You Can Waste A Lot of Time Measuring Everything in eCommerce

In today's age of eCommerce, data has become the fuel that powers businesses forward. It provides insights into customer behavior, sales metrics, and a host of other vital information that drives growth. However, businesses must be able to collect, store, and interpret this data effectively if they want to gain insights that can propel their growth. One of the keys to achieving this is to create a measurement plan that supports business intelligence.

A measurement plan is a document that lists the key performance indicators (KPIs) that eCommerce business values, how they will be tracked, and why they matter. To create an effective plan, it's important to start by identifying the different aspects of the business that will be measured. These include website shopper behavior, merchandising, consumer analytics, pricing, promotions, and website technology performance.

Website Shopper Behavior KPIs:

Some of the most important KPIs for website shopper behavior include clicks, bounce rates, site search, and average order value (AOV). These metrics provide insight into how customers are using the website, what they're searching for, how long they're staying, and how much they're spending. To track these KPIs, businesses should be asking questions like:

1. - How many clicks is each page of the website receiving?
2. - What is the bounce rate for each page, and how can it be improved?
3. - How many site searches are being conducted, and for what keywords?
4. - What is the average order value, and how can it be increased?

Merchandising KPIs:

Merchandising KPIs are crucial to understanding how products are performing and what the consumer demand is for different products. The key metrics include conversion rates, product views, best-selling products, and slow-moving inventory. To track these KPIs, businesses should be asking questions like:

1. - What products are being viewed the most frequently?
2. - What are the best-selling products?
3. - What products are not selling as well?
4. - How can inventory be optimized to improve sales?
   

Consumer Analytics KPIs:

Consumer analytics KPIs help businesses gain insights into their customer base, and include metrics like customer lifetime value (LTV), customer acquisition cost (CAC), and repeat customer rate. To track these KPIs, businesses should be asking questions like:

1. - What is the customer LTV, and how can it be improved?
2. - What is the CAC for each customer segment, and how can it be reduced?
3. - What is the repeat customer rate, and how can it be increased?

Pricing and Promotions KPIs:

Pricing and promotions KPIs measure the effectiveness of sales promotions, as well as overall pricing strategy. Key metrics in this area include gross margins, average discounts, and return on investment (ROI) for different promotions. To track these KPIs, businesses should be asking questions like:

1. - What is the gross margin for each product, and how can it be increased?
2. - What is the average discount being offered, and is it too high?
3. - What is the return on investment for each promotion, and how effective is it?

Website Technology Performance KPIs:

Finally, website technology performance KPIs measure the performance of the website itself. These KPIs include page load times, page speed, and mobile responsiveness. To track these KPIs, businesses should be asking questions like:

1. - How long does it take each page to load?
2. - Is the website speed fast enough, and how can it be improved?
3. - Is the website mobile-friendly, and how can it be optimized for mobile devices?

Once an eCommerce business has identified the KPIs that matter most to it, the next step is to create a report or dashboard that effectively tracks and displays these metrics. Creating a great report or dashboard requires consideration of the business objectives, how it makes profit, customer behavior and other relevant factors.

Creating a measurement plan is an essential step to providing business intelligence for eCommerce businesses. Identifying the key performance indicators that matter most for each part of the business and asking the right questions will ensure that the resulting reports and dashboards deliver the insights needed to drive growth. By adhering to these principles, eCommerce businesses stand a much better chance of succeeding in the highly competitive world of online sales.