Analyzing eCommerce KPI’s – Traffic – CRO – AOV – Profit Margin
There are really only four ways to improve your sales and profitability from eCommerce, increasing traffic, improving your conversion rate, increasing your average order value, and improving your profit margin.
So where do you focus? Personally I think the focus should always be on all four, and often times working on one area will help you in the others. If you increase your margins, you can spend more on advertising, and thus increase traffic as an example.
Here are some general insights to improve your KPI’s. Obviously every business and industry is different, but hopefully this might give you some ideas to improve your eCommerce store.
When it comes to traffic I would focus on building a strategy to build traffic via the six major channels we discuss below. Google Analytics is by far the best free tool to start analyzing your KPI’s but there are other great paid platforms to help you analyze even deeper data like customer life time value.
The question you need to answer here is why would someone go directly to your site?
First they need to know your brand. So how do you build your brand?
Do people recognize you locally? Building local brand awareness is certainly easier than national or multi national awareness. If you have a physical location it is easier to do so, otherwise you may need to get creative going to events and other ways to build a local presence if you are just pure eCommerce.
Are you advertising on social channels using paid media to reach a huge audience at a low cost? Social is probably the cheapest advertising methodology to build pure brand awareness.
Are you offering unique contests and promotions that make your brand interesting to come to directly via the site. Having unique promotions that change frequently might make people come back to see what new things are on sale.
Do you sell something unique? Perhaps if the answer is no, consider bundling or packaging your product via subscription or some other way that makes it unique to only you.
Loyalty programs are another great way to build brand strength and get customers coming back for more knowing they will get rewarded for directly buying from you versus a competitor.
- Unique products no one else has
There are really five ways to improve SEO that can be summed up here.
- Technical SEO
- Content / Data
- Link Building
I would make sure you have a strong technical SEO foundation leveraging Robots.txt, Google Web masters, proper on site tags and much more. To learn more about On Page SEO view our ebook or other online resources like Moz.
Content and data is incredibly important. I would have a process for consistently improving and increasing the content and relevant SEO data on your website such as product descriptions, blogs, reviews etc.
Google is going to see how many shares your URL’s are getting on major channels like Facebook and Twitter so getting a social presence is key for SEO.
Local listings via something like Yext or just manually claiming them will help your local SEO and possibly location based site visits.
Link building is another great way to build SEO, and takes time in terms of other sites linking to you via news articles, PR, and much more. Here are some tips for link building.
Social media as mentioned earlier not only helps your SEO but is a massive traffic channel in itself. Posting interesting and unique content about your brand and other industry related news is a great start to tapping into this channel at a low cost.
Ultimately social media requires paid advertising to bring in huge results, and you really need to spend a fair amount to grow your Social presence into the big leagues. Its very much a pay for play system now.
- Run promotions and contests
- Get creative with your posts, don’t be boring
- Stay consistent and active
- Integrate with social channels via Facebook store etc
- Test different types of paid ads to see what works best
Referral traffic is great because it boosts SEO and generates referral traffic in itself. Links from other major sites can direct a great deal of targeted traffic if they come from a popular traffic source. Back links are also a major part of Google’s Algorithm improving your SEO presence.
Building referral traffic is very hard but can be done through hard work, PR, and overall high quality digital marketing efforts. Link building is still important despite losing some prominence in SEO and there are many tips and tricks to build up links over time.
Paid traffic is a massive opportunity to most eCommerce businesses but also requires both time and advertising budget to make effective. There are a lot of ways to go about paid advertising through Google, Bing, Display Networks, and more.
I would consult with an expert or test the waters on Google as well as leverage Remarketing advertising to at least advertise to people who are already interested in your site and brand.
