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Avant-Garde E-Commerce KPI’s

Pete Prestipino — Mon, 21 Dec 2009 21:25:00 GMT

The next issue of Website Magazine addresses the topic of high-performance analytics. As you might imagine, a great deal of the content related to identifying and discovering how to make the most of key performance indicators (KPI's) was included. Today let's look at what makes an appropriate KPI for Internet retailers, and identify those which will be most meaningful to your bottom line.

A key performance indicator is simply a measure of performance. KPI’s help to determine how successful or unsuccessful a company is in terms of making progress towards its goals.

Good KPI's cover everything (good and bad), can be assigned to be monitored and evaluated by the appropriate personnel or department(s), can be tied directly to profit and loss and most importantly need to be actionable. The problem most of retailers have with KPI's is that we're measuring the wrong ones. Instead of a KPI like average order value (which is important) we can do a lot more with KPI’s, measuring all sorts of things and how they impact our businesses performance.

There are but a handful of essential KPIs commonly used to track performance, return on investment and conversion rates for ecommerce websites. The e-commerce KPI listed below are ratios and percentages that can be used in addition to traditional conversion rates and return on investment calculations. Let the KPI’s listed below act as a means to find out what might be really helping or hurting your e-commerce store.

Editors Note: It is important to note that the KPI’s we are covering below ultimately need to be trended but they could prove useful as weekly measurements. Once a sufficient amount of data is gathered, fluctuations will become apparent, as well as site performance measurement indicators. When analyzing performance and overall ecommerce health, these KPI need to be compared in a YOY (year over year) manner.

Let’s get down to business. While most of us are content looking at the number of orders, the profit per order, and perhaps even some customer satisfaction metrics, let's look at a few additional KPI's that can be monitored and improved upon. You’ll notice we’ve not included a few of the more popular (average order value, shopping cart abandonment, etc.) metrics and opted instead to look at more value driven, yet esoteric or avant-garde ways to measure success or failure.

Buying Sessions: What you'll discover with a KPI for buying sessions is how well your actual site is performing - specifically the advertising. Divide visitor sessions with a purchase by the total number of sessions.

New vs. Returning Visitor Percentage: How often are new people visiting your site versus those which return periodically to see what’s new? This KPI will tell us. Just take the number of new visitors and divide it by all unique visitors. You’ll find out how effective customer communications are (e.g. email marketing). You can also establish a ratio to help understand the performance of new versus returning visitors by diving returning visitors by new visitors.

Order Conversion Rate: While most merchants track the number of orders that occur from day to day or month to month, understanding the order conversion rate helps to identify issues which may be hindering visitors from completing their purchases. Calculate this KPI by dividing visitors by orders. Use in line with shopping cart abandonment to identify stumbling blocks in the sales funnel. If you are currently tracking the order conversion rate, add another layer to this valuable KPI by comparing it to the buyer conversion rate (buyers divided by visitors).

Items Per Order: This KPI might ultimately be the most valuable one of those listed here. The items per order percentage will (if trended year over year) help us identify how well we are doing selling related or adjunct products.

The ratios and measurements for these KPI will vary from site to site, and are quite dependent on the industry and online business model. To get started you’ll need to find the right data (again, at least one years worth) within your analytics solution and if it is not already available in the formats listed above get out a pen and paper (or a calculator) and do some good old-fashioned math.

Each ratio that you calculate should or can then be used as a target. For example, is the items per order ratio falling? If the answer is yes perhaps it’s time to ramp up our merchandising efforts. Is the order conversion or buyer conversion rate increasing? Give your web designer a pat on the back? Buying sessions decreasing? Fire the ad executives. Analytics tells us a lot about performance but you’ll need to do the harder management work to make sure what you’ve learned sticks in your business processes.

E-Commerce Stats - $913 Million in Online Spending on 12-15-09

Pete Prestipino — Mon, 21 Dec 2009 16:30:00 GMT

Comscore has reported that holiday season retail e-commerce spending for the first 48 days of the November/December 2009 holiday season to date has reach $24.8 billion – a four percent increase versus the same time last year.

The most recent week began on a slightly disappointing note, with sales of $854 million on Green Monday (Dec. 14, 2009) down 1 percent versus year ago, but was followed by three strong spending days that each surpassed $800 million. Most notably, Tuesday, December 15 set an individual day spending record with $913 million, the first such day to surpass the $900 million threshold.

So what were the other top selling days thus far for Internet retailers?
Consider using this as a guide to plan your 2010 e-commerce marketing.

The State of .INFO from Afilias

Pete Prestipino — Mon, 21 Dec 2009 16:00:00 GMT

Afilias, provider of Internet infrastructure services and registry for the .INFO domain, released its 2009 .INFO Annual Report. The .INFO TLD has had a tough run the past several years, but things are most definitely looking up.

