Website Analytics is there for retailers to use. You’ve just decided to start an online retail business. Why not? It’s relatively easy and cheap to do. You can start a Drop Shipping business, or join Shopify or trade your own goods online with a Woocommerce site. According to Quora, there are between 12 and 24 million ecommerce websites on the net. However, only about 650,000 ecommerce websites generate annual sales of more than $1,000. That’s a miserable 2.7% generating very modest turnovers.
Is your online business not performing as planned? Are your paid search adverting and social media marketing campaigns not resulting in sales? Then you’re probably targeting the wrong customers at the wrong place with the wrong products. So how will you know that you’re doing things wrong? You can do the right thing by using a Website Analytics tool such as Google Analytics.
What is Website Analytics?
Web analytics is the process of analyzing the behavior of visitors to a Web site. Indeed, the use of Web analytics is said to enable a business to attract more visitors, retain or attract new customers for goods or services, or to increase the dollar volume each customer spends, says Margaret Rouse in Techtarget.com.
Web Analytics is not just a process for measuring web traffic but can be used as a tool for business and market research, and to assess and improve the effectiveness of a website, according to Salini, Malavolta and Rossi (2016).
Salini et al (2016) mentioned that the four essential stages of Website Analytics are:
- Collection of data,
- Processing data into information,
- Developing Key Performance Indicators (KPIs), and
- Formulating an online strategy.
Each of these stages impacts or can impact the stage preceding or following it; in other words they are sequentially connected and not isolated from each other.
Collecting data for Web Analytics
The simplest, cheapest and most used Web Analytics tool is Google Analytics (GA). Indeed, Google analytics offers a free service to its users. But before you can use GA, you need to create a new account. GA will create a tracking code that you can copy into the memory of your website. Your website should now be connected with Google Analytics.
However, your site needs traffic in order for GA to do its algorithms and results. Therefore you need to write a post or promote products to start attracting visitors.
Processing data into information
Google Analytics can track a visitor’s location, device, landing page, and behavior while he or she is using your website. In addition, you can see where the visitor came from (Google, Bing, Yelp, etc.). This can help you to spend those pay-per-click marketing dollars wisely.
Kristi Hines suggests in his blog Kissmetrics.com that Google Analytics help you as follows:
- Find out which online campaigns bring the most traffic and conversions.
- Determine where your best visitors are located.
- Learn what people are searching for on your site.
- Visualize what people click on the most.
- Uncover your top content.
- Identify your worst performing pages.
- Determine where people abandon the shopping cart.
- Discover if you need a mobile site.
Before you start perusing the pie charts, line graphs, and spreadsheets available in the user interface of Google Analytics, it’s important to figure out what to monitor.
Developing Key Performance Indicators (KPIs)
Since you’ve identified what works and what does not work with your website, you need to develop KPIs. A KPI, or Key Performance Indicator, is a metric used to measure performance. Drew Strojny of The Theme Foundry advised that SMEs and bloggers using WordPress to keep the following ideas in mind when identifying website-related KPIs:
- KPIs should align with business goals. The KPIs related to your website should align with a specific action you want website visitors to take. In many cases, this will be a revenue-impacting action, like contacting you for a quote if you’re a service provider.
- KPIs should correspond to trackable metrics in Google Analytics. Therefore, when you know what your KPIs are, you should connect each one to a specific tool or tool in Google Analytics.
The top 8 metrics and KPIs that online retailers should take into account with website analytics are according to Natalie Pavlovskaya writing in InstantShift:
- Average Order Value (AOV). AOV is considered a key metric by many online retailers, because the higher you can encourage AOV to be, the more income your store will get. The basic calculation is: (Sum of Revenue Generated)/(# of Orders) = Average Order Value
- Conversion Rate. The conversion rate tells how effective your store is at closing deals. The basic calculation is: (Number of Sales) / (Number of Visits) = Conversion Rate.
- Bounce Rate. Bounce Rate is a percentage of visitors who leave your site immediately, probably because they didn’t find what they were looking or the website was too complicated or annoying to use. The basic calculation is: (Number of visitors who leave immediately) / (Total number of visitors) = Bounce Rate.
- Shopping Cart Abandonment Rate. According to the Baymard Institute, the average shopping cart abandonment rate is 69% (2017). The basic calculation is: (#of people who don’t complete checkout) / (# of people who start checkout) = Shopping Cart Abandonment Rate.
- Cost per Acquisition. Cost per Acquisition is a critical marketing metric. It can tell you which campaigns can drive your sales and which will become a costly pile. The basic calculation is: (Total Cost of Marketing Activities) / (# of Conversions) = Cost per Acquisition.
- Traffic. Where does your audience come from? Which channels produce the most customers? What social networks, keywords work best for your business?
- Net Profit. Net Profit is the actual amount of profit a business generates after all expenses. It tells you the profitability of your ecommerce business after taking all costs into account. The basic calculation is: (Total Revenue) – (Total Expenses) = Net Profit.
- Customer Lifetime Value (LTV). Customer Lifetime Value measures the total amount of money a customer spends in a store during his relationship with it. The basic LTV equation: (Average Order Value) x (# of Repeat Sales) x (Average Retention Time).
Once you’ve got the overall picture of your online store’s performance, you’ll need to formulate or change your online business strategy.
Formulating an online strategy
Formulating an actionable online strategy for your business may be your biggest challenge. Sarah Williams Founder & CEO of 816 New York proposed the following steps to develop a Google Analytics Measurement Plan:
- Step 1. Document your business’s objectives. Ask yourself as a company: Why do we exist? What is the Core Purpose and Vision of the brand itself?
- Step 2: Identify strategies and tactics. One Strategy you would adopt is to sell products. The tactics that support that strategy, then, might be to sell online through the website, sell items in stores, or sell via a mobile shopping app.
- Step 3: Choose KPIs. For an e-commerce site, the KPIs (measurements of strategies and tactics) might include monitoring how much revenue has been generated, and the average order value from online and mobile app sales.
- Step 4: Choose segments. It’s important to segment your data to drill down to its essence. Not all customers are the same, and it’s often helpful to segment your reporting to identify distinct market segments.
- Step 5: Choose targets. You must define the targets for each KPI. What indicates success? Where can you do better? Isn’t that what you want to find out, after all?
- Step 6: Implement and control. Monitor the data regularly to adjust your tactics with the trends.
A Google Analytics result page
Lastly, one of the greatest advantages having an ecommerce website is that you can measure the activity and the behaviour of users. However, there is no advantage if you don’t measure the performance of your website and marketing strategies. Therefore, make sure that you target the right customers with the right products at the right places, and, o yes – the right prices. For that reason mastering website analytics tools such as Google Analytics may bring you close to achieve all your KPI goals. Good luck with your website analytics!
A last word from Albert Einstein “Not everything that can be counted counts, and not everything that counts can be counted.”
- Predictive Analytics helps Retailers to make sense of Big Data
- Marketing Automation is enabled by Artificial Intelligence, Big Data and Chatbots
A Marketing Plan helps you to communicate the right content to the right audience.
Salini, A., Malavolta, I. and Rossi, F. 2016. Leveraging web analytics for automatically generating mobile navigation models, In Mobile Services (MS), 2016 IEEE International Conference, 103-110.