A guide to using data to improve your business’s eCommerce strategy.May 5, 2019 - 13 minutes read
Consumer Metrics & Insights You Should Track for Total eCommerce Success
Image credit: ’Man with Headphones Facing Computer Monitor’, Bruce Mars (source)
“Big data is at the foundation of all of the megatrends that are happening today, from social to mobile to the cloud to gaming.” – Chris Lynch
The evolution of eCommerce means that today’s consumers are more empowered than ever before. Nowadays, online shoppers can access information, connect with their peers, and make purchasing decisions seamlessly wherever they are in the world, at any time of day or night.
While this 24/7 access to eCommerce services offers a wealth of opportunities for budding brands to expand their reach and increase profitability, to compete on today’s digital battlefield, it’s vital to connect with your customers on a personal level.
If you want to reach out and offer your audience genuine value and deliver the kind of communications that will not only increase conversions but also encourage brand loyalty, you need to harness the power of big data.
By using the wealth of digital data available at your fingertips and utilizing it to make informed business decisions, you stand to deliver content that resonates with your prospects while developing strategies that will result in continued growth and evolution.
Here, we explore the power of big data in eCommerce and the essential consumer metrics you should track for maximum success in today’s competitive marketplace.
Let’s get started.
The importance of big data in eCommerce
Recent studies suggest that retailers who leverage the maximum potential of big data could boost their operating margins by up to 60%.
By drilling down into the consumer data that is most valuable to your business’s aims and goals, you’ll be able to make your business more cohesive, focused, intelligent, and sustainable. These are the key ingredients of eCommerce success.
Big data provides a comprehensive snapshot of your business’s various operations by using key performance indicators (KPIs) to measure (and improve) your processes, practices, and strategies in specific areas.
Big data-driven KPIs – or insights – empower business owners to identify trends, spot strengths or weaknesses, and ultimately implement initiatives that will help make your eCommerce empire bigger and better than ever before.
By drilling down into past, present, and predictive data, you can improve your digital marketing strategy, enhance your customer experience (CX) offerings, predict future trends, and improve your internal processes.
Experts predict that by 2022, the revenue generated from the big data analytics market will rise to $260 billion worldwide – a testament to the power of big data in the digital world.
Essential consumer metrics & insights you should track
“Data really powers everything that we do.” – Jeff Weiner
We’ve established the power of big data in the contemporary world of eCommerce. Now, we’re going to explore the consumer insights and metrics you should track to not only enhance but also preserve your success year after year.
Average order value
If you can increase the value of your average customers’ order, you stand to boost your bottom line in a big way.
The average order value (AOV) metric tracks the average amount spent in your primary currency every time a customer places an order through your website or mobile app. To calculate your AOV, you can divide your total revenue by the number of orders.
This particular consumer insight matters as by understanding what your average customer is willing to spend on your products, you’ll be able to optimize your pricing strategy and understand where you can improve your content marketing efforts to offer increased value to your prospects.
Ways you can boost your AOV include cross-selling or upselling your products, creating discounts or coupons, and offering your customers free shipping.
Customer retention rate
Eighty-six percent of consumers will pay more for a seamless customer experience. That’s a lot of potential conversions.
If you provide an exceptional level of consumer support, you will encourage brand loyalty and repeat business. As a result, you will see your customer retention soar.
Attracting new customers to your business is expensive, typically costing around five to 25 times more than it takes to retain an existing consumer. Moreover, research shows that the most successful eCommerce businesses enjoy more than 50% of their revenue from loyal repeat customers.
Your customer retention rate is a consumer-based performance metric that you need to track at all times.
