Four e-commerce Metrics That Can Help Increase ROI
Many e-retailers focus on conversion rate, but here are four less-obvious ways to analyze your data that can provide important insights.
An experienced businessman can tell you off-hand various ways how to increase the revenue of your online store: by adding new marketing and sales channels, investing more in PPC [pay-per-click] campaigns or by making a special time-limited offer to all of your customers. But there is a gold mine when it comes to ROI optimization: data. Learn to read and benefit from it.
You’ve probably already read about conversion rate and other crucial conversion metrics. So that’s not what we’re going to talk about today. Let’s focus on a change in your online store’s order data and not-so-obvious metrics that you should keep in mind to raise your sales and to keep your customers satisfied.
Not-so-obvious order metrics
1. Average order value
This one is essential. AOV is not just a number that would inform you about your profits (don’t forget to add expenses such as processing the order and its shipping and you’ll find out that there are many more useful metrics when it comes to counting money), it primarily tells you who your customer is and what their purchasing habits are.
Sometimes, retailers pay too much attention to increasing the traffic of their online store which can cost quite a lot of money. Increasing the AOV, on the other hand, costs you almost nothing in comparison (as the customer is already at your shop) and can be much more effective.
If you want to boost your AOV, you basically want the customer to spend more money when making a purchase at your online store. You will achieve this by cross-selling (“What about a nice case that would protect your new camera?”), upselling (“Would you consider this smashing camera for only $12 more than the one in your cart?”), free shipping for a higher order value, quantity discount (“You’ll get a 50% discount on every 3rd T-shirt you buy!”) or discount coupons for the next purchase (“Buy for $20, get $2 off next time!”).
2. Average order processing time
This metric refers to the average time between the day an order is placed and when it’s shipped, and is strongly related to the customer experience you provide. There are many competitors out there that are thirsty for your customers. And customers don’t like to wait, so you have to cut your order processing time to a minimum, otherwise tomorrow you will have nothing to process. (The number varies from just a few hours up to several weeks.)
In order to throttle your AOPT, there are many factors involved that should be monitored: your inventory levels (have foresight; make sure you are well prepared for every important e-commerce date that is ahead of you), packaging (we strongly recommend to use a warehouse management system that would automate many aspects from picking an item to its delivery), errors customers make in product selection, weather or federal holidays (these last two you cannot really influence but it is good to be prepared to act in case of any unforeseen circumstances).
3. Order statuses and reasons for cancellation
Every e-commerce platform or custom business solution has its own system of order statuses. But mainly there is this duality that is important: Whether the order was processed and shipped or not, i. e., it was cancelled. This indicator is as clear as it seems.
The ratio of cancelled orders to the shipped ones will tell you valuable information mainly about your webpage and also about your delivery. There are other influencer factors from the customer’s part, some of them unpredictable such as “changing their mind for no reason”, but let’s keep this from the seller’s part: Cancelling the order may be caused by the lack of clarity or inconvenience of your shipping and/or payment conditions. The key to success here lies in the whole sales funnel — the purchase process should be seamless, the add-to-cart so easy and finishing the purchase absolutely intuitive with clear basic info and big buttons.
What may also happen is that your customers cancel their orders on the grounds of delayed delivery. To avoid the bad reputation you would gain from a few delayed deliveries, pay attention to picking the right delivery provider. And remember to always keep customers informed: many orders are cancelled because of the lack of information buyers are given while products are in transit.
4. Most frequent day and time of purchases
This metric teaches you about your customers’ shopping habits. What day and time do they like the most to buy from you? According to recent studies the majority of U.S. and U.K. shoppers do most of their online shopping on Sundays.
It is actually very easy to track what day and time are you busiest. Once you know it, adapt all the associated activities — strengthen your customer service in your busiest days and hours and, on the other hand, stock your warehouse in your “lazy” days and also use these days for managing your marketing campaigns, evaluating their efficiency and considering new marketing channels.
Based in the Czech Republic, MonkeyData provides analytics technology for online retailers and brands.
Originally published at www.internetretailer.com on September 23, 2016.
