Commerce Today Episode 123
===

Joshua: [00:00:00] Hi everyone. So if you have an analytics dashboard that looks like Times Square, you have just blinding lights everywhere and you don't really know where to go, then this Commerce Today episode's for you having a little fun. Being a little contrarian as I like to do from time to time. And I am starting off this episode with the thesis that you can actually be too data driven, that you can have too big of a focus on being a data driven company.

And by the end of this episode, I think I'm gonna have you convinced, and I'm also gonna have you really thinking through your analytics and your data in a different way and focusing on one key metric in each of the areas of your funnel. So let's just dive right in. First up, why measuring everything backfires?

So one thing to think about, one story that I have seen happen all too often is when you have these great integrations into your Slack and you have a Slack channel where your e-commerce team is maybe meeting virtually and looking at your analytics and you're getting [00:01:00] notifications of, let's say. 15 different metrics sessions, bounce rate, A-O-V-C-V-R, roas NPS, all these abbreviations that we love.

Maybe throw in a Facebook CTR on top of it all. You're getting all this information, but it's basically just noise. You'll have different people on your team pick their one favorite metric and argue. Lots of times argue really well both sides of a change of we absolutely should and we absolutely shouldn't do this based on what their favorite metric is.

So it doesn't really help guide decision making, it doesn't help guide priorities. You end up with just total chaos. I end up seeing, companies that spend so much time and money on basically building more and more analytics dashboards and more and more things like that because they think that'll help them basically drive their team towards being more data-driven, towards increasing conversion rates, increasing revenue, increasing profit, and it's really just throwing more good money after [00:02:00] bad.

You've gotten so wrapped up in. The thought of having nice dashboards and the thought of being a data-driven company that you've lost your way. Just see so many projects then get, start, stopped, canceled paused reprioritized, especially if you're looking week to week at some of these metrics, you might one week have someone say, Hey, our click through rate on these ads is down.

We need to completely redo all of our landing pages. You get halfway through redoing the landing pages. The next week, all of a sudden click through rates are way back up. Maybe what you didn't realize is there was a change in the marketplace, a change in your competitors, a change in buying behavior, or it was just a fluke from one week to the next, and here you are halfway through redoing your landing pages when it turns out you didn't need to do anything to them at all.

So you end up with a whole lot of dials and no steering wheel, no true. Data that is really guiding your decision making. In a productive way. And so I believe [00:03:00] you have one metric to rule them all to throw in an old game of not Game of Thrones. Oh Lord of the Rings reference. It's so old that couldn't even think of it.

But yeah, basically you have one hero metric for each stage in the customer journey, and everything else is secondary. And so when you're making a decision, you look at that one hero metric. So one way to look at this is think about, although this also speaking of old cars, don't always do this anymore, but think about especially older cars that will have, or, larger trucks that will have a dashboard where, yeah, you have your big speedometer, but then you also have, your.

Oil temperature, your sometimes oil lifetime, and all these other secondary metrics that. Honestly, when you're driving, you're not paying attention to them unless something is really wrong. You're not glancing down to see what your oil temperature is. You're mainly just checking your speed every once in a while, and that is how you should look at these metrics.

You should have one main metric that is really what you're focused on as you're driving your e-commerce business [00:04:00] down the road. And then you have those secondary metrics just in case you need a little bit more data or something does start to feel a little bit off. Next up, and I actually made some notes on this because there are a lot of metrics here and I wanna make sure I get all these details for you.

If you want this list of metrics, just reach out to me on LinkedIn. You can find me as Joshua Warren with a Cree Tweetie Gold background behind my head in my headshot. 'cause there's a lot of Joshua Warrens out there. Reach out to me and just say you want the one metric to rule them all list.

And I will send this to you so you don't have to frantically make notes as we go. But stepping through the customer journey, first up, interest. So basically these are the people that have initially expressed interest and really all of this, by the way, is going to apply to both B2B and B2C companies.

Some of the terminology may be a little different but this works for any e-commerce, which is really handy. Back to interest. Your hero. KPI, your one KPI. To rule them all [00:05:00] is qualified sessions. And what do I mean by a qualified session? I mean that someone that is on a product or category page and is an engaged session?

