Tag: customer experience metrics

10 Nov 2016

How tracking ecommerce metrics makes the holiday season brighter for online merchants

They are the second greatest gift any ecommerce merchant will receive in the holiday season, after the cold, hard holiday cash that can make or break an ecommerce retailer’s entire year, of course. But, surprisingly, in the rush of business that consumes them from Thanksgiving through the New Year, a lot of retailers overlook the valuable ecommerce metrics that flow in along with the cash. And that’s an oversight that can cost heavily in the long-run.

The reason is that every one of those all-important purchases is accompanied by data that can be captured and integrated and analyzed, and then turned into actionable insights that can remake those one-time holiday shoppers into long-term, loyal customers with a lifetime value many times greater than the initial purchase.

The question is which ecommerce metrics to track, and how, in order to foster a high rate of customer retention.

Six essential ecommerce metrics for holidays and every day

If you can think it, you can count it. The reality is that businesses can incorporate a seemingly open-ended range of metrics into their data collection and analysis, especially with the customizable, integrated dashboards now at their disposal. But, if the goal is enhanced customer satisfaction leading to increased customer retention, not all metrics are created equal.

Keeping an eye on the customer retention prize, key ecommerce metrics such as conversion rate, shopping cart abandonment, churn rate, repeat rate, and customer lifetime value can shine a light on what’s right and what’s wrong about the customer experience, and point the way to refining and improving it. And with the assistance of the right tools for the job, tracking key ecommerce metrics no longer has to be the onerous task it was in the manual age.

Conversion Rate

Before a business can take steps to retain customers, it has to acquire them. The conversion rate reveals how well that’s happening. Arrived at simply by dividing the number of site visitors who make a purchase by the number of visitors overall, it’s a metric that undergirds all the rest.

When potential customers enter an ecommerce website, what are the chances they will make a purchase? Across industries, a target rate is three percent, although specific industries will have rates that vary. If it varies significantly in the wrong direction, though, it may be a strong indication that the customer experience is not what it should be. Because conversion rate is a big picture ecommerce metric tracking large numbers of site visitors, it’s one that is often fully monitored and assessed on a monthly basis to review bulk data, but daily checks are also essential because they can pinpoint unusual fluctuations in the rate that may reveal problems with the website itself.

Shopping Cart Abandonment

It’s disconcerting to see a customer get all the way up to the cash register and then change his mind, leaving behind merchandise in which he was clearly interested. But it’s far from an unusual occurrence. Research from the Baynard Institute shows an average abandonment rate of an eye-opening 68.8 percent. Much of that simply reflects the way in which people surf the web, and the propensity most of us have to “window shop.”

But in other instances abandonment points to more serious buyer resistance, perhaps over price or concerns about quality that weren’t laid to rest at earlier touchpoints. Technical issues, too, are common reasons potential buyers leave – too many hurdles to jump in the checkout process, complicated navigation, and concerns about the security of payments among them. For many businesses, an abandoned shopping cart is an opportunity to reach out to would-be customers in the hope of learning why they left and gleaning information that can reduce the rate. Because the metric is closely related to the conversion rate – reducing the abandonment rate will increase the conversion rate- tracking tends to follow the same monthly cycle.

Churn Rate

Like conversion rate, churn rate is expressed as a percentage, in this case the percentage of customers who make a purchase and don’t return, the flip side of customer retention. Given the high cost of acquisition and the acknowledged need for companies to develop long-term, high-value relationships with loyal customers, it’s a must-monitor ecommerce metric.

For ecommerce businesses, knowing what percentage of customers can be expected to churn within a given period becomes both a measure of how successfully it’s giving customers the experience they expect and a powerful predictive tool for balancing acquisition and retention efforts. Churn rate is typically measured in months or quarters, depending on the average time in which the overall customer base will make a repeat purchase.

Repeat Purchase Rate

Repeat purchase rate simply tracks the percentage of customers who make a repeat purchase within a given period. It is one of the strongest indicators of the quality of the customer experience and the success of retention efforts.

