Are you selling on both Amazon’s marketplace and your own digital storefront? Have you experimented (successfully or not) with Facebook ads, PPC and contextual banner ads? Do you wonder what Instagram’s shopability and the streaming wars will mean for your audience reach?
Chances are you answered yes to all of those questions. Because we’re now living in an ecommerce world where multichannel is mainstream.
You have a general sense that multichannel is working well for your ecommerce brand. But with a dramatic increase in digital natives (and your competitors), the question becomes: how can you wring every last dollar out of your multichannel ecommerce efforts?
This is where metrics come in. However, with multiple points to track across marketing, sales and fulfillment, keeping them all straight can become complicated. Here’s a guide to keep them all straight:
Multichannel: bringing marketing, sales and fulfillment together
With ecommerce, you can’t separate out marketing efforts from your sales or your sales from your inventory management. They are all tied together.
When you undertake multichannel effort, things get even more complicated. For example, a paid search ad may appear to be performing well when you consider the traffic the ad drives to your ecommerce site. But if you dig deeper, it may turn out that your social media ads are actually driving more revenue because the traffic from that source results in a higher Average Order Value.
This is why you need to bring all of your metrics together. Tracking marketing metrics are important, but they mean much more when you tie them to actual sales revenue and fulfillment costs.
One critical step in keeping track of metrics in multichannel ecommerce is to narrow the field.
Having a handful of interconnected KPIs to focus on will give you a clearer picture of profitability and performance than trying to track everything platform by platform.
The 12 KPIs:
- Gross vs. Net Profit: With multichannel ecommerce, you have more opportunities to reach your audience but also more costs. Taking into account net profit (after acquisition, shipping, COGS and more) will give you a better picture of true profitability.
- Average Order Value: Total revenue divided by number of sales. You can increase this number with personalized offers, upselling, bundling, free shipping and more.
- Customer Lifetime Value: A more long term take on profitability after taking COGs, acquisition, returns and more into account.
- Segmented Conversion Rates: Look at who is converting into customers and use this information to tweak your acquisition efforts.
- Revenue by Source: Segmenting conversion by source will give you a good idea of which channel works best for your brand. Building marketing attribution and UTM tags into your processes is critical for this metric.
- Customer Acquisition Cost: How much does it cost to bring a customer all the way through the funnel and make a sale? Looking at all your metrics in one dashboard will help you get an accurate idea acquisition cost. Then you can focus on lowering it.
- COGS: Typically, the second line item, few ecommerce brands fail to consider COGS as a metric. It’s a good standard to give you a product-by-product examination of profitability — which products are loss leaders, and which are your bread and butter? How can you capitalize on this distinction?
- Customer Retention: Connected to the lifetime value of your customers is your retention rate. This metric goes beyond the ‘rate’, giving you valuable information into your most promising buyer personas. Which customers are coming back — and which channels brought them back?
- Cart Abandonment: When and why are visitors leaving your store before becoming customers? Which channels are most effective in bringing them back — retargeting or an abandoned cart email, for example?
- Cost Per Order: This one is important to bring into the mix because it ties in shipping costs (along with processing and advertising). Including fulfillment in your assessment of order costs can help you identify where costs can be reduced.
- Landing Page Performance: Which sales pages are performing best — and why? Heat maps and clicks are good indicators, but you should tie in A/B tests with which pages lead to the highest purchase rate (and the highest order value).
- Net Promoter Score: The gold standard for brand performance, NPS is particularly valuable because it covers brand image, customer service and fulfillment. Most metrics will focus on one of these areas, while NPS gives you a much broader picture of how you’re doing.
Integrating your tools can be hard enough without having to worry about keeping track of metrics in a multichannel ecommerce environment. But don’t let it muddy the waters when it comes down to determining your profitability and where you can make tweaks.
Even narrowing these ecommerce metrics to a shortlist leaves the average company with a lot to keep track of. With marketing, ecommerce and fulfillment platforms typically kept separate, how can you keep them all straight?
Having the platforms separate doesn’t mean your metrics have to remain in a silo. You can use a profit analytics dashboard, for example, to bring together the most relevant metrics for advertising, sales and fulfillment.
Monitoring your profit and marketing performance in ecommerce shouldn’t be hard — and a single dashboard for all your metrics makes it easier.