An engaged session, meaning they spent at least 30 seconds on the site, or there's at least a scroll or mouse click event that was fired. You might be saying, why does that matter? That matters because. If you spent any time in analytics in an e-commerce, you have seen those sites and those reports where there are a ton of sessions, but none of 'em are converting.

Conversion rate is terrible. The bounce rate is super high. There's just some weird stuff in the data. And when you dig into it, lots of times those are bots. Lots of times they're not even hitting product category pages, they're just hitting the homepage. I have even seen. Poorly configured analytics setups where there was like a site uptime monitor that was hitting the homepage every X seconds and it made it, when they switched to that service, all of a sudden their analytics was like, wow, we [00:06:00] have so many more people visiting the site, but they're all bouncing.

It's because they weren't real, they weren't qualified sessions. Set up your qualified sessions and you can do this. And actually, instead of. Reading you instructions for Google Analytics reach out to me for those. Actually, I've written instructions of exactly how to measure each of these things in Google Analytics.

And really a healthy target here is or one way to look at it to set a healthy target is to actually look at what percentage of your sessions are qualified. So you're not just looking at the number of qualified sessions, you're not just looking at growth in qualified sessions, both of which are important but you're actually looking at.

How much, how many of your sessions are actually qualified? So for paid traffic, that might be 40% or better for organic traffic, you're really hoping for 60% or better of your sessions are qualified. So definitely look at this, compare it to bounce rate if you have a, especially on paid ads, if you launch some new campaigns and you see a huge [00:07:00] increase in bounce rate, but not much of an increase in qualified sessions.

Then, okay, this isn't qualified traffic. We accidentally bought a whole lot of traffic and it wasn't the right traffic. It wasn't traffic that is actually interested in our products, that is interested in buying from us. So that's the interest section of the customer journey. Next up is engagement.

Your hero, KPI. Here's super simple. Product view to add to cart percentages. So how, what percent of people that have viewed a product are adding that product to their cart? So really simple metric easy to measure in Google Analytics. And again, this metric is actually gonna be a little bit different for B2B versus B2C.

So the metric itself is the same but healthy values. Really you're looking for 8% or better for a D two C brand. So 8% of the people that are viewing a product are adding it to the cart. For B2B often that's a lot lower just because you might have, more people that are gonna call in, you're gonna have more [00:08:00] people that are doing a longer research cycle before they buy.

So a healthy number there might be as low as 4%. So if you see this being lower than that percentage, and if your qualified sessions are good. So we've already figured out, okay, we have the right traffic going to the site. It's just they're not adding products to their cart. You have probably a product page issue, so that could be you need better images.

That could be especially on the B2B side, you might need to add some spec sheets and other really detailed product information of the product page. Just a lot of digging in to the customer experience on the product page you want to do, if that metric is off. Next up in the customer journey is evaluating.

So your hero, KPI, here is your cart to checkout percentage, and I don't mean actually how many people add to cart and then complete checkout. How many people add something to the cart and then even start checkout? So this is checkout starts divided by the number of carts that have at least one [00:09:00] item in them.

Again, I can give you exactly how to measure this in Google Analytics, exact formula if you reach out to me. And for retail for G two C and retail you really want this to be at least 60%. Otherwise something might be very off. Lots of times if it's lower than that for retail. And even on the B2B side, if you're below a healthy number here it will actually be because people don't understand your shipping policies.

Shipping prices and shipping turnaround times. If you don't have that information on the product page, you may see a lot of people add things to cart. Just to see if the cart will then tell them what their shipping cost is gonna be. So they're not actually ready to buy yet. They're not looking to complete checkout.

They just need that information. And if you don't have that, especially if you don't have some sort of. Receive this in X days or receive this by this specific date information on the product page that can drag this number down. So on the B2B side, you want this to be typically at least 50% If a [00:10:00] B2B buyer is adding a bunch of things to their cart and then not even starting checkout.

Something is probably off there. Now this can indicate that they're building on a cart and then calling into sales. So this is where really understanding the story behind the metrics can be really important. You don't want to just latch on to just the number. You wanna really dig in and understand why.

One of the things I see as well that sometimes causes challenges with this is this'll be the phase or the step at which people start thinking about coupons. And so they may have added it to the cart, gone to the cart page, seen a promo code box, and then thought, oh, I want a promo code. And so now they're out there googling, trying to find promo codes.

