“Truly there are three things a merchant needs to do,” said Kevin Kearns, chief sales officer, for shop analytics firm ShopperTrak at a movie demonstration aimed at brick-and-mortar merchants. “They want to get shoppers in their shop — traffic. Get them to make a purchase — conversion. And they should get them to buy more — transaction size.
“They want to get shoppers in their shop — traffic. Get them to make a purchase — conversion. And they should get them to buy more — transaction size.
“When looking at all these levers,” Kearns continued,”a merchant can really focus in on forcing strategies that will enhance each individual store’s results”
Kearns’ remarks were supposed to assist retailers with physical stores deal with a decline in foot traffic and a rise on digitally affected shopping, wherein consumers use the Internet before visiting a shop or while in a shop to make more informed purchasing decisions.
However, this”retail equation” also represents three major ecommerce key performance indicators. This trio of KPIs is especially potent during the Christmas shopping season or other peak times, when online merchant devote much attention to what matters most: website traffic, conversion rate, and average order value.
Like visitors to a shop at a shopping center or a mall, online site traffic is an indication of the amount of available customers. This number is significant because the complete number of shoppers who see your merchandise is virtually identical to the complete number of possible earnings your shop can make.
If you do not have any website traffic, you won’t make any sales. Similarly, if your website traffic doubles during the Christmas period, you have the capacity to double revenue and profit even if your website’s conversion rate and average order value stayed flat.
When you measure traffic, look not simply at the entire number of people visiting your website, but also at the traffic source.
- Immediate traffic. Visitors who came directly to your website. These people probably typed your website’s domain name directly into the browser’s address bar.
- traffic. People who follow links from your email marketing messages to your website.
- Social media visitors. These website visitors found you on Facebook, Twitter, Pinterest, or any number of other social networking websites.
- Referral traffic. Represents those people who followed a link on another site, excluding social networking sites or search engines.
- Marketing traffic. Visitors who clicked on your banner advertisements, responded to your Pandora advertisements, or clicked and watched out of your YouTube commercials.
- Pay-per-click traffic. The fruit of paid visitors, primarily from search websites and publisher networks.
- Search traffic. Visitors who found your website because of a search on Google, Facebook, YouTube, or other searchable websites.
Website traffic is often a measure of marketing success.
If, for instance, your online shop conducts an extensive email marketing campaign throughout the lead up to Cyber Monday, you’d expect to see a relative gain in the amount of traffic coming to your website via the email station.
Similarly, if you’re operating 30-second spots on Pandora, which I highly recommend during the holiday season, you would expect to find an increase in traffic from the advertising channel.
Site traffic might also be compared against similar spans. By way of instance, how is your website traffic in October this year compared to the exact same 2014 period?
For the holiday season, watch site traffic relative to your marketing actions. Attempt to fine tune as you go.
In the ecommerce circumstance, conversion rate increases the amount of sales your shop makes relative to the amount of visitors on the website for any given time period.
As an increase in conversion speed is frequently related to an improvement in site merchandising, website content, usability, or similar, this KPI is used to quantify operational excellence.
For your Christmas shopping season, use the conversion rate to track the success of particular tasks, merchandising, or even visitor resources.
So, as an instance, track the conversion rate for product detail pages which include a product video when compared with those that don’t. Or gauge the conversion rate for shoppers revealed that a free shipping deal versus those shoppers who didn’t find a free shipping deal.
Also, think about using the conversion rate that will assist you realize how to invest in advertising. If traffic coming from your email-marketing station convert twice the speed of traffic coming from search, you might want to concentrate more energy on email.
Be cautious with conversion rate. Like any KPI, it may be misused or misunderstood. A post on Smart Insights pointed out areas of concern.
- Making your website more engaging may decrease conversion rate. In the event that you regularly create content that is helpful, people could come often to read that content — and just purchase something, say, once in ten visits. If you just monitored conversion rate, you may foolishly think that was bad.
- A relatively higher conversion rate does not necessarily mean more sales. It is much better to convert five percent of a thousand traffic than 50 percent of 10 visitors.
Average Purchase Value
Average order value, which Kearns called transaction size, measures the average value in dollars of a sale on your ecommerce website.
Although easy to figure, average order value is a substantial indicator of ecommerce success, because this KPI is often directly linked to profit. Increase average order value and gains are likely to rise also.
As average purchase value rises, a website will often enjoy a decrease in cost relative to each purchase. The cost reduction can come in the shape of variable expenses such as a lower shipping cost because you could place two items in the same box, or at fixed cost like worker wages.
For the holiday seasons attempt to boost average purchase value. You might consider:
- Offering free shipping with a minimum purchase;
- Merchandising related goods;
- Showing and promoting product recommendations;
- Bundling products.
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