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December 30th, 2020
By: Nici Pillemer
As a performance-driven Content Specialist at Become, Nici Pillemer lives and breathes data analysis, with every piece of content being analyzed for its impact.
Become, as the leading small business funding platform, helps e-commerce sellers grow through data-driven solutions. The company’s BeProfit profit calculator tracks expenses, optimizes profits and provides intuitive e-commerce analytics for Shopify sellers.
As an eCommerce store owner, what is your most valuable asset?
It’s certainly not your physical storefront (since you don’t have one).
Some may argue that it’s your customer service, your brand, or even your employees. But without minimizing the importance of those assets, the ultimate asset of any business is intangible – it’s data.
According to a survey conducted by Deloitte, 49% of business respondents stated that analytics helps them improve their decision-making, 16% of respondents answered that analytics helps with strategic planning, while 10% believe that analytics helps them improve their customer and partner relationships.
Customer data lets store owners into the minds of their customers – enabling them to understand and predict customer behavior as well as make data-driven decisions. This leads to an optimized user experience and increased sales and profitability.
Sounds too easy to be true. But with the right tools, any ecommerce business owner can access, understand, and let their data help them build their profitability. The art lies in analyzing the right data.
Keep reading to find out which data is overrated which you may be wasting your time on (hint: these are the most commonly analyzed data points), and those that are underrated which you should be spending your time on.
Ecommerce analytics involves collecting and analyzing all relevant eCommerce store data that is impactful and then using insights to make data-driven decisions that improve your store and its profitability.
It’s important to analyze all steps in the customer journey (awareness, consideration, conversion, retention, and advocacy) so that you can identify areas for improvement and act accordingly with specific marketing efforts or a tailored sales funnel.
When analyzing data for eCommerce make sure not to fall into the vanity metric trap – those metrics that look good on paper if they improve but don’t actually help business owners make important business decisions.
Standard analytics tools such as Google Analytics often focus on these overrated metrics. While those metrics may be helpful for marketers, they aren’t necessarily the best data points for store owners. According to Neil Patel, the so-called vanity metrics include:
Instead, it’s more beneficial to focus on metrics that help increase your sales and profitability – known as actionable metrics:
Conversion rate – the percentage of site visitors that make a purchase from you (especially on mobile devices)
Average order value – the amount on average spent by your customers per order
Cart abandonment rate – the percentage of customers that abandon their carts before making a purchase
LTV (Customer Lifetime Value) – the amount you predict that each customer will spend over their lifetime, or the lifetime value of that customer
Customer Acquisition Cost (CAC) – the cost on average of acquiring each customer
The first step in analytics is data collection – but you need to make sure that you’re collecting the right data to analyze. In other words, the ‘what’ needs to come before the ‘how’. To do so, you need to define your goals (what do you want to achieve with this data and what type of data will help you get there?) while keeping actionable metrics vs vanity metrics top-of-mind.
Google Analytics is a valuable source of data for ecommerce sellers but it is by no means the only one. If you rely on just one or two data sources then there will likely be gaps in your ecommerce analytics. You’re going to need as extensive a picture as possible so that you can take the right actions to optimize your ecommerce store in all the right places.
These are the most important data sources that every ecommerce business should focus on:
Marketing ad platforms – platforms such as Facebook Ads, Google Adwords, TikTok and Snapchat are rich in valuable data that reveal a lot about an ecommerce business’s performance. Marketing ad ROI is one of the most important, and most underrated, metrics.
eCommerce platform – whether you use Shopify, Magento, WooCommerce or another ecommerce platform, the data that you can analyze from your chosen platform is crucial. Important metrics include profits, costs, orders, shipping, inventory and other measurable data points.
Google Analytics data – typical data from traffic sources such as social media or email marketing such as demographics and site visitor data can be overrated, but with Enhanced Ecommerce from Google Analytics you can access the more useful actionable data such as user behavior throughout the customer journey.
