This vital skill is imparted to pilots during training. Pilots also use a visual observation method, but only as an additional control method for reading the instrument readings. The business also has its own devices, sensors, and indicators, which instead of a manager monitor every aspect of the company’s activities.“Always keep an eye on the indications.”
For example, a software development company tracks things like monthly user profitability, inflow and outflow, the number of free trial users, and the number of registrations and activation of paid tariffs. Mobile application developers can track such indicators as the number of application installations, application usage time, and frequency of use. Companies operating in the eCommerce market have their own set of eCommerce analytics, on the timely monitoring of which the state of a business depends.
In this article, we will talk about the most important of them. Each metric will be described in three sections. Let’s start with the basic terms and find out why you should keep track of them.
1. Average order value
Description: This is one of the most important metrics in e-commerce. It is directly related to revenue, and the higher this indicator is, the more revenue the online store will receive.
How to calculate the average check?
Average check calculation formula: the sum of all orders/number of orders. For example, we had 350 orders and their total amount is 8260 $ We divide 8260 by 360 and get an average value of 23.60 $ This is the average check in your online store.
A few ideas for increasing the average check:
1. Cross-sale based on recommendations. Many online stores have a pop-up window next to the product description offering related products. It works like this: “If you like it, you may be interested in this product,” “Customers who bought this product, often interested in it.
2. The goods are included in the set. Offer the buyer to order two items together for a lower price. For example, the cost of a smartphone and a case to it – 570 $, and in the complete set – on 20 $ cheaper. This offer will not only increase the average check in the online store but also will help to sell with the popular product less in demand.
3. Free delivery. Buyers react to the benefits, and free shipping is a good bonus. Some online stores offer free goods when you reach a certain amount. You can add this notification to your cart:
Why is the average check important?
You will significantly increase your income if you can increase the average order value. In each case, it is necessary to calculate and bring this indicator to the desired one. For example, if you just raise the prices, you will not only get a short-term increase in the average check, but also the inevitable outflow of customers to competitors.
2. Conversion Rate
Description: The store conversion rate reflects how efficient your business is at each stage of interaction. According to Nielsen Norman Group’s research, in 2018, the average conversion rate for eCommerce companies was 3%. But in addition to the overall figure, there are also conversion steps that a visitor must go through before making a purchase. Based on this information, you can set up a “sales funnel” and track the conversion rate for each stage.
How to calculate the conversion rate?
Divide the number of visitors who made a purchase (or other desired action) by the total number of visitors. For example, 15,000 people visited your online store in a month and 150 people made a purchase. In this case, the conversion was 1%.
A few ideas for increasing the conversion rate:
The effectiveness of the online store and its marketing efforts are ultimately evaluated by the percentage of conversion of visitors to customers. Making a positive decision to buy depends on such aspects as the availability of the right product, its cost, completeness of description, the reputation of the online store, the presence of feedback on it.
3. Abandonment Rate
Description: When it comes to sales, large online stores, even with low conversion rates, receive a large daily flow of visitors, which guarantees them a constant flow of revenue. But shall do a small shop, where the flow of visitors which is not so significant and most make the first and last visit? This is the feature of working on the eCommerce market – it is necessary to constantly find the factors that affect the interruptions coefficient and eliminate them.
How to calculate the abandonment rate?
In order to calculate the rate, it is necessary to divide the number of visitors who added items to the cart but did not make a purchase by the total number of visitors who made a purchase.
For example, 5 visitors to the online store added items to the cart, but did not make an order, and 100 people made a purchase. In this case, the interruptions coefficient is 5%.
It is important to understand that the majority of visitors add items to the cart in order to save them for the future and make the purchase later. Based on this, criteria is needed to distinguish between a delayed purchase and an interruption. Depending on the product category to which the product belongs, the timing will vary.
A few ideas to reduce the interruptions:
1. Use time-limited offers: discounts, promotions, free shipping, gift.
2. Use non-material incentives. For example, when adding an item to the cart, you can set a timer that will indicate the date of receipt of the parcel, if the item is ordered now.
3. You can limit the shelf life of the item in the cart. Thus, the buyer will be aware that the quantity of goods is limited. And the risk that it may end, will create motivation to place an order without delaying it later.
Why is this metric important?
If you see a high interrupt rate in the online store, then take a closer look at the shopping cart page. Here, usually, is the reason that increases the interrupt rate. Often the delivery terms and payment methods can only be seen by going to the “Basket”. If this is not the case, then it is worth testing and monitoring the user to identify hidden factors affecting the refusal to make a purchase. The work on reducing the failure rate will affect your revenue over time.
3 Metrics for Measuring Your E-commerce Website’s PersuasivenessTo understand the effectiveness of the tools used in internet marketing and evaluation of your investments, you need to accumulate expertise and collect information on each channel of attraction. After a while, you will be able to identify the best and focus your investments on them