Training: Analytics Optimization
Analytics Training for eCommerce Marketing Managers
Lesson One: The Big Six Metrics
Analytics packages like Google Analytics can be overwhelming. It feels like there is an infinite number of data points and reports to consider. All of this great, but in the world of eCommerce, the Big Six eCommerce Metrics sit above all other measures.
Revenue: Let’s be clear. There is one metric that stands above all others. Sales revenue is the driver of all businesses and the farther our metrics’ eye veers from this prize, the further away from success we’ll be.
Transactions: The number of orders is a close cousin to revenue in importance. In some ways it’s more important because this is the measure of customer engagement. These typically represent the people that are driving the business.
Traffic: The most common measures are Sessions or Visits is the number of potential customers walking through the door. This becomes the “opportunity” the site is capable of.
Conversion Rate: This is the portion of traffic that crosses over from prospect into a customer. This is the ultimate measure of the health of a product or category. It speaks to the efficiency of taking a visitor and turning them into a customer.
Average Order Size: Revenue divided by the total number of orders measures how much people spend. This is the average value of a customer that places an order.
Revenue Per Session: Finally, this is the metric that answers the question, what’s a web visitor worth? It also connects traffic directly to revenue and helps ultimately determine how much you can invest in bringing visitors to the site.
It’s Absolutely Relative
The optimization process involves comparing products, sub-categories, categories and departments to their cousins paying attention to what’s working best and what’s not working. This approach helps establish site benchmarks, evaluate different strategies and improve your ability to use your data to find the most profitable path.
Absolute metrics by themselves are not as interesting as their change over time and the relative metrics are specifically designed to compare the categories and products even when they generate very different absolute numbers.
Lesson One Exercise
Take your best performing product category and compare it to your worst performing product category. Rank all your categories for each of the Big Six eCommerce Metrics to isolate the best and the worst category for each analytic. Ask yourself why did this category win while this one lost? Develop a list of hypotheses about your site’s “success drivers” and build a list of strategies to test.
Lesson Two: Test & Control
In order to optimize an eCommerce website and maximize the overall site revenue, it’s important to have a long list of ideas to test that you think will improve the overall ability to attract, engage and convert visitors into customers. This can be challenging, because it’s not just an exercise in what you could change but in what, if changed, is likely significantly “move the needle” on one of the Big Six eCommerce Metrics.
The following is not an exhaustive list of strategies but designed to get the creative juices flowing. These also happen to be strategies that have historically made the biggest impact on optimizing eCommerce sites.
Product Content: Many eCommerce sites rely on manufacturer-supplied content to build their product presentations and while manufacturers know their products really well, too often this is the same content that is used on many sites and thus doesn’t help differentiate your site. Consider testing adding content depth (word count) and increasing the breadth of the product or category presentation.
Page Optimization: Product presentations are a competitive endeavor. Whether you are optimizing for paid or organic search, aiming your product at specific buyers through keyword research is a strategy that drives better success and lower costs.
Price Testing: Price is probably the single most important factor in a purchase decision and this should be at the top of everyone’s list of things to test.
Reviews: Test review mining and review summaries. Review hunting is the process of asking happy customers to write reviews, review mining is the process of extracting the good reviews and make them easier to find in a summary of the reviews.
Promotional: Creating a sense of urgency is a great way to lift conversion rates. Things like highlighting limited stock, offering limited free delivery and limited time discounts are great techniques to test.
Now it’s time to expand this list. There is no better way to get ideas than by comparing good products to bad products and good categories to bad categories. Hopefully the reasons are obvious just by looking at the product presentation. How about comparing your presentation to a competitors’ for both the good and the bad. Can you see the strategies that seem to work? Can you see the mistakes that have been made? The goal is generate a list of guesses to these questions that you can then proceed to test.
Lesson Three Exercise
Conduct a competitive analysis. Enter a sub-category level term possibly putting the word “buy” in front of the category name and enter it into Google. Pay attention to what comes up on top both on the organic and the paid side. Then go evaluate these competitors at both site level but then get into the category and the product level and directly compare your presentations to these “winners.” Identify three strategies your competitors do better than you do and three strategies that you do better than your competitors.
Lesson Four: Identifying competitive threats
Here we’ll talk about seeing your competitors through your own site’s analytics. I know what you are thinking: you can’t measure your competitors with your own analytics. Technically, I guess that’s true but analytics data can act as a competitive tripwire that senses your competitors presence. The data can help you focus your actions on the biggest and most attainable competitive opportunities.