With all of these bits and pieces of data coming in, it can get overwhelming – but it doesn’t have to be.
There are many apps and ecommerce analytics tools available online to help ecommerce businesses consolidate, organize, and present their data in an intuitive and understandable way.
Your data needs to tell its story, one which you can act upon to improve your store and help you make the right decisions.
For example, Shopify has an app store where you can find a variety of analytics tools. BeProfit – Profit Tracker is one such ecommerce analytics tool that serves as a profit calculator with user-friendly analytics dashboards for centralized data analysis, visual reporting, paid acquisition channel analysis and business metric tracking.
Armed with practical insights, business owners are well-equipped to make well-calibrated decisions and changes based on real time data as opposed to operating their businesses on assumptions and guesswork (such as mobile marketing channels) and how it affects your conversion rate, bounce rate and overall customer acquisition.
Once you have all this relevant, actionable data presented in a user-friendly way, you need to then act on it by applying it to your business. After all, what’s the point in having all this data if you don’t act upon it?
Here are some examples of how you can use your ecommerce analytics data:
Although some of the big platforms come with built-in eCommerce analytics, there’s still the option to integrate your account into many of the most popular ecommerce platforms. If you use an platform such as Shopify, WooCommerce, or Magento, it’s very straightforward to use since those platforms offer easy Google Analytics integration.
Once you have all this data at your fingertips, you need to then be able to analyze and understand the story it’s telling you. A tool is only as useful as you make it – if you don’t know what you’re looking at or how to correctly interpret all the wonderful data that your Google Analytics is presenting to you, then it does you no good.
The first step is to set up your account correctly by setting goals and creating segments to sort your data.
Once it’s all set up, you can then start analyzing the story that the data tells you.
Here are some of the top do’s and don’ts to take into account when using analytics:
-Focus only on the overrated vanity metrics
-Analyze and base your decisions on data averages
-Incorporate dirty data such as generated by spam or bots
-Break your data down into default or custom segments
-Focus on the underrated actionable metrics
-Set goals so you can measure your conversion rate
-Remove skewed data or outliers
-How do I set up enhanced ecommerce tracking?
Enhanced ecommerce tracking is a Google Analytics feature that provides more detailed user behavior data spanning the entire customer journey, providing online retailers with additional data and reports and richer insights.
It’s simple to activate Enhanced Ecommerce within your account – you simply need to click a few buttons in your admin dashboard.
Luckily, the main ecommerce platforms such as Shopify, WooCommerce, and Magento offer the option to automatically integrate with Enhanced Ecommerce tracking. Of course, this makes your life a lot simpler and mitigates the need to pay a professional to do the job for you.
Let’s look at Shopify for example. Once you’ve integrated your Google Analytics account, you can easily activate Enhanced Ecommerce tracking by following these simple steps:
In your admin console, click on Online Store → Preferences
Go to the Google Analytics section, check Use Enhanced Ecommerce then Save
Next go to your Google Analytics account and click on Admin
Go to View and then Ecommerce Setting
Turn Enable Enhanced Ecommerce Reporting to ON and Save
When you utilize analytics correctly for your business, you unlock many benefits, for your customers and for your store’s profitability. Ecommerce analytics give you the opportunity and ability to:
What are the best tools?
There’s no shortage of effective tools on the market, but those that offer insights into user behavior throughout the entire customer journey are often considered the most valuable. We recommend the following:
Google Analytics Enhanced Ecommerce
BeProfit – Profit Tracker: Shopify profit calculator that tracks expenses and helps optimize profits
Hotjar: heat-mapping that gives you visual insights into your users’ behavior on your website
When it comes to building a successful, profitable ecommerce business, it’s crucial to optimize your store in the right way, in all the right places. The only way to achieve this is to make decisions based on data pulled from multiple sources.
Fortunately, this doesn’t have to be a daunting task if you have the right tools in place and if you remember to always focus on the underrated actionable metrics and forget about those overrated vanity metrics.