Best Analytics for eCommerce Tools?
Many online merchants find a few valuable tricks with their analytics tools and see some minor advantages, but it can feel like squeezing ROI droplets out of a routine that only sees minor changes. They hear about analytics in favorable terms, but it seems complicated to know where to begin when there are over 100 eCommerce analytics tools to choose from. Regardless of the nature of your business, what is the best analytics for eCommerce?
We’ll cover eCommerce analytics from a bird’s eye view and then dive into specific metrics to help you develop your best analytics practices. As you read through the different metrics explained below, consider which are most applicable to your online store. If used diligently, contextually relevant analytics applications will create an unstoppable momentum for greater revenue controls and essential revelations about your market.
The Best Analytics for eCommerce Depend on You.
High-quality data helps business owners understand the most significant factors impacting their company at any given moment. It can provide a high-level overview of your overall performance and granular detail about each element influencing that performance.
At first, it can take a lot of work to apply it to changing, real-time scenarios. It’s much easier when looked at from a specific, needs-based perspective, so you keep sight of relevancy. Every eCommerce business must keep accurate track of its overall revenue, so that’s the most foundational place to begin. When you see how the lifeblood of your business is functioning, you’ll naturally see where it’s coming from and where it’s going.
You’ll then see other analytics grab your attention, sensing their cohesion with the big picture (and their influence on your bottom line). Gradually, your analytics reports will become customized to the unique activities that bear the most on your revenue, revealing the needs and trajectory of your company. Rather than see it as a glut of information you must digest from A to Z, begin with the basic foundations applicable to all businesses, branching out into more specific territory as the needs arise.
Over time, your understanding of analytics will become much more fluid — but most importantly, you’ll be able to leverage your knowledge in the most impactful ways for your specific market niche. The essential eCommerce analytics are most relevant to you and the challenges your company and customers face.
Related: eCommerce Reporting Best Practices
The Basis of eCommerce Analytics
To begin, the best analytics for eCommerce provides a clearer picture of your sales channels, their performance, and the forces most significantly impacting them. Once you’re comfortable measuring these, the following crucial data points guide your newfound understanding to best use. The former shows you where you’re at, while the latter shows you how to improve the former.
Each metric has a cause-and-effect relationship with other metrics, and those patterns are more illuminating than any statistic or figure. Your business strategies will improve as they align with these patterns, especially those related to your customer’s shopping habits. To begin recognizing those patterns, you’ll need a solid working knowledge of the eCommerce analytics categories outlined below.
These fundamentals will help you begin testing your theories about your market, and it becomes fun and accessible once you see firsthand how it responds to your adjustments.
At its most basic level, this amounts to improving the ROI of specific efforts, which itself requires defining success for your business. While the actual ROI is increased profits, how will you raise them? The answer to this is where specific data points become more meaningful than others. As with anything in analytics, the solutions must always be contextual.
Consider eCommerce analytics in terms of five general categories:
- Customer base
- Traffic activity
- Customer behavior
Extrapolating from the basic-five framework listed above, we’ll explore the most critical data points generically and as they relate to specific scenarios.
To sustainably tighten eCommerce cash flow, all companies need to know their audience. What is your clientele’s overall motivation? Which problems are they trying to solve, and where do your capabilities overlap with their needs?
Above all, what do you need to know about them to convert profit potential into actual profits?
- Customer preferences — how else will you ensure your inventory, services, content, and overall brand message are what they’re looking for?
- Customer engagement — what’s the level of brand awareness in your market base, and how often, when, and where do they engage with it?
- Quality of customer support — are your customers likely to become repeat customers, and how do your response times and communications practices impact repeat sales figures?
Measuring the biases of your market as it already is will help you position yourself to capture more of its activity.
It’s not enough to know how many site visitors you have, with omnichannel presence and personalization schemes so normalized — though they’re also generating increasing customer wariness. To reach the right balance, you’ll need some consistency in gauging where customers are coming from, which helps you hone your marketing efforts in ways that land well with your customer base’s expectations.
Before even getting tricky, though, measuring site traffic patterns is a prerequisite for comparing them to future patterns as you make other adjustments. Traffic analysis mainstays include traffic levels, peak traffic times, and customer geolocations (although the latter must be taken with a grain of salt, as an estimated 31% of total web users sometimes use proxies).
More detailed analysis helps web designers see which pages are more popular than others, and digital marketers rely on thorough traffic reports all the more.
Related: How to Sell Through Multiple eCommerce Platforms
Getting to the heart of your customer’s motivations, as described above, helps you begin seeing their behavior in a new light. As customer behavior most radically determines the trajectory of your future sales, you’ll need to measure how those behaviors manifest throughout your site activity.
This is when the best analytics for eCommerce businesses become more dimensional, revealing a narrative about the customer-brand relationship. Spend some particular quality time delving into behavior metrics such as:
- Time spent on site
- Content engaged with
- Products looked at
- Purchase timing
With any statistic, measures can be either qualitative (subjective data) or quantitative (measured precisely). Studying behavior increases the level of qualitative analysis required, which is easiest done with surveys or reviews of your customer communications. This blends with marketing metrics covered below — consider quantitative measures, such as those above, with more authority.
This is where the rubber hits the road, or in fact, already hit the road. Increasing revenue and decreasing costs have always been the most basic formula for business health, and businesses should view virtually all metrics with two goals:
- Increase revenue
- Decrease costs
Altogether, these are seen in the average profit margin measurement (costs minus sales). More tellingly, the monthly sales growth reveals the longer-term health of your business. This can also be done quarterly and annually, which helps adjust monthly sales goals more realistically.
The purchase rate and average purchase amount are essential, and most merchants do this automatically. When they look at their periodic sales, they have an innate sense of how many customers they serve and how much they spend. Revenue metrics go deep into calculating the ROI of any activity, which shows which activities are more worth your company’s time.
Inventory management comes into play too. Analyze product performance whenever you need to place an order with your suppliers. Track the expenses involved in carrying each product to know exactly how good carrying that product is (not just how much initial revenue it creates). For example, some top sellers may result in greater customer service or return issues.
The analytics involved in tracking revenue health are extensive and are the keystone for knowing which other metrics need your attention. Once you see the state of your company’s financial health, the most important tasks naturally become more evident.
Understanding marketing campaign performance requires drawing from analytics for multichannel sources. Once they’ve been compiled, you can then calculate and compare the performance of each channel. Overall, marketers need to look at their lead conversion rate to gauge the effectiveness of their marketing efforts. If it’s low, it could mean there needs to be more understanding of the audience and what they need.
Marketing requires a thorough understanding of the Customer Base and Customer Behavior metrics discussed above, and you can often save time discovering what they want by conducting customer surveys.
Conclusions based on qualitative analyses like surveys should constantly be tested, as they are more theoretical. Once you prove your theories, however, you begin shifting back to quantitative measures, establishing a feedback loop of analytics, adjustments, and verification.
Building on Previous Knowledge
When looking into the best analytics for eCommerce, it’s too easy to become lost in studies that fail to resonate back to the issues facing your business today. Rather than avoid them altogether, however, you owe it to yourself, your employees, and your customers to take what’s working and leverage it as well as possible. Connect the metrics most obviously impacting your business with the most logical metrics, and aim to see the relational nature between them.
Just as you can’t focus on one part of your business at the expense of another, the best analytics practices for eCommerce require taking them as a cohesive unit. At most, try to see them as only separate points of view directing your attention towards the same thing: your company’s next most powerful move.
If you’re ready to leverage your eCommerce analytics and take your business to the next level, Onramp can help. Contact us today to hear how we can help you bulk up your stock (and your cash flow) to boost your business.