A doctor who diagnoses a course of treatment continues to run tests on the patient to confirm that it’s providing effective — and if it isn’t getting results, they pivot to another treatment. The alternative, which is delivering the treatment and simply trusting to the assumption that it will work perfectly, is obviously a bad idea. It could prove ineffective, or even make the patient worse.
Similarly, if you’re going to run an online store (and there is a lot of value in doing just that, provided you do it well), you need to track the performance carefully and be ready to adjust your tactics for everything from design to marketing. But there are so many performance elements you could potentially follow closely — how do you focus your attention?
It’s simple: you figure out which metrics matter and which don’t. Simple, but not easy, because many metrics are situational: delve into the details of successful marketing campaigns and you’ll see that the metrics targeted and cited vary dramatically (though it could be said that the marketers responsible have selected the stats that sound most impressive).
On the whole, though, there are certain metrics that are almost always important — and in this post, we’re going to look at those that really matter for eCommerce in 2020. Let’s get started:
Simply a matter of the number of visits to your website versus the number of orders made, conversion rate remains the core metric to monitor. It’s a mark of the efficiency of your sales process. A slight uptick in conversion rate can hugely increase your profitability, while a comparable dip can lead your business to struggle.
Some people monitor only the bounce rate (the rate at which people leave from the pages on which they landed without viewing any others), but it’s not always that useful in itself. Instead, you should also look at your exit pages overall: the last pages your users visit before going elsewhere. If you can find a page that seems to be pushing people away, you can improve it to great effect.
If your website doesn’t load within a second, many prospective visitors will give up on it and decide to go elsewhere. And it isn’t good enough to load swiftly on broadband-equipped desktop computers: it also needs to perform excellently on mobile devices using shaky mobile data connections, which calls for extensive real-world testing in unfavorable scenarios (for instance, does your site load quickly in an area with a weak mobile signal?).
Customer lifetime value
The ceaseless churn of earning new customers and waiting for old ones to leave isn’t a good business foundation, even for e-commerce merchants with vast potential audiences. It’s far better to focus on retaining customers for as long as possible: loyal customers spend more and are considerably more receptive and forgiving. Your customer lifetime value predicts how much your average customer will be worth, and bringing it up will massively help your stability.
Email is still one of the best channels for marketing — indeed, the ROI for a strong email campaign is always formidable — plus there is a lot of analytical value in assembling a large email database. If you can convince people to subscribe to your newsletter (for discounts, updates, etc.) then it will significantly bolster your promotional options.
Cart abandonment rate
One of the most frustrating occurrences in online retail is getting a shopper almost all of the way through your sales funnel. You get them to your website, convince them that a given product is right for them, and see them get close to conversion, only to leave your website at the last second. Every cart abandonment is a significant waste of effort and resources, throwing away all that led up to the cart selection. So bringing down your abandonment rate is vital.
Each of these metrics can tell you a lot about the performance of your online store, so instead of spending a lot of time trying to trawl through massive amounts of analytics data, focus on the things that matter the most. This will free up the time you need to actually work on improving them — and getting the results you need.
Written by Micro Startups:
Micro Startups is a business community that celebrates inspiring startups and small businesses of all shapes and sizes. Whether you’re a solopreneur or a hustling startup, Micro Startups has you covered. Find us on Twitter for the latest micro biz news and inspiring entrepreneurial stories @getmicrostarted.