Metrics matter — and with a plethora of available insights on today’s data dashboard, ecommerce retailers have a lot to look at.
A focus on the wrong data or an inability to extract the right numbers to enhance your unique goals can render them completely useless — wasting time, money and valuable opportunities for growth.
However, when it comes to tracking the “right” metrics, one dashboard does not fit all.
Having worked with both startups and in senior technology roles across large brands, including Denny’s, PetSmart and Transdev North America, Gavin Hupp currently serves as as Vice President of Information Technology for SeaWorld Parks & Entertainment.
He said selecting the right metrics depends on your organization, business model, goals, size, maturity, capabilities and technical infrastructure.
But the most important aspect of any metric is the people — the analysts who generate the metrics, the leaders who decide on actions and the workers who carry out those actions.
Of course, a B2B SaaS start-up will likely have different metrics and different staffing and resources available than a legacy B2C retail brand with millions of online customers.
For Ardon Lukas, founder of Shirtwascash, a meme-inspired ecommerce apparel store, his main focus is contribution margin (CM).
“It shows your true margin after known variable expenses like ads or delivery,” Lukas said. “Gross margin can be deceiving, those variable expenses make you unprofitable. Products should be optimized for contribution margin. In private owner groups, they know CM is the thing to track. It's also custom fitting for your business.”
For Brandon Rusk, it’s a little different. As the manager of ecommerce analytics for Safeway, a food and drug retailer operating stores across 35 states, he’s worked with 11 divisions and over 2,400 stores.
Right now, he’s focused on digital engagement (clickthrough rates, traffic), average order value (adjusted for inflation), strength of wallet and omni-flow as it relates to ecommerce shifting sales away from in-store.
Related Article: 3 Metrics That Will Drive Marketing Outcomes in 2022
Company goals and focuses may vary, but the metrics should feed the same purpose — informing decision-makers of signals that need to be addressed.
Metrics shouldn’t be vanity numbers; they should lead to action, according to Hupp.
He explained, “Metrics should not only cover business performance, but also technical performance of the components that make up your ecommerce ecosystem; ideally converging business and technology team goals into a single strategy and represented on a dashboard. A good starting point is establishing a few objectives and key results (OKRs).”
Objectives Set Priority
Hupp’s method to metrics starts by determining objectives, which set the priority for all activity that follows.
He recommended a few actions and approaches:
- Select the metrics that measure key results. Then set more granular key performance indicators (KPIs) that team members can act on when their metric indicates its necessary.
- Observe the metrics’ performances over time. This allows you to differentiate between the noise you should ignore and signals you should dig into deeper.
- Have a balanced scorecard across functional areas. This includes products, operations, marketing, customer experience and engineering. These areas should directly support the objectives of your organization.
- Look at the customer journey and determine potential friction points. You might look at macro conversion rates, micro conversion rates, average order value, refund and return rates, accuracy in order picking, internal order cycle times, order fulfillment time, etc.
- Identify technical optimizations you should make. You can do this with a technical SEO audit, producing metrics on page speed, indexed pages, crawl errors, mobile performance and more.
- Look at technical metrics on the infrastructure/architecture health of ecommerce systems. You can gain this information by implementing fitness functions that analyze code quality, resiliency, observability, scalability and stability.
Customer Obsessed Metrics
In the State of Customer Obsession Survey 2021, Forrester declared “Organizations that put customers at the center of leadership, strategy and operations outperform their non-customer obsessed peers.”
And, seemingly in response, their 2022 Global Marketing Survey revealed that customer engagement metrics were becoming more prevalent — with a 62% increase from last year in the reported use of “community involvement” as a metric on the dashboards of chief marketing officers.
Additional dashboard metrics included advocacy participation, number of engaged users and product usage.
Amid the myriad of online offerings, ecommerce brands can effectively establish their own unique identity through content creation. Good content can drive profitable growth for an organization by providing education and awareness that addresses consumer needs and elicits loyalty.
Tracking the right metrics connects the dots between your content and those consumer needs. But a 2022 survey from Parse.ly of more than 800 content marketers found that instead of culling content ideas from customer data, the top content driver was cross-departmental and executive-level requests.
Why? Because while 83% of those surveyed track metrics, almost 50% said they are unsure they’re doing it correctly — or if it’s even working. Additionally, 53% said they don’t tie revenue goals to content.
Related Article: 9 Steps for Creating a Successful Content Strategy
B2B Ecommerce: Avoid the Spiral
Because marketing sourced metrics fail to adequately establish the impact and value of marketing efforts, Forrester predicted that in 2022 these metrics (and presumably the folks who focus on them) will take “a downward spiral towards irrelevance.”
In 2015, 70% of B2B marketers used a marketing-sourced pipeline as a primary performance indicator. In 2020 it was still one of the most frequently used indicators, but its appearance on CMO dashboards decreased to 47%. By 2025, Forrester expects just 15% of marketers will incorporate it as a primary performance indicator.
Researchers further predict that successful B2B marketers will employ lift-based performance indicators — which are determined by documenting the correlation between an individual campaign and the percent increase of a defined metric.
Customer Marketing Metrics
A customer-focused marketer seeks to understand and document what customers really feel. These insights can serve to retain and increase an organization’s loyal audience and increase the well of new prospects. But isolating this data and determining exactly what actions create value requires a focus on the right metrics.
Forrester VP and Principal Analyst Amy Bills suggested output metrics could assist.
In a recent blog, she discussed the importance of connecting typical customer marketing activities to shared impact metrics.
First, she advised having a clear understanding of what factors (reputation, efficiency, growth, etc.) are most important to the company. Next, focus on the specific value your actions are creating to achieve those goals with output metrics.
“Then show how your outputs, such as driving faster adoption, streamlining and scaling customer storytelling and influencing upsell opportunities, contribute to those shared, high-level metrics,” Bills said.
“In our day-to-day work with customer marketers,” she continued, “we see that those who can establish and reinforce outputs related to shared impact metrics are better able to gain and keep the attention of leaders. By contrast, it’s frustrating to try to connect tactics and actions such as email opens and number of case studies directly to impact metrics. It’s a much bigger and less credible leap.”
Related Article: Is Too Much Data Hurting Your Marketing Strategy? Here's What Experts Say
The Most Important Metric
To keep moving forward, Hupps said organizations must continue exploring and analyzing their data and the relationships between events to find more actionable metrics. But it’s also essential to remember what’s most important.
The challenge, according to Hupp, is selecting the right metrics to focus on — the ones you can quantify and can show you can improve.
“This is where A/B testing can come in handy,” he explained. “All that being said, the most important part of metrics isn’t the process, data, analytics or technology, it’s the people.”