Introduction
In this post, I’m going to help you better understand your e-commerce and marketing analytics so that once you do get a hang of it, you can start making more sales and grow your customer base. So, if you do have a good handle on the actions that your customers are taking online, you can better serve them and better engage them. So this guide is going to teach you the terms that you need to know and the numbers that you should be looking at. Once you know how to analyze your data, you’re going to have what it takes to make the right business decisions, to grow.
Analytics for validating your business
Yes, so if you’ve just started out, the first thing that you’re going to want to do is validate your business. So you might be wondering if you have a good business idea or if people would actually be willing to buy from you. So the metrics that we’re going to be looking at right now are going to answer those questions. So let’s hop into our analytics dashboard and by the way, you can link your Google analytics super easily to your Shopify store. Starting with returning visitors. This is the percentage of users who returned to your site after their first visit. This number is going to be a very clear indication that people liked what they saw. According to our research, a good ratio of returning visitors is anything higher than 20%. Time on site will be the average amount of time that users are spending on your site, per visit. How much time is going to depend on what you’re selling, but in general, if people are spending time on your site, that is just showing that they’re having a good experience. According to our research, anything more than 120 seconds is great. Pages per visit shows how much exploring customers are doing on your site, So if you have four or more pages per visit, that means a customer is very interested in what you’re selling and who you are as a business. So you might’ve heard this one before, bounce rate. So bounce rate is how many users are visiting your store and then leaving immediately before taking any other actions. This is kind of like showing up to a party, looking around, realizing maybe it’s not your scene. And then just bouncing. A high bounce rate just means that you’re not giving a good impression. I use might bounce because of poor design or maybe you have slow pages or maybe they just find your content irrelevant. So those metrics are going to help you understand whether you have a valid business idea, but if your business is past that phase and you’ve already validated it, you’re going to be focusing on acquiring customers. In which case you’re going to want to look at these next metrics.
Analytics for customer acquisition efficiency
Okay that seems pretty wordy, but basically what I mean here is that you’re going to want to make sure that you’re spending as little money in marketing as possible while still getting the most customers. For most of you, and generally in ecommerce, marketing is going to be one of your biggest expenses. So looking at these analytics is going to be crucial and bringing your costs down while making sure you’re gaining the most efficiency. One of the main metrics for this is a conversion rate. A conversion rate is the percentage of people that visited your website and then went ahead and made a purchase. Now, this is important because if your conversion rate is low, that’s actually not a good sign. That means that you’re spending a lot of time and money in acquiring customers, but they’re just not purchasing. So I can’t really tell you an exact number, unfortunately, um, knowing if your current conversion rate is good or bad is really going to depend on your industry and it’s going to depend on what you’re selling. So for example, if you’re selling a lavish trips to Italy. Your conversion rate might be 1% or it might be lower. But for this industry, that might make sense because this is a big purchase and it might take a lot of time for customers to do research and, you know, finally make that purchase. But if you’re selling $5 hair ties, you might have a conversion rate of 10% and that could be, you know, low or it could be industry standard since it is an impulse buy. But if you are looking for a hard answer on your specific industry, in what you’re selling, just type it into Google, just say you know, what’s a good conversion ratef or blank, um, put in your product or put in your industry and that will give you a good idea. All right. So next up is page load time. Our study shows that page load time can impact as much as 16% of your revenue. So that being said every second counts, and it is no surprise that people’s attention spans are getting shorter and shorter. Um, and people are getting frustrated just after waiting 400 milliseconds for a page to load. So, what you’re going to want to do is you’re going to want to monitor your average page load time in Google Analytics. Under two seconds is a good place to start. Um, and one of the most common causes of slow low times is going to be oversized images. So use Pixlr, that is a free online program and that’ll just help you size your photos and your logo down. Just make sure that you’re not sizing it too far down so that your image looks grainy or pixelated. This metric is super important. Customer acquisition cost. So if you’re spending more money than you’re actually making, your business is not going to be profitable. You won’t be able to survive as a business. So customer acquisition costs measures the amount of money you’re spending to acquire each of your customers. Customer acquisition cost is calculated by comparing the amount that you spend in marketing against the number of sales you make. So for example, if you’re spending 10 grand per month on Facebook ads, and from that you’re making a thousand sales, your monthly customer acquisition costs is going to be 10. Okay, great. So now we know that it’s going to cost us $10 to acquire a new customer, but that still doesn’t tell us whether we’re actually profitable. So to do that, you’re going to need to compare your customer acquisition costs against your customer’s lifetime value. Customer lifetime value just means how much money a customer will actually spend with you over the lifetime or the course of their relationship with you. So if your customer is going to spend a hundred dollars with you, then yes, $10 to acquire them definitely makes sense. There are many factors that come into play when it comes to, um, lowering your customer acquisition costs. And I do think that each of you watching will have a unique situation, but one of my biggest recommendations would be to hire an ad specialist. If you are running paid ads, Um, I work with a lot of small businesses and some of the most common feedback that I hear from them is that they’re running Facebook ads or they’re running Instagram ads, and they’re just not seeing any results. So I would say either you really educate yourself on ads, or if you don’t have the time, make sure that you’re hiring an ad specialist who really knows what they’re doing. That way you can lower your customer acquisition costs while still seeing the results that you would want to see from your ads. If by the end of this video, you want to learn even more about which metrics are key to establishing and growing your online business. We have a free guide that would be the perfect first step in learning about your e-commerce analytics. So I will make sure to leave a link for you guys in the description box. Um, it is a free ebook on e-commerce analytics for beginners. So make sure to click that link in the description box if you guys do want to get your hands on that, and hopefully that’s helpful to you.
Analytics for scaling growth
So if you are larger business and maybe you already have your loyal customers, then you would be in the scaling phase. So at this point, we would be looking at the metrics that help you scale your sales. Average order value is one of the main metrics that you’re going to need to watch for and that’s going to help you sell more items or higher price items, and that will help you improve your overall business performance and your efficiency, unique visitors is another big one. So your unique number of visitors is going to naturally reflect how much you’re growing overall as a business. Now, I would just say, be careful, don’t put too much emphasis on this. You want to make sure that you’re also looking at your number of transactions and your revenue. So these are the metrics that are the most important for scaling and growth. And these are going to be the ultimate measure of your performance in this phase. If you’re a real keener, then you should be tracking your metrics in a spreadsheet. So I would say track these metrics weekly, and then look back at your spreadsheet and see if you are improving over time. Your main goal should be to always be doing better than the week before. All right. So those are all the metrics as they relate to your e-commerce store. So by now, at this point in the video, you should have a really good understanding of what metrics you should be looking at, whether you’re in the validation, efficiency or scaling phase. If you are serious about starting an online business and you haven’t signed up for Shopify yet, then I would say, definitely give it a go. Shopify makes selling online really easy and you can get started with a free 14 day trial. Um, the nice thing also is that there’s no credit card required, so you can give it a go and these powerful features and the plethora of free apps make marketing really simple.
