How to grow an e-commerce with a data-driven approach

15 metrics you can’t live without

I’ve been working as a Product Manager in e-commerces for the past 10 years, including +5 years in a company with multiple billion dollars revenue. My position implied that my main responsibility was improving how the business was doing.

In the last few months, I’ve been helping others improve the performance of their online stores. But I’ve found that most of the help was needed on actually understanding the current status and what information they needed to see in order to make the right decisions.

Some of them just didn’t know what metrics they should look at. They were tracking visitors, transactions, but were unable to understand with more detail what was going on when sales were up or down. Others were overwhelmed by how much data was available and couldn’t determine what was actually important to see in order to take the proper decisions.

So I figured I can put some of my experience together and create an article with the key indicators and the decisions you can make with the results you get from them.

In case you want to download it to read it later or for further reference I created a guide with the 15 esencial metrics that will you grow your e-commerce.

NOTE: this article is based on Google Analytics because it is the most widely used tool, and it is available out of the box without any effort for most of the e-commerce store builders like Shopify, BigCommerce, WooCommerce, Magento, etc (and because it’s free if you don’t have any tool and need to start with something today). But the concepts and decisions explained will make them equally valuable if you use any another analytics tool.

Basic

There are certain metrics that you should be analyzing every day that will provide the most basic information about the performance and health of your e-commerce.

Transactions, Conversion Rate, Average Order Value

This core metrics will inform you about the total number of transactions you received over a period of time, the conversion rate related to the sessions in this period, and the average order value considering all purchased items.

• Where to find it

“Conversions” — “E-commerce” — “Overview”

• What decisions can we take?
• Transactions: it is difficult to make decisions only with the number of transactions, but a rise or fall in this simple indicator could be an alert to look at other metrics such as the particular performance of a product or marketing campaign.
• Conversion rate: it does have more direct actions that we should consider. The first question usually is: is my conversion rate good? It is relatively easy to find average conversion rates on the web to compare your performance against other e-commerces. It is important to find a benchmark as similar as possible to the category and location of your site. The value changes greatly by industry, geographic region, or even device.

(An outdated example of different industries conversion rates)

• Average Order Value: similar to transactions, this KPI can trigger alarms if it goes up or down. It is also an important metric to follow for long periods of time. If you are working on up-selling or bundles you should see this number grow over time. You can make decisions such as promoting “second unit 20% off” and evaluate how much this value is increased.

Users, sessions, page views, traffic sources

These metrics refer to how many people are visiting my site and how much of it they are seeing. Traffic Sources refers to through what channels they are reaching the site.

If I have a good conversion rate but few users, my e-commerce will not be successful anyway.

• Where to find it

A lot of this information is found in “Audience — Overview”.

Besides users and sessions, we can also see how many are new users and how many are recurrent, the number of page views, the average session duration and the bounce rate (number of sessions that left the site without making any interaction).

This information should be monitored daily, but in order to make decisions, we will often need a higher level of detail.

One of the most important secondary analysis for this KPIs is the traffic source. How many users are coming from our marketing campaigns? How many from our social networks? How many from the emails to the registered user base?

• This information can be found in “Acquisition” — “Overview”.

In this dashboard, we can clearly see how many users are being acquired by each channel and the importance of each of them in our e-commerce.

The second important part of this report is the conversion rate by each channel:

• What decisions can we take?

Viewing accesses and conversion rate by each channel we could make decisions like:

• Do I have low paid traffic but it has a good conversion? Maybe I can raise the paid budget.
• Do I have a lot of direct traffic but with high bounce rate? I may need to improve the information displayed on the Home page.
• I do not have email traffic? I should start making newsletter campaigns to my existing user base.

Advanced Conversion

With the previous section, we cover that first glimpse that anyone who has an e-commerce should be looking at daily. But it is still too basic to make great decisions and to really manage a successful site or app.

As we said earlier, a key metric is the conversion rate. Let’s make a deeper analysis of it.

Conversion rate by “{division}”

One of the most common and important ways of making a deeper analysis of any type is to group sessions by a certain characteristic and analyze the particular conversion rate those users had.

Conversion rate by Traffic Source

This would be the analysis mentioned in the previous section. Group all sessions that came to the site by a particular channel and check how the conversion rates vary for each of them. Identifying what source is working best in terms of conversion among paid, social networks, email, or any other is key to making the critical decision of where put more efforts to acquire traffic.

Conversion product category, brand

Another analysis that might be interesting is to look at the performance of each product we sell. How many sessions are seeing a particular product versus the transactions it had?

• Where to find it

“Conversion” — “E-commerce” — “Product Performance”.

The last column of this report indicates the purchases of each product divided by the number of views of the detail page of that item.

You can see for example in the 5th position, a product that had only 4 purchases for every 100 users who saw its detail.

In this view, we are ordering products by highest revenue, but if order them by the last column (Buy-to-Detail Rate) in ascending order, we will see the products that are performing worst in this dimension.

This same report can be seen by category or brand changing the_“Primary Dimension”_ to Product Category or Brand. If you have a retail with many categories it may be useful to see how these values vary by category. If you have a cell phone store, variation by brand can be a good metric to decide what products to promote.

(Although in this view lose conversion)

• What decisions can we take?

Suppose we sell refrigerators. Perhaps the overall conversion is good, but the first item that appears on our search results page has a lot of visits and no one buys it. Possibly removing the item from our catalog can improve the overall conversion.

Conversion rate by landing page

Landing Pages are the first pages that users see when they enter our site. Many times we make marketing campaigns where the user access a particular promotion page or are directed to a product detail page. It is very useful to see how the conversion rate varies according to the page where the user first landed.

• Where to find it

“Behavior” — “Site Content” — “Landing Pages”.

• What decisions can we take?

In the last column, we see the traffic that came through the Home page had a 3.66% conversion rate (higher than the average of 3.03% of the entire site), and some landing pages of particular products had a lower value (as the last “Mens T shirt” with 0.83%).

This information is very useful to decide what landing pages to use for paid traffic, social networks or emails.

Conversion rate by Segment

One more way to see the conversion rate, that gives us the flexibility to make almost any analysis we want to do, are the segments.

• Where to find it

Clicking on the “Add Segment” button that appears at the top of any report, we can create segments based on any attribute Google Analytics has tracked:

• User attributes: age, gender, country, mobile vs desktop
• Product Attributes: category, brand, SKU
• Behavior: number of sessions, new users vs recurring, users who visited a particular page

And practically any other variable that comes to mind. Google Analytics has a ton of built in variables you can select from to create a particular segment with all the sessions or users that fit that criterion.

Once you created the segment, you can go back to “Conversions” — “E-commerce” — “Overview” and have a comparative view of all sessions vs sessions of that segment:

• Revenue, conversion, transactions and other information relevant to compare.

(example with mobile traffic)

• What decisions can we take?

With this feature, there is an endless number of analyses that we can make.

Following the above example, if we make a segment of mobile users and see that conversion rate is much worse than the overall users, you can decide either to stop investing in mobile traffic or to improve how your store is displayed on mobile devices.

We could also analyze the conversion rate by category (eg Fridges vs Washing Machine) and see which one should be promoted or in which category I have a worse performance and I need to get better products.

That’s it for the first part! In the 2nd part, we will cover more advanced metrics such as multi-channel attribution, time to buy and other very useful performance indicators with the decisions you can make based on your results.

You can download now the guide with all 15 metrics, as reference material with all the metrics of the first and second article

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