Let me start by asking you a question…
Do you like, love or hate numbers?
Most people say they hate numbers. And this is usually because they don’t know how powerful mastering your numbers can be. Or they don’t like the numbers they see, so they ignore them.
By the end of this article you are going to love numbers. Promise!
So, here’s something we want you to remember:
Knowledge is power.
Numbers show us the truth. They show us the true state of our online store, without any emotion, reasoning or bias.
Everything in eCommerce and digital marketing is literally just numbers. You can track and measure everything. There has never been a better time to have an online store. We have complete transparency over customer experience, what’s working and what’s not working – and we have the agility to change it, literally overnight.
Now, just as a side note – just because we can track and measure everything, doesn’t mean we should. We want to measure what drives the needle. If we were to track and measure every little metric we’d spend our entire day tracking numbers, instead of working on impacting them. So you want to measure the important numbers in order to have a top-down view of what’s working and what needs improvement.
Here’s something else I want you to remember.
A website is not a tattoo.
You can – and should – be making tweaks constantly. But we don’t want to make changes based on a hunch. We want to make them based on data.
By looking at the numbers you can get a quantifiable measure on how things are going without letting your personal opinions, emotions or bias getting in the way of results.
For example – let’s say your favourite colour is pink so you make all the buttons on your website pink. If you test this and find that green buttons convert better, what colour are you more likely to go with? HINT, the answer is the one with the highest conversion rate!
Often people will measure the number of sales they make, the revenue they generate and their profit left at the end of the day. BUT a sale is not the start of your customers journey, so it doesn’t make sense for us to just measure just this metric. When we know what is happening throughout the entire purchase journey we can see what’s working and what needs improving.
What do I mean by this? Well, I want you to think of your customers purchase journey like a funnel.
People enter the top of your funnel when they become aware of your brand. Then they will get curious and show interest in your product by visiting a product or category page. From here they might do some research and look to be further educated on your product. Then they might add the product to cart, initiate checkout and complete the purchase.
You will know that not everyone completes the entire funnel, right.
People drop out of the funnel at various points. You may get heaps of clicks to your site, but hardly anyone goes to your product pages. Well, you can then get curious as to how to optimise your homepage to be more inviting for people to check out your products – i.e. go to the step of the funnel. If you get lots of add-to-carts but no checkouts, you can get curious as to why the checkout process is not converting, and how to optimise it.
When you track and measure the important numbers you can work out where the leaks are in your funnel and what is driving the needle.
Here are 10 key numbers to track and measure:
1. Total Sessions
= total # of hits you’ve received to your site
This is important to know because it’s the very top of your website funnel. If you don’t have any traffic coming to your site, no matter how good your site is, no one would see it. It’d be like printing a box of glossy brochures and leaving them stored in the back of your car.
2. Percentage of returning visitors vs percentage of new visitors
Returning visitors = (# of returning visitor sessions) / (total sessions)
Percentage of new visitors: (# of new visitor sessions) / (total sessions)
Now the average cart abandonment rate is around 70-80% – meaning that only 2-3 people complete a purchase for every 100 people that visit your website – so if you have no returning visitors you are leaving lots of money on the table. We are going to go into how to stop leaving money on the table, so for now just get in the habit of tracking these two numbers.
You can find these numbers in your google analytics under Audience > overview
3. Cart abandonment rate %
= (# of add to carts – # of completed purchases) / (# of add to carts) x 100
You need to track and measure this to see how many people are adding to cart, but not purchasing. Once you know this you can get curious to see what will decrease your abandon cart rate – and you can test and measure it with a metric in place.
You can find these numbers in your dashboard.
For example in shopify:
(add to carts – purchases) / (add to carts) x 100 = abandon cart rate
( (1112-541) / 1112 ) x 100
(1112-541) = 571
571 / 1112 = 0.513
0.513 x 100 = 51.30
4. Customer acquisition cost
= (total sales and marketing expenses) / (# of customers acquired)
This is the dollar value that it costs you to acquire a customer. The easiest and simple way to calculate this is to divide the total sales and marketing expenses by the number of customers acquired.
5. Repeat purchase rate
= (# of people who have purchased more than once) / (total # of purchases)
Selling to existing customers is much easier, quicker and cheaper than acquiring a new customer. Yet so often I see people focussing on constantly getting new customers and neglecting their existing customers. We can leverage our existing customers with cross-sell and upsell, and we’ll cover this in the upcoming modules. But for now, make sure you track and measure your repeat customer rate.
6. Opt-in conversion rate
= (# of email opt ins) / (# of sessions)
Email marketing is one of the most powerful channels we can utilise in order to sell more on our online store. So we want to track and measure the number of people who opt in to our email list. We own our email list. We do not own our Facebook or instagram following. It’s important so we measure it.
7. Sales conversion rate
= (# of sales) / (# of sessions)
This is one of the most important numbers to track, because it indicates how many sales we are making. The most common mistake I see people make is – that in order to improve the numbers of sales they make, they think that they need more traffic.
Think about this. For every 100 people who visit your site you make one sale. You have a 1% conversion rate. If you increase your conversion rate to 3 or 4% you would be making triple the amount of sales, without any more traffic.
8. Average order value
= (total revenue) / # of (orders placed)
This gives us an indication of how much people buy in each transaction. Just like the conversion rate, if we can increase the average order value, we can make more sales and more profit, without having to get more traffic and more conversions.
9. Gross profit margin
= (revenue – cost of goods sold) / (revenue) x 100
The gross profit margin is a really important one. An obsession with revenue — instead of profitability — could be harming your business. Revenue is vanity, profit is sanity.
10. Total revenue
= total $ made via website
The total revenue is the final number that we want to track and measure in our top 10. It may seem obvious but by measuring this it gives us a quick, one figure, gauge on how things are going.
You can’t manage what you don’t measure, so start tracking these key metrics today.