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Updated: July 11, 2012 17:49 IST

How much do you know about your online customers?

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Magesh Kesavapillai
The Hindu Magesh Kesavapillai

Analytics plays an important role in measuring online store business

The Internet has transformed many aspects of our lives, and shopping is one of them. Online commerce is growing exponentially right before us.

In the case of traditional brick-and-mortar stores, one gets to read the body language and expressions of the customers, from which their satisfaction or dissatisfaction can be gauged. This is not possible in online commerce. So, it is imperative to have a structured process to measure and analyse the effectiveness of an online store.

The website is one of the key parameters for a successful online retail business. There are plenty of resources available for e-commerce entrepreneurs to create shopping websites. But how efficient is a website, and what are the key performance indicators of the online store? Analytics plays an important role in measuring online store business. It provides valuable insights that aid in strategic decisions.

Performance indicators

First, visitors to the website and their behaviour are the crucial data to be captured and analysed. The percentage of new and returning visitors provides a good indicator of the overall business health. Browsing habits and visitors’ intent vary drastically. So, it is important to segment visitors of the website and develop a deeper understanding of the audience.

Segment them in meaningful ways: are they buyers or browsers? Prospective or committed customers? Unregistered visitors or registered users? Geolocation of visitors is another category to be considered for segmentation. Then, create different sets of metrics for each segment. For example, average visits, average time spent, average order value and conversions by each segment. These metrics would be very useful in the strategy to attract the right customers to the Web store.

Next, gather and analyse the click path, which is the sequence of hyperlinks that visitors follow on the website. Create metrics such as page views per session — this is an indicator of how compelling and easily navigated your visitors find your website.

Also, analyse the shopping metaphors. Shopping metaphors in an online store are the different ways that shoppers use to find products of interest — internal search provided within the website is one such way. Tracking how searching visitors differentially convert into customers should help you understand how effective your search engine is.

Next, measure the shopping cart activities. Metrics such as ‘average items per cart completed’ are indicators of acquiring better qualified visitors to the site. ‘Abandonment rate’ will help in studying the reasons for abandoning products in the cart. The data from shopping cart logs will also provide useful information on sales and demand forecasting, promotion planning and shopper behaviour analysis.

Next is the metrics from the ‘check-out’ process. Measure the speed of the ‘check-out’ process, effectiveness of payment gateway and details such as number of drop-outs during check-out. Valuable insights can be gained from these metrics.

Analyse merchandising cues. Merchandising cues in an online store are the different ways Web merchants present their products to motivate purchase. The examples are cross-sells, up-sells and promotions. Collect the metrics related to merchandising cues, for example cross-sell sales; this is an indicator of relevancy of the cross-sell recommendations.

How they got there

Knowing how visitors reached your site is as important as knowing what they do on the site. Track and measure the traffic to the website and also the sources of the traffic. The metrics collected in this regard will help in evaluating the marketing techniques such as banner ads, referral sites and paid searches.

(The author is Principal Product Manager for an IT product development company.)

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