Imagine you are selling books online: you wholeheartedly welcome every new subscriber, offer Black Friday discounts, and even host online reading events in the hope of higher customer engagement. Still, your sales have hardly increased in the past 6 months, and customers don’t rush into buying some of the gems of your book selections.
What might be the problem? The chances are you’re missing out on ecommerce analytics tools.
In their Advantage Survey, Deloitte Analytics discovered that:
By investing in ecommerce performance analytics, you might recognize loads of potential red flags for your business, missed clients, and decreasing sales.
So what is ecommerce web analytics, why do you need to track it, and which metrics bring the most benefits to your business – read in this article.
Kaleigh Moore at Supermetrics defines ecommerce analytics as:
the process of gathering data from all areas that have an impact on your online store and using this information to understand the trends and the shift in consumers’ behavior to make data-driven decisions that will drive more online sales.
Ecommerce analytics include metrics related to the full customer journey from familiarizing the buyer with your product to converting them into an advocate of your brand. Metrics allow you to collect data – both big and small – and analyze it in relation to the common shopping trends, your sales and product performance, and user behavior on your website and/or app.
From setting measurable goals to monitoring your sales performance, data drives every promotional and marketing decision in a successful online store. Here are a few reasons why ecommerce analytics will help you leverage your online business potential:
Ecommerce tracking tools scan the customers’ data and identify trends based on the most-searched and rising product lines. You’ll get access to the shopping trends both on a global scale across various vendors in your product category and within an individual account based on your customer’s previous purchases.
With a simple sneak peek into the customers’ behavior and into the product performance in your business category, you will understand what the shoppers are looking for and push relevant offers towards the customers.
Ecommerce businesses are often claimed to lack a personal touch with customers, but analytics tracking tools can easily address this issue.
Analytics reports provide some useful insights about where your shoppers come from, which items on your website are their favorites, how much they spend on average. This data will allow you to pamper your customers’ wants and personalize your offers.
Epsilon reports that 90% of customers are likely to shop three times more frequently if a brand offers a personalized experience. Such perspectives on customer conversion seem too promising to miss out on that Google Analytics Audience report.
Analyze whether your marketing campaigns are worth investing in and what revenue you get from your paid ads. With some best ecommerce tools, you’ll see which keywords in your ads convert into sales and how many new customers they bring into your e-store.
You may choose to pause a Facebook campaign if customer acquisition costs become too high, or invest more into your Google ads that drive more sales than usual. Whatever change your marketing campaign brings, you’ll see it displayed in your analytics report.
Tracking the location where your product is sold most and the time of the year when it is most popular will help you avoid unexpected stock-outs in your inventory.
A high cart abandonment rate in a certain location may also cause you to optimize logistics and prevent possible delays in product delivery. In the times when 98.1% of the US shoppers say that delivery impacts their brand loyalty, you might really want to see into those analytics reports to replenish your inventory at your buyers’ most popular location.
Ecommerce analytics is all about data and numbers. But how do you obtain them?
There are quite a few tracking metrics that, depending on your needs and objectives as an e-retailer, will give you valuable information on your brand success. Some of the most common classifications are:
In this article, we will discuss the latter category and explain the metrics falling under each focus area.
Financial metrics focus on the revenues your business earns from various channels and customers. Here is the list of some most important financial metrics.
MRR measures the total amount of predictable monthly revenue, thus, giving insights about your brand’s revenue growth or decline. It is calculated by summing up all recurring income for the month, including gains and losses but excluding one-time charges and/or taxes:
MRR = Σ Recurring Revenue
Or, if your ecommerce business is based on subscriptions, you should multiply the number of active accounts by the monthly billing amount:
MRR = Number of Customers × Average Billed Amount
MRR serves to track business performance, measure comparative progress (month-over-month) of a brand, and – most importantly – plan budget. If your MRR is lower than expected, your e-store may have lost a few customers and you risk running into financial trouble. A rising MRR means you might afford to spend more on your marketing campaigns or product development.
LTV measures the projected revenue that a customer will generate throughout the lifespan. The metric takes into account repeated transactions, average order value, and client abandonment rate. The easiest way to calculate LTV is by following the formula:
Lifetime Value = Average Value of Sale × Number of Transactions × Retention Time Period
LTV is extremely useful to assess your ecommerce business health. A growing LTV means that the company satisfies its customers; a declining LTV indicates a brand loses money out on each customer and needs to work more on customer retention.
CAC shows how much your company is spending to acquire a customer considering the cost of sales and marketing efforts. To calculate CAC, you should divide the total cost of sales and marketing by the number of customers acquired:
Try to keep your CAC as low as possible and compare it to your LTV values. Usually, the LTV:CAC ratio should be 3:1 (meaning a customer’s lifetime value should be three times higher than their acquisition cost). In case of rising CAC, you might want to optimize your sales and marketing efforts and invest less in customer acquisition strategies.
Marketing metrics measure the success of all your marketing activities, including social media campaigns, email marketing, and paid ads leading to your website. Here’s the list of metrics you should find useful:
This metric shows the number of users accessing the webpage during a certain period of time. It is calculated based on the user IPs and cookies accepted on a device, so even a returning client accessing your e-store from a different device will be counted as “new”.
A steady flow of new visitors helps you grow your customer base, whilst a high number of returning visitors is a sign of healthy retention rates.
