An Overview of Ecommerce Analytics
Ecommerce analytics is a tool designed to help you gather and analyze large amounts of data to produce actionable insights. It provides a big picture of your store’s performance, identifying the growth drivers and areas of improvement.
The key growth drivers of ecommerce stores may be centered around four components of business: consumers, inventories, marketing, and products.
- Consumers: Building a deep understanding of changing customer behaviors
- Inventories: Monitoring inventories to reduce costs
- Marketing: Optimizing promotional campaigns to increase conversions
- Products: Developing products that meet customer expectations
If you can gain deeper insights into your products, marketing, inventory, and customers on a regular basis, you’ll be able to make more informed decisions that can help drive growth for your ecommerce store(s).
In this article, we provide our top 15 tips you can use to measure your online store’s performance and gain valuable insights into your products, marketing, inventory, and customers.
15 Tips for Measuring Your Store’s Performance
Ecommerce stores may need to follow specific procedures and techniques to measure their store’s performance accurately.
Here are the top 15 tips you may like to implement to measure your store’s performance:
- Choose the right ecommerce metrics to track.
- Ensure your analytics are set up correctly.
- Install Enhanced Ecommerce.
- Track the source of your conversions.
- Build an ecommerce dashboard for ecommerce reports.
- Monitor the conversion rate of your store.
- Gain valuable insights from demographics and interests reporting.
- Optimize default channel grouping.
- Create custom audience segments from customer data.
- Sync your customer segments to email.
- Monitor new sales compared to inventory levels.
- Track the ROI of channels in paid ad campaigns.
- Pay close attention to first-time buyers.
- Generate daily snapshots and scheduled reports.
- Track individual products and product categories over time.
Let’s take an in-depth look into these 15 tips below:
1. Choose the right ecommerce metrics to track.
A typical ecommerce store can track over 300 metrics. However, tracking all of them may lead to analysis paralysis. Therefore, ecommerce companies need to select the right ecommerce metrics to track depending on their specific business objectives and strategic initiatives.
For example, if an ecommerce store wants to expand the business into new locations, it may need to track metrics such as top-selling products, top-purchasing customer segments, products with high customer retention, value spenders, products with high average order value (AOV), and customer segments with high customer lifetime value (CLTV).
The performance reports generated on these metrics can help ecommerce stores pitch their top performing products to target customers in the new geographical area to start generating revenues from day one of the business expansion.
2. Ensure your analytics are set up correctly.
Data integrity is the biggest concern for ecommerce stores. Data integrity refers to the accuracy, completeness, and reliability of your data.
If you don’t set up your ecommerce analytics properly, you may not be able to gather the data you need. Even if you gather and analyze some ecommerce data, it may not be accurate and reliable. Many ecommerce companies run multiple analytical tools for different functions within the organization. However, if they don’t talk to one another, they may likely generate conflicting results.
Ensure that you set up your ecommerce analytics platform correctly. If you have multiple analytics platforms, you should ensure an immaculate integration between them.
3. Install Enhanced Ecommerce.
Enhanced ecommerce is a combination of metrics, KPIs, and dimensions that provide a big picture of how visitors are interacting with the products on your ecommerce website. Online stores can install enhanced ecommerce to gain insights into the shopping behaviors of visitors.
- Closing the loop between campaign and conversion
- Attribution of customers and conversions to its source
- Getting actionable insights into marketing channels
- Optimizing marketing efforts
4. Track the source of your conversions.
The ultimate goal of all ecommerce marketing strategies is to increase purchases. However, one thing marketing teams should not overlook is analytics around the source of conversions.
Aggregating individual metrics for your sources - like AOV, LTV, CAC, and more - can help you determine the best channels for different use cases. For example, if a Facebook ad tends to generate high LTV customers based on first purchase attribution, it might be good to leverage for new customers. However, you may realize that email marketing drives better second purchase ROI, lowering your marketing costs for subsequent purchases and driving higher profitability.
