E-Commerce Data driven strategy: how to increase sales by analyzing data
Do you want to improve the performance of your e-commerce? Discover how to set up a data driven optimization strategy
Knowing how to analyse data is the first skill to acquire if you want your e-commerce to succeed. If you want to increase your sales, the next step is to set up a data driven strategy. In other words, you should make your decisions based on real and concrete numbers, which show the real progress of your e-commerce.
In recent years, many marketers have revolutionised their approach to digital sales by investing in data acquisition. We can extract data from different sources, from websites to social media platforms, from CRM to written lists. However, it is not accessing the data that's difficult, but the ability to analyze data with a critical eye. The data can tell us a lot about the "state" of our e-commerce and show us the best direction to take in order to optimize performance. Here's how to build an e-commerce data driven strategy and increase sales by analyzing data.
Data Strategy: how to improve your ecommerce performance
Getting an online store off the ground means maximizing performance, boosting sales and improving the user experience. We have a reliable way of doing this: using data. Here is a list of the data items that are most relevant to your business and how to analyze them.
Your customer data
If you want to build a strategy based on data, you'll need to learn how to read those related to your existing and potential customers.
Tracking a buyer means building a real identity of your ideal client, which goes beyond the simple personal profile. The buyer's character also includes personal characteristics, interests, and ambitions. Understanding your customer is essential to offering them the best possible product or service.
But how do you profile a buyer person? Suppose you have an online store that sells shoes made from recyclable material. In its simplest form, a typical customer would be a woman, aged between 25 and 30 years old, who earns about 30,000 euros a year and loves to buy online. This is a woman who is attentive to fashion but who, at the same time, wants to help protect the environment and, therefore, chooses a sustainable approach.
Having all this information about your ideal customers helps you to improve your offer and focus on what is really important to the people you want to reach out to.
Once you have this data, you can use it for:
- Sort users into special lists and send personalised offers based on their behavior and interests
- Invest in influencer marketing campaigns and find personalities as close to your audience as possible
- Optimise the customer journey and make the experience even more enjoyable and personal
Customer Acquisition Cost (CAC)
Another fundamental metric to look at when you want to increase sales is the CAC As you can see, this is the value you invest in convincing a potential customer to buy a product or service.
The CAC can be calculated simply by dividing all costs incurred to acquire more customers (marketing expenses) by the number of customers acquired during that period.
Knowing your CAC is crucial because:
- It helps you build a general overview of the ROI of your marketing investments
- It allows you to figure out the value of acquiring a new client
Customer Lifetime Value (CLV)
The lifetime value is one of the most interesting metrics to analyze for an e-commerce. This metric immediately shows you the value of your client over time. We are not talking about a single purchase, but about the entire relationship between your company and the customer in question.
This data is particularly interesting for those who sell recurring products or services, such as business models with subscriptions. Tracking the CLV may seem simple, but in reality, the process can be much more complex than it seems.
Here's an example: suppose you've been running a wine shop for the last 5 years. If a customer has bought a case of wine per year for five years at a cost of 60 euros, the CLV will be the result of the annual value multiplied by the reference period. So you multiply 60 euros x 5 years = 300 euros CLV.
In general, the golden rule for finding the CLV is:
- Identify all touch-points between your e-commerce and the customer, tracking each of their transactions
- Integrate and analyse the value of these touch-points into your CRM. If you don't have a CRM, you can always use an add on for integrating a customer management tool with your e-commerce
- Evaluate revenue for each touch-point
- Multiply that entry value by the entire amount of the average life of the client
- Optimizing your CLV is a vital step to increase sales. When analysing this data, you may find that:
- Your e-commerce CLV is too low. This could be due to a number of factors, such as the shopping experience
Your customers make recurring purchases on certain occasions or at certain times of the year. In this way you can further segment customers and create custom offers to invite them to a new action.