Here we'll talk about the main Digital Marketing Performance metrics for e-Commerce that really matter, and should be observed at least 1 to 2 times a week. We are considering that the campaigns are targeted to the user who is already at the "bottom of the funnel", i.e., the user has already had one or more contacts with your brand/product, and is considering buying.
The year 2020 brought many challenges to e-Commerce worldwide, and we had a brutal increase of companies going digital with the goal of selling their products to what, for them, was a new sales channel, especially for businesses that had physical stores as their main conversion channel.
Having been working with e-Commerce since 1999, I see that it is common for businesses to think that the only work required to start selling online comes down to 5 steps:
5 initial steps to start your e-Commerce
- Choose the most cost-effective e-Commerce Platform for your niche;
- Hire one or more logistics companies that make deliveries in the market of operation, preferably with delivery monitoring integrated to the e-Commerce platform;
- Choose the Payment Methods you will make available to the customer;
- Register the products with photo, description and price;
- Make some investment in Digital Marketing on Google and Social Networks: "put some ads in there and we'll wait for the applications to come in."
The day-to-day reality couldn't be more different.
The fact is that just like you, who may be getting into the online sales game, thousands and thousands of businesses are also doing it or have done it long before.
You are now competing not only with other companies in your area, depending on the flow of people you can capture the attention for an eventual purchase. The competition now is with all geographic space in which you can perform the delivery of your product. And if we are talking about a Portuguese company, at the very least you should think about serving Portugal and Spain if you really want to be profitable in online sales and a sustainable business in the long term.
Key KPIs for e-Commerce
Know and understand the main figures (KPIs - key performance indicator) for an e-Commerce to succeed in 2021 is preponderant to stand out in the market, and here we will try to help in a didactic way with these metrics of Performance Digital Marketing for e-Commerce, considering that we are investing in ads on Google and Social Networks:
- Impressions: how many times your ad was displayed according to the keywords (keywords in Google or Bing Search) or targeting chosen (Google Display and YouTube, Facebook, Instagram etc).
- Clicks: how many times your ad was clicked.
- CTR: percentage between the amount of clicks divided by the amount of times your ad was displayed, e.g: (1,000 views/50 clicks) = 5% of CTR.
- Average CPC: average cost per click of your ad in the period, ex: if your ad had 500 clicks in a period of 7 days and was invested 100? (100/500), the average CPC of the period is 0.20?
- Average CPM: average cost in the period for each thousand times your ad was displayed, ex: your ad had 10,000 views in 7 days and you invested 100? (100/10), you had the average CPM of 10? Note that the division is by 10 and not 10,000, because the CPM considers the amount invested per 1,000 ad views. Another detail is that the same user can see your ad in the period more than once.
- CPA: cost per acquisition/conversion, ie, how much you needed to invest in the ad to make a sale, eg: considering the same 100 ? invested and 5 sales made in the period, we have 100/5 0 20 ? of CPA, or cost per sale.
- ROAS: returned on the investment in advertising, ie, is the amount of sales divided by investment, ex: if it was invested 1,000 ? and this returned in sales 2,500 ? we have 2,500/1,000. Your ROAS in this example would be 2.5.
- ROI: ROI takes into account all costs, not only the investment in ads. Here we have to consider the cost of production or purchase for resale of your product, expenses such as water, energy, rent, employees etc. It is a more complex calculation because we have to know precisely what really is the total cost we have with each product, however, with this precise value, we can know exactly the profit we are having from investment in Digital Marketing.
So I just need to figure out those metrics and that's it?
Not quite, but before we talk about other important metrics, in this article we will still explain the best practices to make those metrics the best they can be.
And if you've made it this far, you might like to learn more about Contextual Marketing in another article available in our Blog.
First you need to know that each ad platform will show you different results. I will explain.
Imagine you're investing $1,000/month on Google Search and $1,000/month on Facebook/Instagram in ads.
Comparing Google Search's 10% CTR to a Facebook/Instagram CTR of 5% is like comparing apples to grapes. The platforms are different, depending on each market, each niche, these numbers can also vary. And user behavior on each of these ad platforms is different.
People who are searching for something on Google and find your ad are more likely to click than those who are scrolling through their Facebook feed and come across your ad. They are different moments of the user and possible client, and understanding that the platforms complement each other (and in what way) will make all the difference in improving results in the medium/long term.
Analyzing numbers only as data will not bring you great insights either. It is necessary to transform isolated data into useful information, relate it to the objective of the ad, the chosen target, and then begin to draw the first insights to improve the performance of your digital marketing campaigns.
Let's further explore the example cited above and imagine that the average CPC in Google Search was 0.50?, we will have 2,000 clicks on the ad with 1,000? of investment. As the CTR was 10%, we can assume that the ad was displayed 20,000 times to people searching on Google.
To make the count and comparison easier, let's assume the average CPC on Facebook was also $0.50, meaning you also got 2,000 clicks with the $1,000 invested. However, since the CTR was 5%, we assume here that the ad was shown 40,000 times to people browsing on Facebook and Instagram.
If 5% of the people who clicked on the ads coming from Facebook or Instagram make a purchase on your e-Commerce, we will have 100 sales coming from the ads for these two social networks.
If only 2.5% of the people who clicked on the Google Search ad made a purchase, we will have 50 sales coming from the same 1,000? invested.
Man, you can see that it's much better to invest everything in Facebook and Instagram than in Google Search.
Well, I wouldn't say that, and I'll explain why:
- I don't know which ATP (average ticket price)I don't know the average purchase value of the customers who came through Google Search ads, and I don't know the ones who came through Facebook and Instagram ads either;
- I also don't know which LTV (life time value)The average total purchase value of customers over a period of time who came from each ad platform, e.g., customers who came from Google Search ads may make an average purchase 3 times a year, and those coming from Facebook and Instagram may only buy an average of 1 time a year. I ask: which customer is going to be valuable to my e-commerce business?
? This is getting too complicated? ??
?however it has not yet explained how to improve these numbers? ??
Some tips to improve your Digital Marketing for online sales
- Have a clear and objective value proposition regarding what you are promoting on Digital Marketing ad platforms. Do not annoy your potential customer with false or even vague promises. It is increasingly difficult to attract the user's attention, and to get them to click on your ad, not to mention.
- The Landing Page (first page the customer will see after clicking on your ad) has to be 100% consistent with the promise/offer contained in your ad. Otherwise you'll be throwing money in the trash can and undermining all the planning you've done. And you may even be penalized by the ad platforms.
- The loading time of your site has to be brutal. Be obsessed with it. Every extra second your site takes to load will be proportionally reducing your CR (conversion rate)The percentage of people who clicked on the ad and made a purchase.
Do you have any questions or doubts? Feel free and put it in the comment below. I will be happy to answer them all.