Setting up your business online is no easy task, especially since you don’t have the opportunity to interact in real time with customers while they browse through your website.
But don’t fret; there are many ways to monitor online performance. One of these is via e-commerce analytics.
With these numbers on hand, you can stop relying solely on sales as the metric for success. The digital world and the internet are complex markets that require more in-depth analysis. Let us show you how.
What is E-commerce Analytics?
E-commerce analytics is a diverse set of metrics used to analyze how customers interact with your website and how it translates to your bottom line.
You can measure how many people visit your website and how many times they revisited. You can also measure how long they stayed on your website and how many pages they went through before leaving. Most importantly, you can measure the percentage of people who ended in a purchase.
All in all, e-commerce analytics monitor various metrics that can be used to measure the performance of your website with regard to customers, sales, and marketing. You can then adjust your strategy accordingly.
Why Does Your Online Business Need One?
E-commerce analytics serve as your eyes and ears. With this, you get the opportunity to analyze how your products, product placement, pricing, customer service, and other components are received by your customers.
It will also help you understand your customers better, as well as develop strategies for you to better offer your services/products. This knowledge can help you build a good relationship with your customers, encourage loyalty, and ultimately, improve sales.
Getting Started With Google Analytics
Google Analytics is an effective tool, as it provides you with the most essential metrics that you need to monitor your online business.
It’s powerful and free, but can be a bit confusing for those just starting out. Let us help you find your way around this:
Step 1: Create an account in Google Analytics
To use Google Analytics, you first need to create a Google account. Your existing Gmail account can also be used. Just go to the Google Analytics website and sign up or sign-in.
Once you’ve set up the account, click Get Tracking ID at the bottom of the page. You will need to input this code on relevant pages (e.g. shopping cart, landing pages, etc) on your website. The code should look like this:
Step 2: Connect your eCommerce Store to Google Analytics
The next step is to connect your online store to Google Analytics. Each online platform has their own process for incorporating the Analytics tracking code. If unsure, check with your website host for instructions on how to do this so you can start acquiring customer data.
Some platforms like Shopify, for instance, offer an integrated solution that only asks you to input the Google tracking code into a field in your store’s settings. Other platforms, however, require an additional plug-in/app.
Once this is done, don’t panic if you don’t see anything on the overview of your account. Your data will only begin to be analyzed once Google Analytics has finished installing. Also, give it time for data to be collected and analyzed.
Step 3: Set Up eCommerce Tracking
Lastly, you need to activate e-commerce tracking to be able to receive data on your e-commerce performance.
To do this, go to your platform’s “Account Settings”, choose the “E-commerce Settings” option, and then enable e-commerce.
First Things First, Making Sure You´re Ready For The Online Business Game
Before you start analyzing the different metrics that Google Analytics will provide you, you have to make sure that you cover your bases first.
It’s important that you make sure your product matches your perceived market, and that you have what it takes to take the next big step in your company’s growth.
Achieve Product/Market Fit
This is the first and most vital analysis you must make to make sure your business will be successful. Is there a need for your product/service? Are you providing real value with the product or service you are offering? Do you bring something to the market that is different and/or better than your competitors?
You will realize that you have achieved product/market fit when you analyze your metrics and see that you not only have an increase in acquisition (more on this later) and customer satisfaction, but those other metrics (e.g. bounce rates, returning visitors) are performing well.
Achieve Validation Phase
Validation means that you are ready to scale your business because you have built a wide and loyal customer base. You also have the resources now to expand beyond your current status.
The validation phase can only be reached once you have achieved product/market fit. Expanding without being sure of market fit will deplete your resources fast.
In addition to achieving product/market fit, there are five metrics that can help you verify that you are ready to achieve Validation Phase.
- Customer Lifetime Value (LTV): Lifetime value is how you profit from an average customer during the time they remain your customer. If you have a high LTV, it means you have loyal customers and a strong base.
- Returning Visitors: The percentage of users who return to your site after their first visit. This means these visitors have become customers because they like your products. 20% and above is a good indicator of this.
- Time on site: If your visitors are spending a long time on your site, it means they’re enjoying their experience and have found something they like. If people stay for more than two minutes, that’s good news for you.
- Pages per visit: It’s no good if people stop at your landing page. If you see that they’re looking around various pages regularly, then it means they’re attracted to what you are offering. Four pages per visit mean that your customers dig your product and style.
- Bounce rate: This is correlated with the metric above. If people only see your landing page (or any other single page) and leave, then your site needs improvement.
Which Metric Should You Pay Most Attention To?
Not all metrics are made equal. And while you could find most of them useful, its sheer number can be overwhelming.
If you’re just starting out, you need to pay the most attention to these five metrics:
Acquisition (Are customers coming?)
This metric will let you know the number of your site visitors over a given time.
You can correlate this with a marketing campaign or sale that you’ve launched, and see if it has been effective. You can see what percentage of your visitors is new and how they accessed your page (e.g. from which channel like social media or email).
Bounce Rate (How often and why do people leave your page so soon?)
Bounce rate is defined by the number of visitors that leave your website after opening one page.
Keeping your visitors is as important as bringing them in because visitors would then become the customers. A good bounce rate is between 40% to 55%. Anything above and you should seek to improve website speed, design and layout, usability, and ease of access.
Location (Who is your target audience?)
This metric lets you see where your visitors are coming from.
If you’re targeting a specific geographic area and your visitors are not coming from there, there is likely something wrong with your marketing strategy and publicity. This could also help you target an area in which your sales are lower/higher depending on what your goal is (scaling or strengthening market share).
eCommerce Overview Growth (How are my sales?)
This report is the summary of your revenue, while at the same time providing you with broken down data on related figures over a time period. This conversion rate, number of transactions, and unique purchases done.
Product Performance (How are each of my products doing?)
This metric allows you to analyze with greater detail each of your products and see how they’re performing. This will give you the insight you need to redesign a product or produce more of an ultra-popular one.
Collecting these metrics may seem daunting. But after some practice and getting used to, reading and interpreting them will be easier to do. After all, these numbers are there to help you enhance your online business and serve as a guide to improve your relationship with your customers.
Google Analytics gives you the opportunity to access most of these metrics for free, as well as give you factual and real data that will give you an upper hand when developing your business, marketing, and sales strategies.