Tuesday, 15 November 2011

How much was the visit worth?

In retail there are a few core KPIs such as Inventory turnover ratio, Sales per square foot, average spend per footfall, etc. From the store manger, merchandiser and the marketing personnel's point of view it the average spend per customer footfall that explains if the store is attracting the right target audience and after they have made the visit to the store the customer has found the product that he/she is looking for, it is priced right and it has inspired or motivated the customer to part with the money and take the product home.

Technology has not fundamentally changed the essentials; we still need to eat, clothe and shelter ourselves. How we do that and the other needs of safety, education, comfort, etc has gone through revolutionary changes. 

In my experience working in ecommerce websites , I find that this one KPI of Revenue per Visit sums up all the other KPIs very well and provides everyone with an actionable metric. It quintessentially measure the money that the website makes every time a customer enters your ecommerce store. Then add further dimensions such as 

- Revenue per visit based on frequency of visit of the customer
- Revenue per visit split by demographic data such as age, region, etc
- Revenue per visit by first referrer visit, by last referrer, all 28 day referrer visits
- By product category
- By visitor loyalty
- By Devices ( like smart phones, tablets, etc.)
- Revenue per visit by marketing channels/ landing pages
- Revenue per visit with relation to customer satisfaction rating scores

The product team looks at the revenue per visit on the page and combines it with page view bounce rate, page view conversion report and in relation with the product's importance in portfolio decide on whether the product is meeting it's expectation or not.

Revenue per visit in view with the competitor price index/ position gives us what the pricing team need to do to make the product/ product category more competitive and compelling for the customers.

The promotions team looks at the uplift in revenue per visit to the cost incurred on promotions. 

The merchandising team can optimize based on the positive or negative change in this metric on the performance of the new zones/ pages they have created.

Above all to the top management it provides in a snapshot the health of the business and with every footfall the customer makes to the website or ecommerce store, what was the bottom line or top line impact. In short what is the worth of every visit the customer makes to the website through their desktop, iPad, smart phone, online kiosks, smart TV or any other device that is going to enter the market and how much he transacts with the company/ brand.

Friday, 12 August 2011

Six Dimensions of Analysis for a Web Based Business

Most of us are familiar with web analytics thanks to great proponents of this trade, who have really made it large and got web analytics the due credit and recognition it deserves. However as web analysts most of us stop with click stream and do not look beyond that. Today I would like to talk about the other facets of analytics for a web based business which are equally important and would help us as marketers to solve the Rubik.

The First Dimension:

Is off course is what all of us are familiar with the “Click Stream Analysis”, which looks at visitor and customer behaviour on the website. We analyse the various referrers, frequency of visits, number of pages viewed, time spent on the website and more importantly how many converted into sales or leads or any other goals that we have set as success criterion. Another blog on web analytics KPIs which I have written in the past delves in this area.

The Second Plane:

Business/ Trade analysis: This analysis is surely being carried out perhaps in a separate department within your organisation or by business analysts/ consultants who keep the top management updated with regard to the health of the business. The Finance team also carries out this analysis and tracks growth in terms of sales, margin, cost and profit. In case of a business that is done on the web, it is important for the web analyst to understand the sales driven by the website, the profits made from different offering, parameters of growth and other such business KPIs.

To elaborate on the same for an ecommerce website we would look at the year on year/ week on week and other periods of comparison for sales, orders, average order value and growth on these parameters. We would look at factors contributing to growth, what percentage of it is from underlying customers and how much is from new acquisitions. Further also we need to look at operational metrics such as availability, speed and accuracy of delivery, customer complaints, etc. and macro economic factors like inflation, customer spending index, customer confidence measures, etc.

The Third Angle:

The most important element in the entire piece is the customers. How well do we know them? Let’s start with demographics. Who are these customers? Are they, young or old, male or female, where do they live, what is their educational, cultural, social background, how affluent are they, etc. We also need to look at data on how often customers buy from us, how much they spend and what products/ services they bought. This data is mostly available in our customer databases, which we use to target and market using email or even direct mail. We need to also research and understand what drives these customers, what their motivations to buy from us are and when they leave to our competitors why do they leave. This is usually data that we could get by qualitative research.

Fourth Estate:

Is all about competitors. What is our price and promotions position with regard to competition. We have at our disposal competition intelligence tools. These tools are at many levels, if you only need to know what is your visitor market share and market position, tools such as Alexa and Hitwise can help. However if you want to scrape your website or competition website to compare products, price and promotion information then there are service providers like eClerx, profitero and Netvide. These tools provide data to then build a basket of comparative products and the price index of our competitors with ours. This is very powerful as right price is increasingly becoming more important (especially in the online medium, where comparison is so easy) as the determinant of sale/ conversion.

Fifth Slant:

The marketing effectiveness study is our fifth component. This area of analytics is also a mature one as online advertising and targeting has been around and studied for a long time. There are tools like double click, Unica, etc that measure the return on investment of the marketing spend. They also are so advanced that they manage the end to end process of administer/ target the audience and measure the impact. The most popular online advertising channels are search engine marketing, email marketing, affiliate and online media (such as banners and links). Recent times we have more subtle marketing that has caught the interest of marketers is the social media marketing. You can read more on social media marketing in this blog - Social Media.

The Final Piece:

The final piece to the jigsaw puzzle is the new kid on the block – fraud analytics. Big ecommerce websites are easy targets for fraudsters. Analysis in this area involves identifying patterns of fraud attacks and to build rules to prevent them when they hit the website. This could help us to save not only losing revenue but more importantly reputation as well.

Puzzle Solved:

When we look and comprehend all this data impacting and contributing to the business individually as well as in a combination, that is when we could draw more meaningful insight. This would give us a complete picture of how we could improve and optimise the business for better reach, profits, revenue and customer satisfaction.