One of the most interesting parts of running an online store is exploring the data and analytics available to you. In this blog we looked at the three key metrics that the professionals use to build world-class brands. You can learn what these three stats mean, how to find them and get some ideas about how to improve the performance of your store today.
The internet allows website operators like you to study your visitors behaviour, see which products your visitors interact with, analyse the effectiveness of different posts or campaigns and constantly improve your store. There’s a whole section of Teemill dedicated to this kind of analysis. You can also use third party tracking plugins like Google Analytics, which has an almost infinite combination of different metrics and recipes to study to look for correlations. The volume of data available has its pitfalls. Starting without knowing what you want to achieve can lead to conclusions like “bounce rate from visitors using Android last week was 5% higher than the week before while time on site from IE8 on Sunday’s is below average.” That is what we would call “numberwang” – metrics and reports that do not move the issue forward.
Start with the issue
It helps to stop and think about what you are trying to achieve, and focus on one thing at a time. It helps to start with the big, important stats that make big stores tick along. We’ll define some here.
- Conversion rate If 100 people visit your store and 1 of those check out, you have a CR of 1%. This metric tells you how much your visitors like your stuff.
- Traffic This is the number of people that visit your site. For a constant conversion rate, traffic is basically proportional to sales. More traffic, more sales.
- AOV This is the average order value. Your store turnover, or sales, is the traffic * conversion rate * AOV. A low AOV would be a customer who buys one t-shirt, compared to a higher AOV from a customer who checks out with a hoody and a t-shirt.
These three metrics are the engine room of any online store. To demonstrate how to use them, you could look at a store and decide that you would like to make more money. First you could study conversion rate. If you have some traffic but are not getting the sales you’d like, you can try working on your designs, product descriptions, photography and store branding and monitor your conversion rate to study whether or not your customers like what they’re seeing.
If your store already features conversion-rate maximising work like world class products, captivating descriptions and beautiful photography – but you’re not getting the sales you’d like, traffic is the KPI you will focus on. You can try different strategies for awareness and engagement on social media, guest blogging, PR or paid advertising and all the while monitoring which strategies work best in increasing the number of visitors.
And if you have great traffic and a great conversion rate but would like to boost income, focusing on increasing your average order value by adding your best designs on sweats and higher value items and working on some merchandising and photography that shows products that work well together to encourage buyers to add more to their basket.
With just three metrics, you can run a successful online business.
What do the other metrics do then?
The other stats are important because they help you figure out why the other stats aren’t great. For example, studying traffic sources and comparing organic traffic to direct traffic might help analyse if your SEO work or PR campaign is getting the better results. Looking at the search terms that people type on your site might help identify which products customers are looking for – or can’t find, helping unlock a higher conversion rate. And looking at the most frequently purchased t-shirt designs could help you decide which designs to put on a hoody or jumper increasing average order value.
Focus on actions and solutions to the numbers. The graphs won’t double, it’s what you do about the graphs that gets the results.
That’s why the Teemill analytics page intentionally does not aspire to have as many analysis functions as Google Analytics: Rather than an infinite list of things you can study, we want to make a page with simple insights you can actually do something about. And while you can install the Google Analytics plugin for Teemill if you really want, you probably don’t need to. All the stats you need are in Teemill. With presenting data, often less is more. A compact and focused approach works better than spending heaps of time in analysis. Our recommendation? You’re better to approach analytics from time to time, but spend nearly all of your time working on growing sales when you are running an online store.