5. Build an ecommerce dashboard for ecommerce reports.
Dashboards help visualize the data gathered and analyzed on multiple metrics and KPIs in one central place. They can be helpful for organizing quick views of the most important metrics to the business. A highlights-level dashboard might have total revenue, profit margin, orders, and top order sources for a day. It’s important to note that these dashboards probably won’t replace all the reports you use, but should provide a 50k foot view of the business (or a part of the business) at a quick glance.
For instance, you can create an ecommerce dashboard on Glew’s ecommerce analytics platform by combining metrics such as customer acquisition cost, number of new customers, and number of returning customers to understand the efficiency of customer acquisition efforts. Likewise, you can create a dashboard for orders by combining metrics such as the top-selling products by profit and volume, average order value, cost per order, profit margins, and amount refunded.
6. Monitor the conversion rate of your store.
All your marketing efforts go in vain if your conversion rates are not up to the mark. Did you know the average conversion rate of ecommerce websites in the United States is 2.63%? This means less than three people complete the goal of purchasing a product out of 100 visitors on the website or a landing page. A small increase in your conversion rate can lead to a significant increase in revenue.
Let’s say that an ecommerce store has converted 26 people out of 1000 visitors to its website and generated a revenue of $260 (average order value is $10). This means the store’s conversion rate is 2.6%. If the conversion rate increases to 3.6% (an increase of one percentage point), the number of conversions would become 36, resulting in a revenue of $360 (a 38% increase in revenue).
Therefore, ecommerce stores may need to monitor conversions from their website more closely by tracking metrics such as conversion rate, shopping cart abandonment rate, conversion rate by channel, click-through rate, cost per acquisition, and more. Often times, you can find an underperforming channel that, if improved, would greatly affect your overall conversion rate.
7. Gain valuable insights from your top performing customers.
It’s important to understand who your best customers are. “Best” is a bit of nebulous term, but can be be broken down into several categories including:
- The top 10% of spenders
- The top 10% in AOV
- Highest LTV customers
- Full-price spenders
- Highest repeat spenders
- Most profitable
Understanding the persona and demographics of these groups can help you cater your messaging and ad targeting to focus on your “best” customers, while not muddying the waters with the profiles of your least efficient customers.
8. Optimize default channel grouping.
Default channel grouping is a technique of classifying channels based on the traffic source or medium. For an ecommerce store, Google Analytics automatically groups common channels with names such as Direct, Paid Search, Referrals, Organic, Social, Display, and more.
- Social: Facebook, Instagram, Twitter, Pinterest, Yelp, and other social media platforms
- SEO: Google, Bing, Yahoo, and other search engines
From an analytics perspective, default channel grouping allows you a more granular view of where your traffic is coming from and which sources are generating revenue. While Google Analytics is an excellent starting point, you’ll want to adjust the default groupings to separate things like paid social from organic social.
Alternatively, you can use Glew, which interprets your Google Analytics channels and better organizes them for more accurate and transparent reporting.
9. Create custom audience segments from customer data.
No two customer segments share similar interests and preferences. If you pitch the same offer to all customer segments, you may end up running a loss-making ecommerce business. This is why you need to segment the visitors based on their behaviors, demographics, and interests. The segmentation helps you personalize offerings and enhance the customer experience. Ecommerce stores may need to choose an analytics tool that segments customers to help gain valuable insights into their behaviors.
For instance, Glew’s ecommerce analytics divides customers into 30+ segments based on behavioral and demographic filters. A few customer segments may include value spenders, high average order value, frequent refunders, repeat buyers, and value shoppers. Glew enables you to download reports on any customer segment with the single click of a button.
10. Sync your customer segments to email.
You can do even more with customer segments by connecting your email or marketing automation tools with an ecommerce analytics platform like Glew.
If you use Mailchimp or Klaviyo, Glew allows you to push segments directly to your email platform and use them for targeted email campaigns (like abandoned cart emails, special promotions for your VIP customers, winback campaigns for at-risk customers and more).
