The online marketing space is in constant shift as new technologies, services, and marketing tactics gain popularity and become the new standard. Online store owners are one of the many different segments affected by these constant evolutions. In order for these business owners to survive and thrive, they need to be able to make better decisions faster. This is where web analytics comes into play.
In this article, I will cover the major aspects of web analytics as they apply to the e-commerce space, and I’ll also provide a number of tips and important takeaways for online store owners of every shape and size.
Why Should You Bother with Analytics?
Before I dive into setting up the necessary “tools of the trade,” I think it’s important to take a moment and mention why I believe it is critical that all serious online store owners master the basics of e-commerce web analytics.
Understand What Is Working
As a small-to-medium online store owner, your resources are finite, which means that time and burn rate are critical factors to success. Without knowing which marketing activities are working, you will be wasting both time and money. Another symptom of this lack of information is that you will be missing out on profit from the channels that are working, because instead of doubling down on these channels, your budget will be spread across both profitable and unprofitable channels.
Knowledge Is Power
Having access to statistical information from all areas of your online marketing and sales activities gives you an advantage over competitors that do not have this information. Understanding trends and which marketing channels are no longer profitable allows you to maneuver as a business before damage is done to your bottom line. And, understanding shifts in consumer behavior gives you insights into the demands of your market. Knowing these things enables you to drop certain products or make strategic changes in your pricing that will result in big gains or, at the very least, limit damage to your profits.
Gateway to Higher Conversions
Having relevant statistical information at your fingertips is the first step in building a foundation for continuous experimentation on your website and other areas of your online presence. Being able to test certain copy and the overall layout of your e-commerce site is the next logical step for a profitable business that wants to raise its profits.
Understand Activity in Terms of Funnels
One of the basic concepts of web analytics is funnels. All marketing activities can and should be seen in terms of funnels. The idea of funnel analytics is that your target audience will go through a step-by-step flow or funnel until they make a purchase on your site. A typical marketing funnel may look like this:
- A fan on your business’s Facebook page sees one of your posts.
- The fan clicks on the post.
- The fan arrives on a landing page advertising a specific product and clicks on “add to cart.”
- The fan clicks on checkout.
- The fan enters their personal information and finalizes the purchase.
At each step of the process, a certain percentage of people will drop out of the funnel. Knowing these percentages will help you determine the barriers and psychology behind your customers.
Another classic example of a marketing funnel is that of an email campaign, let’s look at an example:
- You send 1,000 of your past customers an email promoting your summer sale.
- Out of the 1,000, 970 are delivered by your email service.
- Out of the 970, 350 are opened by past customers.
- Out of the 350, 50 click on one of the product links in the email.
- Out of the 50 that clicked, 45 add the product to their shopping cart.
- Out of the 45 that added one or more products to their shopping cart, 10 finalize their purchase.
When looking at this funnel, we can see that the campaign resulted in a 1% conversion rate. This number, however, does not tell the whole story. We can see that there were significant drops at the “open email,” “click on product link,” and “finalize purchase” stages. Now, we know where to focus our attention.
Track Everything Possible
In the world of web analytics, all traffic can be divided into 4 categories. These are search, referral, campaign, and direct. Search traffic is traffic that comes directly from search engines like Google, Bing, and Yahoo. Referral traffic is traffic that comes directly from a link on a different website. Campaign traffic is traffic that has been tagged by the marketer. Direct traffic is traffic that doesn’t have a known source. As you work with Google Analytics, these 4 categories will become more familiar.
A good practice is to manually tag your marketing campaigns so they are better segmented within Google Analytics. Let me give you an example.
Let’s say you publish two posts to Facebook. The first is a regular post about your industry, and it links to a blog post on your site. The second is a special post announcing a new promotion. If you aren’t manually tagging these links, then all the traffic from both posts will appear in Google Analytics as Referral traffic with Facebook being the referrer. It would be more useful to tag each of these posts as different campaigns.
The way you tag links is with UTMs. UTM tags are small snippets of text which appear at the end of a link. Below is an example of a UTM tagged link:
Set Up Your Funnel Analytics
When it comes to funnel analytics for e-commerce sites, I recommend Google Analytics and KISSmetrics. The reasons I like these two services are: (1) Google provides great support for e-commerce analytics natively within Google Analytics, and (2) KISSmetrics provides better reporting and a more visitor-oriented approach than Google Analytics. Together, they provide both the high-level and drilled-down information needed to make important choices about how you conduct your online business.
Get Started with Google Analytics’s E-commerce Integration
Google Analytics has become a standard tool when it comes to web analytics because of its ease of use, informative reports, and the fact that it’s free. Google Analytics is a very powerful tool for e-commerce sites because Google allows you to send all your sales data to your Google Analytics account. Once this integration is set up, all your sales will be tied to actual sessions, allowing you to connect sales to specific marketing channels.
Setting up e-commerce tracking in Google Analytics is a multi-step process which requires that you first enable e-commerce tracking in your Google Analytics adminand then make some changes to your code. This last part can be tricky, and I recommend that you get a programmer friend or your web designer to help you out with this step. If you get stuck, you can check out some of the useful guides listed below:
Get Started with KISSmetrics for Online Store Owners
KISSmetrics is an amazing tool for online store owners because it provides you with a deeper layer of information in a wide range of areas of your business, which simply aren’t available in Google Analytics.
With KISSmetrics’s Power, Funnel, Revenue, and Cohort reports, you can find out the following about your visitors:
- How long after visiting your site for the first time does a visitor make a purchase
- The average order value per customer, segmented by marketing channel
- Which marketing channels bring you the highest ROI (critical for 80/20 analysis)
- Which blog posts drive the most sales
- How many blog posts does a visitor see before subscribing to your newsletter
- Which steps in your sales funnel are the most problematic
- The average path taken by visitors before they buy on your site
- Where visitors are on your site when they contact your support team
I highly recommend that online store owners use both Google Analytics and KISSmetrics so they can cover both the high-level and low-level data on their customers. Without easy access to the information that can help you make necessary business decisions, you will be blind to movements in the market and potentially miss out on thousands of dollars in additional revenues.
Below is a list of guides for getting started with KISSmetrics and setting up their revenue reports:
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ReplyDeleteGuess what? This is exactly what large companies are paying me for. They need to know what their customer needs and wants. So these companies pay $1,000,000's of dollars per month to the average person. In return, the average person, myself included, answers some questions and gives them their opinion.