Probably are finding affiliates for your competitors that are pushing them to your competitors. So that's where maybe you want to do some different messaging around promotion codes and sales in the cart flow. All right, so the next step in the funnel we're gonna talk about is the purchase step. So this is where I feel like everybody focuses.

[00:11:00] So chances are you've got the right metric here already. But just to make sure it would be your conversion rate, your checkout conversion percentage specifically. So when I say checkout conversion percentage this is actually the percent of people that convert. That have started checkout. So it's not just percentage of people that go to your site and then checkout, because again, those could be all the problems we just discussed in the previous steps in the buying journey.

Could be non-qualified traffic, could be a lot of different things. So we're actually just looking at the number of checkout starts versus the number of checkout completions. Again, this can vary a little bit between retail and B2B, but you want to see at least 60 to 70% of the people that are beginning checkout actually completing it.

And if not this could be a lot of things. This could be, you're asking way too many questions in the checkout, way too many fields. I see this a lot on the B2B side, where especially if it's a new account. You really want to collect, 30 different pieces of data. The sales team loves to have that.

Maybe [00:12:00] even your ERP or CRM was originally set up to require all those fields, but that will kill your checkout conversion rate. So be smart about what you're asking before purchase and then what you ask after purchase. Also payment errors the, those can be a silent killer of this metric where you're having either issues where people's credit cards aren't working.

Or actually some of the bigger retailers, especially the biggest D two C brands we've worked with when you're doing just a huge number of checkouts, even if it's just like a 2% error rate, that 2% can really start to add up to a lot of money. I. So I've actually found on some of our bigger projects where there are issues with your payment gateway that maybe a lot of other merchants don't run into 'cause they're not at your scale and your volume that are starting to slowly eat away and cause basically.

What I consider silently failing checkouts. Like these are the people that aren't gonna reach out. They're not gonna complain. Their order just isn't gonna go through and they're gonna go somewhere else. So again, if that metric [00:13:00] is off, then that can indicate if you've checked everything else, maybe start looking at your payment method logs.

This also lots of times we'll put, so much time and effort into optimizing how fast a site is. All the way up to checkout, and then people just don't spend as much time optimizing checkout. So your buyer may, especially if they're on mobile, they're getting this great experience, oh, this site's so fast, I've added it to my cart, I'm ready to buy.

Hit checkout. Okay, now it's taking forever, and now I'm getting bored and distracted and thinking about opening up a different app, or just going to the Amazon app and making my purchase there. And now you've lost the sale. So definitely make sure that your checkout is fast as well. Now a lot of people, that's where the customer journey ends.

But there's actually two more steps you need to focus on if you want to grow your e-commerce business. Next up is retain. And so for this, the most important metric for you to track is your 90 day repeat purchase percentage. So how many people are ordering [00:14:00] again after 90 days? Like what percentage?

And again, I have a really awesome query that you can run for this using big Query or if you have a CDP like Twilio segment, you can run it there as well. So this really varies by industry. So this one I'm a little more hesitant to give you a benchmark number on, but I'm gonna try. If you're selling a consumable product, especially consumable product, that has a.

Lifetime of 90 days or less. You really should see this at 25% or greater. If it's hard goods, if it's other items that you know, maybe are a one-time purchase, it might be as low as 10 to 15% is what you're looking for here. Now this is, this will show you, this metric will show you how well your loyalty program is working, how well your ongoing marketing to your existing customers is working.

Even what your customer satisfaction is. If they're getting the product and they're like, oh, I don't like the way this was shipped, or This product doesn't actually match what I thought I was ordering, [00:15:00] they're probably not coming back. This metric can give you insight into quite a bit of your post-purchase experience.

Now, the last one and this one is the step that I feel like 99% of the e-commerce businesses out there miss. And if your business is tracking this and you can show me some historical data. Reach out because I wanna celebrate you and talk about what a great job you're doing as an e-commerce leader.

'Cause again, people forget this step and this step is advocate. How many of your customers after they purchase again and again from you, even, how many of those are you turning into brand ambassadors and advocates for your brand? And KPI to track here is the referral share of new orders.

So if you're tracking, especially through a checkout field. And again, don't have too many checkout fields. If you're asking people, how did you hear about us? And they're saying, an existing customer referred me, you wanna track that percentage. You can also get fancy and you can actually give people referral links.

