customers, you can reduce the need for continuous acquisition efforts and maximize the lifetime value of each customer.
Monitoring and improving your CRR allows you to identify areas where customer satisfaction may be lacking or where your retention strategies can be enhanced. By addressing these areas, you can proactively work towards improving customer experiences, increasing loyalty, and reducing customer churn.
Customer Acquisition Cost (CAC)
Customer Acquisition Cost (CAC) refers to the total amount of money a business spends on acquiring a new customer. It includes all the marketing and sales expenses incurred during the customer acquisition process. Calculating CAC helps businesses understand the financial investment required to bring in new customers.
The Customer Acquisition Cost (CAC) is determined by dividing the cumulative sales and marketing expenses incurred during a specific timeframe by the number of new customers acquired within that same period. It encompasses all relevant costs associated with sales and marketing activities. From advertising expenditures to promotional campaigns, every cost incurred in acquiring new customers is taken into account when calculating CAC. By considering all these costs comprehensively, businesses can gain a more accurate understanding of the investment required to attract and convert new customers.
Shopping Cart Abandonment Rate
It can be disheartening to witness potential buyers loading items into their shopping carts, only to abandon them without completing the purchase. Several factors can contribute to this phenomenon, with some of the most common reasons include:
- Unexpected additional fees or exorbitant shipping costs
- Absence of a guest checkout option
- Lengthy and cumbersome checkout process spanning multiple pages
- Concerns about payment security
- Overall suboptimal user experience
High cart abandonment rates often indicate underlying issues in the checkout process. Monitoring this metric allows you to identify potential problems and optimize the experience for customers.
To calculate shopping cart abandonment, divide the number of completed cart checkouts during a specific period by the total number of carts loaded within the same period, and then multiply the result by 100. This calculation provides valuable insights into the rate at which customers are abandoning their shopping carts, enabling you to take targeted measures to address the issue and improve conversion rates.
Return On Ad Spend (ROAS)
Without a clear understanding of your expenses concerning driving new revenue, it’s easy to fall into the trap of spending more than what you’re earning, leading to unfavorable outcomes.
To keep tabs on this aspect, you can employ the metric known as Return on Advertising Spend (ROAS), which is calculated by dividing the Revenue From Advertising by the Cost of Advertising.
For instance, imagine you invest $5,000 in a social media advertising campaign and find that it generates $25,000 in revenue. Applying the formula, you get $25,000/$5,000 = 5. This means that for every dollar you spend on advertising, you’re generating $5.00 in revenue.
Regularly monitoring your ROAS empowers you to assess the effectiveness of your advertising efforts and make informed projections about the revenue potential of future advertising endeavors.
Channel Mix Metrics
To gauge the effectiveness of your marketing channels, it is essential to monitor metrics such as conversion rate, abandonment, and average order value (AOV) for each channel individually.
By identifying the sources of valuable traffic, you can delve deeper into the performance of each channel and uncover the underlying factors driving the numbers.
For instance, analyzing conversion rates specific to each channel provides insights into the success of your marketing efforts and whether the shopping experience aligns with the promises made during the initial brand interaction. This information helps you assess the efficacy of your channel strategies and make necessary adjustments to optimize customer journeys.
Net Promoter Score (NPS)
Net Promoter Score (NPS) is a metric used to measure customer loyalty and satisfaction with a brand or company. It provides insights into how likely customers are to recommend a product or service to others, serving as an indicator of overall customer experience and brand advocacy.
NPS is typically determined through a survey that asks customers to rate their likelihood of recommending the brand on a scale of 0 to 10. Based on their responses, customers are categorized into three groups: Promoters (score 9-10), Passives (score 7-8), and Detractors (score 0-6).
The NPS is calculated by subtracting the percentage of Detractors from the percentage of Promoters. The resulting score can range from -100 to +100, with higher scores indicating a higher likelihood of customer recommendation.
By regularly measuring NPS, businesses can assess their customer satisfaction levels, identify areas for improvement, and track changes in customer sentiment over time. It serves as a valuable tool for evaluating the success of customer experience initiatives and guiding strategies to enhance customer loyalty and advocacy.
Web:eyez Advanced Analytics tool for E-commerce –
Webeyez provides modern day e-Commerce monitoring and analytics solutions that empowers businesses to optimize their revenue potential. With a comprehensive suite of features and a strong focus on resolving site issues, increasing conversions, and maximizing sales, Webeyez offers businesses the tools you need to take control of your online performance. The Session Recordings feature provides a granular view of the customer journey, enabling businesses to understand how users navigate and resolve site issues with lightning efficiency. The Lost Revenue Dashboard quantifies the financial impact of site errors, allowing businesses to prioritize and resolve them effectively. Real-time alerts ensure proactive management of high-priority issues, enabling businesses to optimize conversions on the spot. Tracking and analyzing goals in real-time help businesses stay on top of their objectives and make data-driven decisions.
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