Here’s how to work out this essential consumer metric:
- Customer Retention Rate = ((CE – CN) / CS)) x 100
- CE = Quantity of customers at end of period
- CN = Quantity of new customers acquired during period
- CS = Quantity of customers at start of period
To put this into a practical perspective, here’s an example:
If you kick the month off with 1,000 customers, and by the end of the month, 150 people have moved on, but you’ve managed to gain 200 fresh prospects, you now have 1050 customers. Here’s your retention rate as a percentage:
((1050–200)/100) X 100 = 85%
If your customer retention rate drops over time, you’ll be able to find the source of your issues (whether it’s your content and marketing communications, your website functionality, your service levels, etc.) and make changes in these vital areas. Once you’ve done so, you’re likely to see your retention rates rise again and make more profit.
Customer lifetime value
Your customer lifetime value (CLV) refers to the overall worth or value of your business to your consumers throughout the entire relationship with your brand.
As you now know, encouraging customer loyalty is a critical component of ongoing eCommerce success. The probability of selling your products to a new prospect is 5% to 20%, whereas the likelihood of selling to an existing customer is around the 60% to 70% mark.
Having a concise understanding of your CLV will help you plan your future marketing initiatives in an informed, targeted, results-driven way, improving your future customer interactions across all touchpoints – from website to mobile app and beyond.
To help you understand how to calculate your CLV, here’s a quick video tutorial for your viewing pleasure:
Contrary to popular belief, email is still one of the most effective eCommerce marketing channels.
As a matter of fact, 58% of millennials say that email is their preferred way to be contacted by a brand. Moreover, email marketing generates around £29 billion in retail sales every year.
By tracking, measuring, and monitoring your email opt-in rates over time, you’ll be able to identify trends while gaining a deeper insight into the deals, offers, campaigns, and content that resonates most with your audience. If you see a peak or a trough in your opt-in rates and can attribute these trends to particular campaigns, you’ll be able to evolve your email marketing initiatives over time, enjoying more profit as a result.
In addition to your opt-in rates, you should also explore these valuable email-based metrics to further boost your efforts:
- Open rate
- Click-through rate (CTR)
- Bounce rate
- Spam complaints
- Conversion rate
Landing page conversion rate
By gaining detailed insight into your web or landing page conversion rates and comparing these metrics to other pages on your eCommerce store, you’ll be able to drill down into potential weaknesses or leverage your existing strengths.
If you’re converting well in one area, you may be able to take a similar approach to other pages on your website or store, ultimately increasing your overall landing page conversion rates.
These consumer-driven metrics will complement the landing page conversion rate metric, helping you to gauge how user-friendly and engaging your offerings are in the eyes of your customers:
- Average session length
- Bounce rate
- Goal conversion rate (an insight designed to show you when a user has successfully completed a specific goal, like subscribing to a mailing list, sharing a piece of social media content, redeeming a discount code, etc.)
Net promoter score (NPS)
Your NPS is critical to your entire consumer-facing operation as this is how your service levels are perceived by the web-using general public. Fundamentally, your NPS determines how likely a customer is to recommend you to someone else.
Here’s how NPS works:
You ask your existing customers how likely they are to refer you to someone else on a scale of one to ten. These responses place your consumers into one of three categories:
- Promoters (9-10)
- Passives (7-8)
- Detractors (0-6)
By looking the percentage of respondents that dip below the ‘promoter’ category (9-10) and taking away that number from your ‘detractors’ (0-6), you’ll arrive at your overall NPS score.
Because today’s online shoppers value the opinions of their peers above all, this is a consumer insight that you must monitor regularly as it will empower you to make pivotal tweaks to your service, product offerings, and customer communications.
Resources like Trustfuel NPS and Wootric are excellent for squeezing the most value from your Net Promoter Scores, helping to boost your scores (and brand credibility) over time.
It’s clear that by harnessing the power of big data and drilling down into specific consumer metrics, you will be able to achieve maximum eCommerce success. While every business is unique, tracking these core metrics is essential to ensure the ongoing success of your empire. Measure these insights today, and you’ll reap endless rewards tomorrow.
If you’re looking to upgrade your eCommerce offerings and improve your online store while gaining access to a wealth of invaluable consumer data, explore our products. We may have the very solution you’re looking for.