As the name suggests, Average Session Duration indicates how much time a visitor spends on your website entirely. The values differ depending on the purpose of your website and on the marketing campaigns you’re running: multimedia content and improved UX design will hold your client longer in your e-store.
This metric shows the number of pages a user has visited in a single session on your website. A high page-per-view rate shows a user’s interest in your website content and positive customer engagement. A 2019 survey of Littledata found that the average pages per session were 3.0, so you may consider yourself lucky if your online store scores are higher than this metric.
Bounce rate indicates the percentage of people who land on the homepage and leave without continuing to browse the website. An increasing bounce rate has the contrary effect to that of the rising pages-per-visit rate: it means that the users have no good reason to stay on your website, so you may be losing your clients. So if you’re working in retail, you wouldn’t want to see it rising over 40%.
Sales metrics measure everything related to online sales and payments, from the number of products sold to the average amount of money spent by a customer. Some of the sales metrics include but are not limited to the following list.
AOV helps you understand your customer’s spending habits, identify shopping trends, and create personalized offers in your e-store. Just divide your revenues gained in a certain period of time by the number of orders placed during the same time period.
One way to boost your AOV is to introduce loyalty programs as well as improving prices, the quality of your products, and their design.
Cart abandonment rate shows the percentage of users who have added items to their cart but left without completing a purchase. The value is calculated by dividing the total number of orders by the total number of visitors who have added something to their online cart. To obtain the percentage, subtract the obtained value from one and multiply by 100:
If your cart abandonment rate exceeds 50-60%, you might want to simplify the ordering process, add some more payment methods, or improve on-site messaging to help the customers proceed to the checkout.
User happiness metrics measure customers’ satisfaction with your brand. It is worth mentioning one important metric in this category: Net Promoter Score.
NPS is relevant when a customer becomes your brand advocate. This metric shows how likely the customers are to spread the word about your e-commerce business and is obtained by surveying your clients. In-app messaging, customer feedback forms, and an after-purchase friendly pop-up saying “Rate Us!” are all the ways to calculate your NPS. The higher your customers’ rate, the more loyal they are to your brand.
Once you have decided on the metrics that are most important to your business, it’s time to choose the analytics tool that will put all the figures together. There’s a variety of online analytics tools – both paid and free – that will satisfy your ecommerce needs. Here’s a list of the most popular analytics tools to try for your ecommerce website.
User-friendly. Detailed. Free. That’s all you need to know about this world’s most-loved tracking tool.
Here’s what you can get with Google Analytics ecommerce tracking:
You may need to put some effort to set up a Google Analytics account (see how to add google analytics ecommerce tracking code here), but it is so worth it at the end of the day.
“Your business is based on real people. Your analytics tool should be too.” The essence of Kissmetrics lies in this single quote. Developers at Kissmetrics take pride in customer behavior tracking and an accurate LTV metric. Here are a few things you can do once you decide to subscribe to Kissmetrics services:
Access to various Kissmetrics reports largely depends on your subscription plan. The prices get quite expensive as the cheapest option starts at $299 monthly. You don’t have to rush into the unknown, though: with a free demo, you’ll get a chance to see Kissmetrics features in action and then make an informed decision.
What makes the marketers love Crazy Egg is its world-class visual analytics. It’s been around since 2006 and earned the trust of the international community with its quick set-up and easy-to-use interface to:
Crazy Egg pricing plan starts at $29 after a 30-day no risk-free trial, so there’s plenty of time for you to see if their UX website audit meets your expectations.
Founded in 2014, Hotjar is viewed by many as a younger sibling of Crazy Egg: both analytics tools boast of their heatmap reports and session recordings. Despite its shared functionality features, Hotjar still allows e-retailers to:
Hotjar offers flexible pricing both for price-sensitive and high-end clients. Basic subscription for personal use comes for free (limited reports collecting data from a max of 2,000 pageviews / day) or at $39 (10,000 pageviews / day) per month. Subscription rates for corporate use start at $99 per month.
This option works perfectly for those who have their online store built on Magento. Magento eCommerce offers a lot of extensions – both free and paid – to optimize your business, but its ecommerce tracking extension exceeds all expectations. You can now integrate a Google Analytics Enhanced Ecommerce tool to obtain personalized data and reports from your online store. Coming at a range of prices (from $39 to $100+), Magento 2 Google Tag Manager extension allows tracking button clicks, form filling, cart abandonment rate, and product promotion, among others.
Why should you pay extra for Magento extension if Google Tag Manager is free? Here’s what you can do once you sign up for a Magento 2 ecommerce tracking:
To install the Magento ecommerce tracking extension, you need to go through a three-stage process and configure your Magento 2 store according to the user guide. If it seems like a lot of hustle and bustle for you, trust this work to a certified Magento Solutions partner, like Elogic, and they will take care of ecommerce tracking extension for you.
When your online store is growing and you’re ready to invest in marketing, ecommerce analytics is the first thing you should consider. For some, tracking tools show nothing more than a bunch of figures, graphs, and charts. But for a successful ecommerce entrepreneur, metrics are a powerful source of information opening a world of opportunities for higher conversion rates, more customer satisfaction, and competitive advantage.
Get in touch with us if you’re looking for an ecommerce development partner to integrate analytics tools for your business.