.INFO Ranks seventh among all 270+ top level domains worldwide, boasting over 5.3 million domains – 70% of which resolve to real content (although there are only 1 million unique websites).

The top regions for registrations continue to be North America (61 percent) and Europe (23 percent). However, Asian markets are growing and the region now holds 11 percent of .INFO registrations. .INFO also continues to gain penetration into the registrar marketplace which offers domain names for retail sale. .INFO is now available with over 330 distributors that support over 90% of sales volume in the worldwide domain name industry.

“After 8 years of concerted effort, .INFO is the undisputed most successful new TLD launched to date, accounting for over 40 percent of all new TLD registrations,” said Roland LaPlante, Senior Vice President and Chief Marketing Officer for Afilias “.INFO’s experience provides many lessons applicable to the launch of new domains to come. As an organization, Afilias has been able to use our experiences with .INFO as a benchmark for successfully gaining approval for, launching and growing more new TLDs than any other registry services provider.”

Buyer Trend Study (2009) from Performics

Pete Prestipino — Mon, 21 Dec 2009 15:44:00 GMT

Last week Performics released findings from an eight month study of consumer behavior which showed that Generations X and Y (consumers age 18-44) were assisting the economic recovery by continuing to splurge on certain types of purchase and looking to the future with optimism.

Performics questioned consumers about their confidence in their economic situation and areas where they may have splurged in 2009. On average, more than half of the respondents think their current household economic situation is the same or better this year compared to their situation a year ago. While consumers cut back on a variety of expenses in 2009, rising consumer confidence throughout the past two months has positively affected reported spending, while the disparity of behaviors and attitudes among age groups has clearly emerged.

“We hoped we would see this positive shift in consumer confidence months ago, and that was part of the reason for Performics’ extensive eight-month study of consumer behavior and attitudes during the recession,” said Michael Kahn, SVP of Marketing at Performics. “The study’s November findings indicate a substantial uptick in positive attitudes, shopping behavior and buying intentions, with younger generations, Gen Y and Gen X, fueling the optimism behind this uptick.”

Looking ahead to 2010, Generations X and Y show greater signs of increased spending:

• 18 percent of those ages 18-44 expect to spend more overall in the next 60 days than in the same period last year, vs. 13 percent of those ages 45 and up.

• 24 percent of those ages 18-44 expect to spend more online in the next 60 days than in the same period last year, vs. 10 percent of those ages 45 and up.

“Regardless of who spent money offline or online, consumers were emphatic about the Web’s role in helping them make smarter purchase decisions in 2009,” added Kahn. “Consumers have long turned to the Internet to check prices and identify the best products to buy and merchants to patronize, but this year’s economic situation pushed this practice front and center. As we expected, consumers will gladly conduct some online research to save a few dollars here and there, let alone to save hundreds or thousands on big ticket items.”

Online price checking can reduce the likelihood of buyer’s remorse for a consumer either by confirming a good deal or identifying a better one, and this rang true for all age groups. When it comes to finding the best deals, nearly half of consumers found the best deals online. In fact, 45 percent of respondents said they found the best deals online in the past month versus only 34 percent of respondents who said they found the best deals in-store.

Also true for all age groups, consumers identified select elements of a website that positively affect their willingness to purchase online. Some of the key factors included free shipping, free returns, home page discounts and consumers generated reviews.

Giving Works – eBay Community Raises $50 Million in ‘09

Pete Prestipino — Mon, 21 Dec 2009 15:23:00 GMT

Despite a consumer spending pullback, eBay buyers and sellers managed to raise a record $50 million for U.S. and U.K. nonprofit organizations so far in 2009.

Users of eBay’s Giving Works program have raised more than $162 million since its launch in 2003. Today, over $91 is raised for good causes every minute.

There are five ways to participate in Giving Works. Most sellers will be familiar with Community Selling, where sellers donate part of their sale price to a nonprofit. Sellers decide which organization to support and how much to give (and receive a tax deduction for their gift. Other options include Direct Selling (nonprofits sell items on eBay with eBay waiving most fees), Give at Checkout, Donate Now, and Shop eBay Giving Works wherein each item posted by a community or Direct Seller bears the eBay Giving Works blue and yellow charity ribbon.

“The eBay community has proven time and again that small actions, when brought to scale, can have a big impact,” said eBay Inc. CEO John Donahoe. “It’s what makes the eBay marketplace so unique, and what enables our community to do good things for causes they believe in. I want to thank every single buyer and seller who connected through eBay and gave back to their communities through eBay Giving Works. Your generosity this year, especially in such a tough economy, isn’t just impressive – it’s inspiring. We’re looking forward to helping you do even more good next year.”