Let’s take an example. If you have a product page that is consistently driving 100 organic visits a day and all of a sudden that drops mysteriously to 10 a day, you might ask yourself what caused that change. It’s easy enough to chalk it up to bad luck or some change in Google’s algorithm, the truth is that in all likelihood it was the result of a competitive victory.
Change in Organic Traffic
While search results can change day-to-day and even hour-to-hour, by closely watching things like organic traffic, patterns start to emerge. When those patterns are disrupted the most likely cause is a competitor. In the example above changes in search traffic should be treated as a competitive threat. Few searchers make it beyond the first page of a search and the higher up on the page the more sales opportunities you will get.
There is only one way to grow organic traffic and that is to displace someone else and there is no better investment than trying to win back a page just lost by giving the competitor a dose of their own strategy. Watching organic traffic at the page level can identify opportunities faster than a SERP rank tracking service.
Change in Conversion Rate
There are many things that can influence a change in conversion rate. A very low conversion rate is usually a problem because people aren’t buying what you are offering often enough, but a very high conversion rate can be an indication that you either have no competition or that you aren’t drawing enough traffic to your site. Understanding your conversion rate averages and watching for significant changes in these averages is a great way of spotting competitive threats.
Monitoring conversion rate by category is an important way to track the viability of your eCommerce product offering and when you see sudden changes in conversion rate, it should similarly trigger a competitive investigation.
Take an example where the conversion rate for a product shoots up. The site may decide to celebrate it’s new found success, but they might be smart to determine why the conversion rate is higher. In most cases, dramatic changes in conversion rate are the result of either an interruption in the supply chain or a change in the pricing competition. In the situation where conversion rates rise dramatically, you probably have a better price or your competitors are having stock issues. Consider raising your price on conversion rate strength.
Similarly when the conversion rate falls, that’s typically an indication that someone else out there has a better overall offering and you might need to drop your price to address the competitive threat. Again, changes in conversion rate don’t necessarily mean that you are under competitive attack, but this is a good early warning sign that buyers are changing their buying behavior.
Lesson Four Exercise
Measure the conversion rate by category this year and compare that number to the same conversion rate last year. Select the products that have increased the most and decreased the most. Determine the cause of these changes. How likely was it related to supply? How likely was it related to competitive price? What would happen if you adjusted price based on the conversion rate?
Lesson Five: The Big Six eCommerce Metric Showdown
In this final analytics lesson let’s go back to lesson one and look at how to incorporate all your Big Six eCommerce Metrics at once. Using the Big Six eCommerce Metrics is not just about understanding six numbers. You’ll want to understand how these numbers vary by acquisition channel and how they change over time. These six numbers ultimately multiply into a detailed unique “thumbprint” for a given product or category. But what to do with this information?
Change: Change is a powerful metric and any metric that changes over time is indicating a success or failure. You’ll want to watch your numbers over time to understand how much your numbers change and essentially what’s normal and what’s not normal. Setting alerts for significant changes is an important way to track change over time.
AOV: While all of the Big Six eCommerce Metrics are important to managing a business, Average Order Value may be the least understood. Anyone lucky enough to have a high AOV likely finds it just a little easier to drive eCommerce success, but AOV is typically not a metric that is easily optimized. Unlike conversion rate or any of the absolute metrics, it’s difficult for eCommerce marketers to influence the AOV. There is an expression that goes something like “You can bring the horse to water but you can’t make her drink” and similarly it’s very hard to influence how much a customer purchases.
Conversion Rate: While it’s unwise to think of any one of the Big Six eCommerce Metric as standing above all the others, Conversion Rate may well be the single most telling metric. While some marketers are happy to just drive traffic growth to their sites, in the world of eCommerce it’s all about turning those visitors into customers. Conversion rate expresses the overall health of a product or a category in its ability to influence a sale.
Organic vs. Paid: Comparing acquisition channels and using one as a benchmark for the other is also a good way to optimize. Identifying the most successful paid products and specifically focusing on winning more organic traffic for these products should drive down the cost per click, improve the conversion rate and improve the overall profitability of the product.
Optimizing an eCommerce site can be done in an infinite number of ways, but by identifying how to use of the Big Six eCommerce Metrics marketing managers can develop long-tail strategies and build marketing processes that are capable of optimizing and managing tens of thousands of products and hundreds of categories simultaneously. It’s impossible to track every metric and the long-tail nature of eCommerce requires that optimization employ business processes. Using tools like eZanalytics.app should help build the processes to access, track and get alerted to key changes in analytics.