You launch an eCommerce business and things turn out exactly like you had planned. The initial investment was recovered with just a few glitches. The business started growing by leaps and bounds, and soon your customers were happy with your products and content to purchase from you. But then one day a new competitor came along. With aggressive marketing and ingenious lallapalooza, they acquired your market share. Now, what will you do? Shut down, or fight back like Hulk? If you’re like me, you will stand your ground instead of backing down. But how?
If you Google ‘send gifts to Canada’, you will get tons of results that are doing a pretty good job. But if you tweak the keywords a little bit, you will notice that only one or two brands are re-appearing in the top 3 results. If everyone is offering the same services, why are there only a few who are getting all the limelight?
This is because they are using the right metrics to measure their success. The right metrics? Yes, in eCommerce if you want to level-up your game, you need to look into the correct metrics for your business. Here are some of the metrics that will help you play your best game:
Cost of Acquiring Customer (CAC)
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Every Entrepreneur feels that the goal of creating a business is to drive sales, regardless of the costs entailed for each individual customer. The Cost of Acquiring Customer (CAC) reveals how much we spend throughout the acquisition of each customer in the funnel; from promotions on Facebook to the customer visiting your website and placing an order, all the way to the final check out.
CAC is the amount of money you spend while acquiring your next customer. The goal is to alleviate the cost of procuring a customer down to a bare minimum. For instance, your CAC is $40 if you need to spend around $200 to get five customers to buy from your store.
To turn your business into a lucrative venture, you need to optimize your acquisition channels so that you keep costs in check and only pay for quality traffic. After all, lesser traffic with a higher conversion rate does way more for your business than a barrage of traffic that is unwilling to convert. There are a lot of factors that determine the cost of customer acquisition, but your goal is to find the accurate number for your business. You can use various techniques like paid ads, high-quality content, or social media to decrease your CAC.
Conversion Rate (CR)
Simply knowing the crunch numbers on the visitors who have visited your site is not enough; you need to know how many visitors are actually buying from you. Conversion Rate (CR) tells us this.
CR is basically the percentage of visitors who conducted business from you. The higher the conversation rate, the better. In a research done by Marketing Land, it was revealed that one way to increase your conversation rate is to leverage videos in conjunction with your content. Furthermore, adding a video to your page is projected to boost the engagement level, which will increase the chances of customers buying from your store in turn.
There are a deluge of articles out there that can help you cut down the conversion rate for your website. You need to know what a good conversion rate for your website is. One thing you need to understand is that regardless of the amount of traffic that is landing on your website, it is important to understand why customers are buying from you or even why they not willing to contend with you.
Shopping Cart Abandonment
Even the most top-notch web design agencies will agree with the fact that the most common cause of customers not ordering from a website is due to the presence of a complex shopping cart in a website. But the sad part is customers will not let you know if they find your shopping cart complex, they will simply leave without letting you know about it.
When Amazon.com launched a one-step check-out process, their sales increased by 28% in a single day. If you have a great website, enticing content, and seem to be getting all the traffic but no one is buying from your website, it means that you need to check this metric.
Cart abandonment can say a lot about the behavior of your customers. If you use a heatmap, you will be able to pinpoint where the problem is. Why customers are buying what they are buying and why they are leaving your website in the midst of a purchase!
If your patrons are abandoning their shopping carts, it means that they found something wrong with it. With heatmap, you will be able to figure out what is bothering your users. You need to make sure that customers don’t leave their shopping carts without completing a purchase.
Average Order Value (AOV)
The last metric you need to track is how much money you are making with each order. This will be identified by AOV. What is the average size of your individual order? The higher the average order value, the better. For instance, your AOV is $40 per order if you made $160 from 4 orders.
By monitoring the AOV, you will figure out how much money you are making with every order with the generated traffic and the conversion rate you are getting.
Figuring out the value per order will help you determine how much marketing budget you need. This will help you develop your next campaign based on the data you already have.
To Wrap it All Up
Opening an eCommerce store is easy but to keep the shop going is hard. You need to figure out the metrics that are relevant to your business. You need to grab these metrics and work on them. Not all the metrics will matter to your brand but some of these metrics will be the one-factor that will help your brand shine in the digital cosmos.