There are a few people who care about setting up a very showy online store with a great design, leaving aside aspects as relevant as online sales analysis or analytics for eCommerce. But nowadays, it is essential to monitor sales in eCommerce, carrying out a thorough and constant control of what each visitor does. Not only does it matter to review the number of payment transactions made, but there is a whole pre-purchase process that is essential to analyze whether you want to turn your eCommerce into a very successful online store. Jorge Zuñiga Blanco, an entrepreneur and sales expert from Costa Rica, provides insight into how to monitor sales and make improvements to ensure growth.
In an eCommerce or online store, there are many KPIs or key indicators to consider to perform a reliable and objective sales analysis. This is the only way we will have to manage our online store in an excellent way at the level of stock, customer service, order preparation, shipments, etc. Asserts Zuñiga, “Monitoring sales in eCommerce helps us and serves to make better decisions focused on improving the productivity of our online store, both at the level of web content, as well as the publication of products, user-facing usability, eCommerce positioning and more.
When analyzing eCommerce sales, business owners have to consider several factors. The first is total sales. It seems obvious, but it is important to measure the total units sold, as well as calculate the gross margin. Likewise, it is interesting to analyze which products are the most beneficial and least reported to us, etc.
Conversion rate is also important. It is the value that is obtained from dividing between the number of users who complete a purchase among the total visits received on the web. The higher the conversion rate, the better, indicating that a large number of visitors find what they were looking for.
LTV (Lifetime Value). Apart from performing the sales analysis, we have to calculate the gross margin that we draw from each customer over the time that is with us. In this way, we measure the profitability of each of our customers.
The Customer Acquisition Cost is the economic investment that must be made for a potential consumer to become an end consumer who acquires our product. This should be as low as possible, as it will mean that we get buyers with minimal investment.
Cost of Sales measures what it costs the company to sell each of its products. As in the above case, it is most recommended to have a low value, which will amount to a minimum expense intended for the sale of a good.
The cancellation rate is the percentage of customers who stop buying at an eCommerce store over a long period of time. Of course, it is interesting that this value is as low as possible, because this means that we have a loyal clientele. To recover old customers and reduce the churn rate, you can resort to techniques such as email marketing or special promotions.
In order to evaluate all of these, there are several tools available. The most famous of the eCommerce analysis tools is Google Analytics. “Through Google Analytics,” explains Zuñiga, “you can measure visits, most visited content, conversions and objectives, keyword performance, AdWords campaigns, emailing campaigns and more. You can have all the information unified in one tool.”
Kissmetrics, another tool, allows you to track the activity of the users who visit you, so you know what they do at every moment from the moment they enter your website until they leave it, which is essential to control the sales funnel or funnel of conversion.
You may think that the traffic your site receives or the number of likes you have on Facebook is enough data to assess how your eCommerce is working, but you need to go further. For example, do you know how much it costs you to attract a customer? Is it a beneficial expense or does it cause you loss? Therein lies the importance of knowing what metrics for eCommerce you should use.
That’s why we’re talking about vanity metrics and actionable metrics. The first are those that are easy to measure and their numbers can provide a false impression. Make no mistake and think they’re totally useless, but it’s data that won’t help you make decisions or measure the profitability of your business. Imagine that in one day you have 1,000 visits to your eCommerce, but that day you don’t have any purchases. Although it’s a somewhat exaggerated example, it can happen. Your website traffic is high; however, it doesn’t report any revenue. That makes your business unprofitable.
On the other hand, we have actionable metrics, which are the ones that interest us. These provide us with accurate and relevant information about the performance of the actions that are carried out in your eCommerce. “An example would be the cost of sales, which tells us what it costs the business to sell its products. This would be a metric that would provide us with valuable information about our company’s profitability,” states Zuñiga.
