Launching an online business can be exciting, stressful, challenging, rewarding and about 40 other emotions thrown in just for good measure.
With all that’s involved in just putting your website alone live (never mind anything else), you’re probably more concerned with just getting everything running smoothly now, and thinking about measuring everything later.
However, it’s important to start tracking your data as soon as your business is live. Even if you’re not using it just yet, it’s better to have it to go back to, rather than not having a clue how your launch went.
As part of your going live checklist you should ensure you have the following tools installed as a minimum. These will enable you to monitor your business performance in almost real time:
- Google Analytics
- Google Search Console
- Bing Webmaster Tools
- Google Adwords Tracking Code
- Bing Ads Tracking Code
These free tools will provide a wealth of information about your business and allow you to measure your return on investment (ROI).
When setting objectives it is important to be realistic, as setting impossible goals will only lead to frustration and could impact on cashflow.
As part of setting your objectives you should also choose the appropriate metrics to track your goals with. While some metrics will be specific to your business, I would consider these as part of your analytic arsenal when starting out.
As I’m sure you’ll know, your conversion rate is basically how many people actually purchase from you. To calculate this metric you can use the following calculation:
No. of Orders divided by number of Unique Visits multiplied by 100
When using Google Analytics, it’s key to remember that it only records online transactions and will not account for orders via email and telephone. Depending on your order split you may need to look at monitoring two conversion rates, online and all orders.
Once you have started to accrue data you can then start to measure conversion rate by sales channel i.e. organic, email, paid.
What is a good conversion rate?
This will depend on your vertical and how niche your product is, however a study by Millward Brown Digital shows some interesting stats on conversion rate.
The average ecommerce rate for the top 500 merchants merchants is approx 3.32%
Amazon’s ecommerce rate is estimated to be around 13% but skyrockets if you are a prime member to over 70%!
Cart Abandonment Rate
This is an important metric that can be easily measured by setting up a goal in Google Analytics.
Effectively we are monitoring how many people display an intent to purchase from your website i.e reach your shopping cart page but do not complete the sale. Depending on the structure of your website you may also be able to determine where you are losing the customer.
There are a number of reasons why customers abandon their cart, the key ones are as follows:
- Unexpected or High Shipping Charges
- Security Issues
- Last minute price research
- Forced customer registration
- Limited Payment Options
- The doorbell rings…. 🙂
Should your cart abandonment be high then there are a number of areas that you should check.
Bounce Rate is perhaps best described by Google:
Bounce Rate is the percentage of single-page sessions (i.e. sessions in which the person left your site from the entrance page without interacting with the page)
It is an important metric and should be closely monitored, particularly when making any changes to your main pages or when analysing device usage.
When analysing your bounce rate it is important to include a number of segments, this will allow you to identify and resolve any issues.
For example, you should look at bounce rate on a device basis and identify if a device is increasing your overall bounce rate. One example could be a high bounce rate on mobile devices.
Additional Segments might include:
Bounce Rate by Channel i.e. Paid, email, organic
Bounce Rate by Landing Page
New & Returning Users
Bounce Rate by Country
Bounce rate Benchmarks
0% – 25% – Very healthy and users are engaging with your content (or cynically, ensure your tracking code is implemented correctly)
26% – 49% – A good place to be, it would be worth carrying out some additional investigation to determine which pages are causing a higher conversion rate.
50% – 74% – No getting slightly higher, it is worth investigating which pages are causing a high bounce rate and also to ensure you have excluded bot/spam traffic (this can add up)
74% + – This is high, it could be a result of a number of issues, poor quality traffic, bot or spam traffic skewing your data, long page loading times. Or, you could have a one page website meaning there is no where else to go!
Average Order Value
Your average order value tells you the average amount each customer spends with your business. You can work it out as so:
Sum of Revenue Generated / Number of Orders Taken = Average Order Value
This provides you with a good foundation in order to forecast revenue, for example, if you know your average conversion rate and average order value you can start to run financial scenarios based on an increase of traffic you aiming for.
If you are attracting 5,000 unique visits per month with a 2% conversion rate and AOV of $30 then a forecast might look like this:
5,000 Visits – 98% = 100
100 x $30 = $3,000 revenue per month
You can then increase the traffic to see how this could affect your revenue.
Note that this is a very basic formula and relies on the fact that the quality of traffic remains the same as it increases i.e. your conversion rate remains consistent.
You can also use this metric when looking at promotions and giveaways and look to increase the revenue generated from existing customers.
For example, if your average order value is $30, we can use this information to create a promotion designed to increase this metric.
Coupon Code: Get 10% off when you spend over $40
This code encourages customers to purchase additional items to trigger the coupon code.
Even taking into account the discount offered you are increasing your customers overall spend.
This promotion is even more effective if you are able to segment your customers and offer them a code that is more relevant to them, i.e. if a customer normally spends $15 on your website, then it is likely to be more effective to offer them a coupon based on a $25 spend.
You are then increasing your your average order value based on the customer’s historic shopping habits and offering a personalised experience for your customer. If you are using Woo Commerce or Magento then you can use this tool to easily segment your customers based on order history.
If you are using paid search or any paid marketing strategies to generate more traffic to your website then the following metrics are a starting point to what you should be measuring:
It is important to monitor your conversion rate in as much detail as possible, if you find a campaign or adgroup with a conversion rate lower than the site average then it is a good idea to find out why and what changes could be made.
Cost per Acquisition (CPA)
This metric displays what each sale actually costs you and you will need tracking code setup to measure this.
You can look at this all the way down to keyword level (if using PPC advertising) and it provides you with enough information to manage and optimize your paid campaigns.
Your CPA goal will vary depending on your business strategy (perhaps you are aggressively acquiring customers) and could be your customer lifetime value or a percentage of your AOV to name a couple. If you are using an agency to manage your paid campaigns then you should always discuss this metric at the beginning of the campaign to outline and manage expectations.
This one is particularly focused on PPC campaigns. Your quality score is Google’s rating of your keyword relevance (amongst other things). Aiming for a high quality score, such as 8+ has the potential of reducing your cost per click and improving your share impression.
If you have a poor quality score for a particular keyword then I would look at the following areas:
- Keyword – is this relevant to your advert
- Landing Page – do you use the keyword on your landing page
- Advert – does your advert include the keyword, is it still relevant?
So we have covered some of the metrics you should be following as a basic toolkit. You now should be able to measure the essentials – conversions, sales, revenue using these metrics.
However depending on your business or as it grows more will be added to the list and some may even change, giving you a personalised overview of your business; allowing you to make smarter data driven decisions and grow your business to dizzying heights!