You’ve surely heard the saying, “Knowledge is power.”
The same is true for an ecommerce business. Having and keeping data related to your online retail store is essential for growth and success. You can use data in several key areas including, customer experience, conversion rate, and inventory management.
Let’s look at these 3 essential reasons to keep your ecommerce data:
#1 – Improve the Customer Experience
86% of consumers no longer used a business due to a poor customer experience. Don’t let bad service push customers away.
So, how do you improve customer experience? Data.
If you truly want to exceed customer expectations, gather and use data to analyze customer behavior, implement changes, and track the progress.
Here are some key data points to help improve the customer experience:
- Net Promoter Score – This metric is a great indicator of how satisfied customers are with your products, service, and brand. It is also shows who isn’t happy with your service and why. Pay attention to common themes amongst dissatisfied customers and improve those issues.
- First Response and Call Handle Time – First response times should be competitive, and support tickets must be handled in a timely manner. Poor customer service ruins a customer’s experience. You must have prompt, helpful, and consistent customer service policies in place. Monitor average response rates and make monthly goals to improve your response time.
- Cart Abandonment Rate – Tracking this data point helps determine if changes are needed to your checkout process, shipping fees, pricing, or other obstacles that prevent sales. Observing your average abandonment rate each month shows how customers interact with the checkout process. It also proves if improvements to the user experience helped or hurt the cart abandonment rate.
Brands in the United States lose $41 billion, on average, each year because of bad customer service. Start tracking the metrics listed above, find the baseline, create ecommerce goals, and start implementing strategies to improve your customer’s experience.
#2 – Increase Conversion Rates
Attracting new customers to your store means more opportunity for more sales. Data keeping plays a big part in getting those new visitors to purchase your products.
With real data, you can make better targeted marketing campaigns to generate new loyal customers. Here are a few key data points to monitor:
- Customer acquisition cost (CAC) – This is a fancy marketing term that means the total marketing cost to win a new customer. You should track this data point each month. It is a great way to see which marketing channels are working the best.
- Lifetime values (LTV, CLV) –This metric is a prediction of what each person will spend over the lifetime as a customer. First, find out how long the average customer will buy from you. From there, find the average amount that a customer buys at one time.For example, let’s say the average customer purchases approximately $30 worth of products from your store every 2 months over a 16-month span before the purchases taper off. That means your average LTV is: $30 x 8 purchases (16 months/2 months) = $240.You want to ensure that the CAC is lower than the LTV. If not, that means you are spending more money acquiring new customers than they will ever spend at your store. In other words, your business isn’t profitable.
- Customer retention rate – To improve profitability, customers need to come back and buy more. Increasing customer retention rate by 5% can increase your profits by 25% to 95%. Retention marketing is cheaper than acquiring new customers and much more effective. Effective data keeping provides valuable information to make product recommendations, offer deals and discounts, and target specific customer groups, based on your customers buying history and past behavior.
There are many more marketing key performance indicators (KPI) you should start tracking this year, but this is a great start. In the marketing world, knowledge really is power. Once you know what works and what doesn’t, making an effective marketing strategy is much more attainable.
#3 – Streamline Inventory Management
Inventory management is one of the most important aspects of running a successful ecommerce business. Inventory issues can be the downfall to online businesses. Without accurate and consistent inventory data, you run the risk of missing out on sales. Additionally, it can lead to overstocking, which ties up money that you could better spend elsewhere.
Here are a few key data points to monitor:
- Inventory Turnover – This metric tracks how often you are replacing stock. You determine this metric by taking your total sales for a specific product and the average value of the inventory you have on hand. The higher this number is, the less stale inventory you have. Determine which products are slow-moving, or not performing as you expected. Push those products in a new sales campaign or liquidate, if needed.
- Days of Supply – This data point is determined by taking your inventory on hand and dividing it by the average number sold daily. Knowing these details will help you stay on top of inventory and lessen the chance of overselling.
Effective data keeping related to inventory management is crucial. Using a robust, real-time, ecommerce inventory solution will ensure that you always have an accurate stock level count and provide data points for smarter purchasing decisions.
Data is the best friend of any determined ecommerce entrepreneur. All these data points play a part in the success of your online store. You don’t have to be a super tech-savvy business analyst to be successful, but you can’t overlook the data you collect from your customers, ecommerce platforms, and software solutions. This data can be used to help your store flourish.
Check out our end of year ecommerce checklist that’s perfect for the online retailer!