You can track that through UTM codes. [00:16:00] There's a lot of different ways to track this, but so often I see people just use that simple field of, how did you hear about us? It's a great thing to add as a. Step after they complete checkout. So once checkout is complete, the order's placed, the payment's captured then you pop up something and say, Hey, how'd you hear about us?

Again, this can vary a lot from business to business, but as a baseline, if this, if at least 5% of your orders are coming from existing customer referrals, you're doing well. If you can hit 10% or greater, then you're starting to really build a customer acquisition flywheel to where you're acquiring these customers, turning them into repeat customers, and then turning them into more repeat customers.

Definitely think about VIP programs. If this number is too low, think about like share and save links on the checkout page, the confirmation page, post-purchase confirmations, et cetera. So that was a deep dive through the funnel. Now, how do you pick your KPIs, maybe some of these areas? The hero [00:17:00] KPII mentioned isn't the one that really fits best for your business.

Just stop and think. Think about what really moves the p and l. Think about what KPIs, if they shift, you're gonna actually feel it in your revenue or your margin. Also think about are these metrics that are controllable within a single sprint? So can the team influence this number in two weeks? If it's something that's gonna take six months or a year to change, then chances are people just, you're not gonna be able to track it and see the changes fast enough to really get excited about this metric and do good work around it.

Also make sure it's plain English. Anyone from a developer to an executive needs to understand what good looks like for this KPI.

All right, so now you've set your KPIs on commerce today, I always like to give you specific actionable things you can apply today to your business. So here's a little 90 day KPI reset plan. And again, I can actually just send this to you on LinkedIn if you wanna reach out to me so you don't have to.[00:18:00] 

Frantically scribble down notes. But it's a pretty simple plan, honestly. So week one is the purge. Not the movie, not the experience, but purging any of your KPIs on your dashboards if no one has acted on them in the past 60 days. So if you have KPIs up there that, whether they're red or green, yellow, wherever they're at, if no one is taking action on them, if they're not.

Signaling something that you then make a change based on for over two months. It's just noise. Just take it out, take it off of your KPI list off of your dashboards, week two, baseline and targets. So document the current value of each of the KPIs that you are keeping. Set a weekly goal for each of those hero KPIs.

So then the next few weeks three through 12 set a 15 minute huddle. I think Fridays are great for this, but I know a lot of people don't like Friday meetings anymore. I think Monday mornings can work as well. But basically ask in the past [00:19:00] week, did this hero KPI move, what did we do that might have caused it to move?

Is it, did we make a change to the business, to the website that may have caused it to move or did something outside of our control within the economy, within the news, within buying pattern, seasonality, et cetera cause it to move. And then decide, okay, based on that, are we gonna make further changes to try to influence this KPI and then at the end of the 90 days basically graduate your KPIs.

And what I mean by that is if a KPI has been stable and it's within the optimal range, I would actually recommend take it off your dashboard. You can still have it on a report or I think the best thing to do then is set up an alert. Where you will get an alert if this KPI starts to drift off of target.

But otherwise, take it off your dashboard, pick the next KPI that you wanna optimize and really focus on that, and then rinse and repeat, and just keep doing this in these 90 day cycles. And you will, by the end [00:20:00] of a year, greatly have improved your e-commerce business. So I would challenge you as soon as you're done listening to this or watching this go to your dashboard, go to your analytics system, wherever you're tracking your KPIs.

Or for those of you that don't have any dashboards and aren't actually looking at your KPIs, go set that system up and pick basically one hero, KPI that you wanna start tracking and you wanna start making changes about and start checking in on that one once a week. Ideally you'd implement the whole 90 day plan, but honestly, if you just go look at your analytics dashboard right now.

Maybe clean it up a little bit. Pick one hero, KPI that we discussed to focus on and focus on that for a few weeks. That's gonna make a huge impact on your work and on your business. So that's it for today's episode of Commerce Today. I'm really excited about the next episode. We're actually gonna dive in to the question.

What is e-commerce? And I think it's gonna go in some directions and be an episode that is not what you're thinking or expecting when I just say what is e-commerce? It's [00:21:00] gonna be a fun one. And yeah, I hope you enjoyed this and definitely stay tuned and feel free again to reach out to me on LinkedIn.

My name is Joshua Warren of Creatuity and Commerce today, and I can get you all of the Google Analytics formulas from today's episode. Thanks. Have a great day.