Key Metrics That Can Revolutionize Your Holiday Profits
ECommerce metrics tell businesses a great deal about their performance and the effectiveness of their strategies. However, when it comes to the build-up to the holidays for eCommerce, often all of the focus is placed on the marketing, promotions, and social media posts that must accompany this important selling season. Many companies forget that tracking the success of these marketing tactics, and sales, requires some forethought and planning in-and-of-itself.
The technology, add-ons, and analytics strategy must be set up before the big selling season starts, and it makes sense to change the frequency or focus of some eCommerce metrics to capture the important details of the holiday season. Therefore, when creating and implementing your holiday marketing and fulfillment strategies, don’t forget to set up tracking for these five eCommerce metrics.
#1: Measuring Order Amount and Value Can Be Eye-Opening
The connection between average order value and a company’s overall revenue is strong. Therefore, order value is an eCommerce metric that provides consistent insight into the financial health of a company. When it comes to tracking specific eCommerce metrics during the holiday season, average order value is one of the most important. This metric also tells you about customer behaviors and how they might change during this special season.
What does the term “order value” mean, exactly? It is the average dollar value that customers spend when they make purchases from your website. The goal is to increase the average order value from your site because increased spending per sale requires fewer costs. Therefore, you can actually increase your margins and revenue without spending more.
During the holiday season, most eCommerce companies will see a drop in their average order value. Shoppers are looking for specific gifts from specific retailers, and tend to spread out their spending more than other times of the year. Trying to keep average order value, and related eCommerce metrics, more consistent during the holidays can be a challenge, but one worth studying in order to best capitalize on holiday sales.
#2: Find the Shoppers Who Abandon Their Cart
Early in the holiday shopping season, you want to start closely tracking your shopping cart abandonment rate. This eCommerce metric tells you the percentage of shoppers who visit your site, place items into a virtual cart, but never complete a purchase. Over the years, lowering this particular percentage has been a big focus for eCommerce companies across industries and product types.
If your shopping cart abandonment rate is unusually high, then it is important to investigate the specifics of what shoppers are leaving unpurchased. This includes looking at whether it is mobile or desktop shoppers who are not completing purchases, if there are certain demographics that don’t proceed to checkout, or if there are technical hindrances that keep customers from hitting “purchase.” As well, there is an opportunity to recapture some of these customers by reminding them via email or banner ads that something remains in their shopping cart from a prior visit.
#3: Learn From Where and Why Your Customers Come to Your Site
Tracking website traffic is really a two-part process, and the eCommerce metric you really want to know is how much revenue is derived from each traffic source. Here’s why:
Knowing where and how customers are finding your site is remarkably important because it allows you to focus on those sources. Thankfully, this information is easily tracked on eCommerce platforms. It is good to know if people are coming to your site from mobile sources, organic searches, direct visits, email referrals, etc. However, the raw numbers on incoming traffic don’t mean much unless you know whether that traffic source is actually making you money.
Therefore, the second step in tracking your various web traffic sources is knowing how often these sources convert. When you start tracking the eCommerce metrics that deal with conversion from web traffic, it becomes more clear which sales channels are worth investing in with your time and marketing.
During the holiday months focusing on sources of conversion can become even more important as your online store is guaranteed to be busier. This additional traffic might come from several different sources and marketing efforts, but if you want to which to focus on next year, follow the money.
#4: Track Your Margins With Platform Tools
Knowing how much you make in sales is good, but what’s better is knowing how much of that money your business actually keeps. Gross profit margin is the eCommerce metric that tells you the amount of money that is kept by the business. To determine gross profit margin, you first need to determine gross profit.
Gross profit is your revenue minus the costs of selling the product. Once you know gross profit, you divide that number by your revenue. The result is your gross profit margin. Your gross profit margin could reveal that a new product is not pulling its weight in terms of margin, the cost of selling and shipping a product is too high, or discounts aren’t working.
As you introduce holiday promotions, you want to know if the cost of selling products is paying off despite the additional promotions. You can look at this number twice a month to understand how costs, such as free products, marketing, or holiday specials, are affecting your overall margins.
#5: Take What You Learn With You Into the New Year
What you want to know about holiday shoppers doesn’t stop coming on December 25th. In fact, there is a slew of data that can be collected from December 26th onwards as shoppers spend gift cards, PayPal credit, and other forms of digital gift-giving. However, the eCommerce metric that matters most in the post-holiday season is refund and return rate.
Understanding refund and return rate comes down to a simple calculation that compares the number of returned items, both in the raw number of items returned and value, compared to the total amount of sales. Not only does measuring refund and return rate give you a better look at the effect on your bottom line, but a higher number could help highlight an issue with a certain product or process. With the right data collection, it is easy to track the percentage of refunds allocated to a specific item or traffic source.
Want Some Assistance Mastering Analytics?
Many of the tools and technologies required to easily track your eCommerce metrics are available through your eCommerce platform. However, many merchants are unfamiliar with the proper back-end development, add-ons, and techniques that are required to successfully capture and analyze the data. This is where 1Digital Agency steps in. Our eCommerce expertise extends to all aspects of web development, design, and strategy. Find out more about our capabilities here on our website.