- Test different campaigns and bid amounts
- Tweak landing pages and destinations of ads to improve conversions
Email is definitely one of the best ways to drive more traffic and convert targeted traffic via sale. You really need a two pronged approach. One, to increase your email list size, and the other to increase the effectiveness of the emails you have. Here are some quick tips to do so:
- Get more emails via solutions like Privy (pop ups), incentivize account registration, etc
- Send regular emails out regarding new products, newsletter information, etc
- Send abandoned cart emails and eCommerce automated related emails
- Don’t overlook transactional email improvements to make transactional emails more useful and drive back traffic to the site.
Conversion Rate Optimization (CRO):
Google Analytics is probably the best free tool you can use to analyze your conversion rate. You need to make sure the data is accurate and matches up with your actual sales once set up.
Conversion rate optimization requires a lot of different tactics to improve over time. I think the best way to improve conversions is to be continuously improving the site on all fronts, design & user experience, product data, functionality, integrations, etc so that the customers keep coming back for more. If you are not improving on a weekly basis, your competitors are and you will fall behind.
Things required to improve consistently:
- Strong technical foundation for growth
- Development operations procedures for launching site changes and improvements
- Growth driven design strategy of continuous enhancements
- Ability to easily improve product and over all content on the website consistently
- Strategy & execution for overall functionality and eCommerce improvements
- Data and analytics to evaluate what is and is not working (Google Analytics conversion tracking etc)
I would look at trying to improve conversions on the three major device types here.
Desktop is where most of your sales will most likely come from, although in some cases mobile might start to over take for certain industries and use cases.
On desktop you have the full real estate of a web page to work with so there are no excuses. Here are some tips to optimize for desktop:
- Make use of the full width of the page with fluid responsive design, not a fixed width that looks like a dated design
- Optimize for entire conversion funnel, homepage content and menu guiding to category, product page, cart, checkout, and order confirmation
- Optimize logistics in order to offer competitive shipping options and demonstrate this across homepage, product page, and checkout
Tablet certainly wont generate as much revenue as the other device types in most cases, but still should be optimized. Leverage fluid responsive design to make the smaller touch screen easy to use and test on an actual tablet to make sure your site feels right on tablet.
Mobile is definitely its own animal and making a site optimized for mobile is no easy challenge on such a small screen. Some tips I would suggest are:
- Optimize responsive design for simplicity and less clutter (Move most items to one column)
- Reduce barriers to checkout by making it easy to go through purchasing process
- Design for the thumb, people are using a touch screen not a keyboard and mouse
- Off canvas mobile menu
- Allow users to save payment info so they can reorder without inputting new payment details
- Remember session details
- Guest checkout
Overall CRO improvements to make:
- High quality product data (images, descriptions etc)
- Reviews & user generated content
- Site speed (Under 3 second load time)
- Improve site search (third party search technologies may help)
Average Order Value:
Average order value is probably the most overlooked statistic but equally as important as the others here. Theoretically, doubling AOV is just as valuable as doubling conversion rate in terms of revenue. One of the easiest ways to improve AOV is to offer free shipping over x amount, incentivizing larger orders.
Here are some of the major tips I would suggest:
- Shipping promotions
- Buy x get x free or half off
- Up Sells & Cross Sells strategically organized throughout the site
- Limited time promotions
- Tiered pricing
- Packaged and Bundled products
- Freight shipping for larger orders
Profit margin is always a concern for any business, especially in eCommerce. It is often an overlooked opportunity that could be improved through streamlining operations around customer service, data entry, and integrations.
When it comes to profit margin I would focus on building an infrastructure that makes your website more efficient on all fronts. Here are some of the things to do to make your eCommerce business run itself, with less costly man power in place.
- Warehouse automation via integrations like Hublogix
- Seamless integration to back office systems (ERP, CRM, etc)
- Marketing automation set up so more emails go out non manually
- SEO & content marketing efforts to drive organic traffic, reducing reliance on paid traffic
- Drop shipping integrations via systems like Logic Broker
- PIM solutions to speed up product data creation
- Marketplace integration to save manual data entry time