Sync customer segments and product information back to Klaviyo and MailChimp for more personalized campaigns with Glew’s advanced segmentation and marketing automation capabilities.
11. Monitor new sales compared to inventory levels.
Inventories and sales should go hand-in-hand. High inventory levels and poor sales may increase the holding cost of inventory significantly. Low inventory and high sales might lead to a delay in fulfillment.
In most cases, ecommerce stores forecast sales based on the data available in their inventory system to stock up products accordingly. However, new and unexpected sales may lead to poor inventory accuracy and order fulfillment. Seasonality of businesses should also be considered; Black Friday/Cyber Monday are generally periods of exceptionally high demand for consumer product companies. Having too little inventory during this period will often cost you sales as consumers evaluate fulfillment times more critically.
To avoid fulfillment challenges, business owners should monitor new sales compared to inventory levels. The KPIs such as the number of new customers, product status, quantity sold, depletion days, inventory velocity, and quantity available would help monitor inventory levels.
12. Track the ROI of channels in paid ad campaigns.
Ecommerce companies spend 29-57% of their marketing budget on paid ad campaigns. Considering the huge budget allocated to paid ad campaigns, you should ensure all channels involved in the campaign deliver desired results.
For instance, a paid ad campaign may involve channels like Google Ads, Facebook Ads, Instagram Ads, and LinkedIn Ads. You should track revenue, ad spend, ROAS, and LTV for these campaigns, across the board.
Tracking enables you to optimize the ad campaign by avoiding the allocation of money to poorly performing channels and double down on the great performers. It’s important to note, that while some channels may appear to have a lower ROAS on individual purchases, when layered with customer LTV, they might actually be generating higher-value, long-term customers. For this reason, it’s important to evaluate these channels through a different lens than just last-click.
13. Pay close attention to first-time buyers.
Ecommerce stores should be sure to pay close attention to first-time buyers, as many of them carry the potential to become repeat customers, lowering your overall all purchase acquisition costs and improving your profit margin.
Understanding the behaviors, tastes, preferences, affinities, demographics, and psychology of first-time buyers can help marketing teams of ecommerce sites come up with cross-selling/upselling offers through personalized email marketing campaigns.
Maintaining regular interaction with first-time buyers not only strengthens your business relationship with them but also increases your brand awareness within the market.
14. Generate daily snapshots and scheduled reports.
There are a few metrics and KPIs like profit margin, advertising expenses, gross sales, and net sales that need constant monitoring for an ecommerce store. C-Suite executives and investors want to be able to evaluate their overall store performance from time to time without having to wait on someone else to supply them with the information. Daily snapshots and scheduled reports enable senior management teams to make quick decisions to improve store performance.
Glew’s analytics platform enables you to schedule automated reports with the previous day’s KPIs and deliver them directly to the inbox of the selected people every day.
15. Track individual products and product categories over time.
Ecommerce stores need to track the products and product categories they offer to capitalize on selling opportunities.
A few vital KPIs related to products to track are:
- Top-selling products
- Least-selling products
- High margin products
- Most reordered products
- High volume products
- Most refunded products
The information available on these metrics can enable ecommerce stores to optimize pricing, drive inventory decisions, and identify buying trends.
Glew is the best ecommerce analytics tool for your business
Ecommerce platforms help business owners make informed decisions. The 15 tips offered in this article will enable business owners to measure their store’s performance from different perspectives and gain real-time insights about products, marketing, inventory, and customers.
Glew is the best ecommerce analytical tool for ecommerce businesses. No matter if you are a merchant or an agency, the powerful analytics software from Glew connects all your data sources and generates actionable insights that drive growth.
With its unique features, Glew’s ecommerce analytics platform will help you:
- Understand and drive the store performance
- Attract and retain customers
- Maximize ROI of marketing
- Manage products profitably
- Visualize data on key metrics through interactive dashboards
- Improve the user experience during the checkout process
Schedule a demo to learn how Glew’s ecommerce analytics platform can help you measure your store’s performance.