As with other important metrics, repeat purchase rate is one piece of the data puzzle that, as the various elements are integrated and analyzed, provides a periodic snapshot of whether targets are being met or missed. It can provide either a bird’s-eye view of how successfully customers are being retained or, thanks to modern, real-time dashboards, home in on specific elements of a marketing campaign by tracking a promotion or other initiative daily or weekly to gauge its success.

Customer Lifetime Value

This is the brass ring, for any business, because the path to business success is lined with loyal customers, as an article in Forbes makes clear. If online retailers manage to retain ten percent of their customers, the author noted, they will double their revenue.

Tracking customer lifetime value (LTV) on a continuing basis provides the ecommerce metric that can put such goals in reach. It’s a projection of the revenue a business can expect from a customer over time, grounded in his or her past behavior as well as the average lifetime spending of the larger customer base.

LTV can guide decisions about budgeting for customer acquisition – how much should a business spend to gain a customer? – and also help calculate ROI. The cost of not knowing LTV can be enormous, as an article on For Entrepreneurs emphasizes. The number one reason startups fail, the author argues, is that it costs them more to acquire a customer than that customer’s LTV will prove to be.

‘Tis the season to begin tracking ecommerce metrics

There’s no better time than the busy holiday season, which sees a large inflow of new and repeat customers alike, to begin tracking these valuable ecommerce metrics. The information gleaned can be a priceless gift for any merchant.

15 Sep 2016
sixt essential metrics measuring customer experience

These Metrics will Eliminate the Guesswork from Measuring Customer Experience

Here’s a safe bet. If you were to wager a few years back that in 2016 a vast majority of companies would identify improving customer experience as one of their highest priorities, your money couldn’t be much safer. In fact, Forrester’s CX Index places the figure at 73 percent. Overwhelmingly, organizations recognize that in today’s customer-centric commercial world, excellence in customer experience and success in business are inextricably intertwined.

It’s just not always easy to know when CX hits the mark. As with any qualitative concept, assessments of customer experience have traditionally been grounded in educated but subjective judgments that leave a lot of room for missteps or erroneous assumptions. But marketers have always known there had to be a better, more reliable way to guide CX improvements – one based in objective customer experience metrics, rather than guesswork.

Turning the art of customer experience measurement into a science

Improving CX no longer has to be about trial and error. With the emergence of cutting-edge customer experience measurement solutions, it’s now possible to view the customer experience in microscopic detail and quantify any number of variables, in real time – visualized through a customizable dashboard. For marketers, that affords a never-before attainable level of actionable data that provide hard data about what is working, as well as insights for optimization.

Different companies will look to different customer experience metrics to address their own CX challenges and goals, and the most successful of them are thinking creatively about what metrics can reveal key information about the customer journey. Some of the metrics that are proving valuable in accurately measuring customer experience include both ones that might come readily to mind and some surprises:

  1. Churn rate isn’t only about the other guy

    If you tend to think of churn rate as a metric that only applies to subscription-model businesses, it may come as a surprise that more and more transaction-based businesses now look on it as a customer experience metric that can tell them a lot about how they’re doing reaching their CX targets. What percentage of customers make a single purchase, but don’t return within an expected time frame? Given the imperative of remaining focused on Customer Lifetime Value (CLV) in any business, the churn rate can be a critical indicator of retention and loyalty, and may be a tip-off that customers aren’t having the quality experience they require.

  2. There’s no measuring customer experience without measuring response time metric

    It may be a more predictable metric to track, but that’s likely because there is no better way to alienate customers than by leaving them hanging, listening to unwelcome music or waiting for an email answer to a query or for a chat line to come to life. That’s not news to any marketer, but turning that knowledge into visible hard data can still be an eye-opener, and a clear call to action if response times are beyond reasonable. Client Heartbeat pegged target time as less than three minutes for the telephone, less than 60 minutes for an email response, and only one minute tops for chat.

  3. Did the customer get the experience he came for?

    What did the customer intend to do and did he follow through to a satisfactory conclusion? Or did he give up in frustration and never complete the desired task? Collecting the answers to those questions by tracking the Customer Effort Score (CES) will reveal a great deal about both the overall customer experience and the specific sticking points on the customer journey. When the goal is to provide a seamless experience, customer feedback on these points can be a crucial indicator of how well that’s happening, including the good and the bad.

  4. How long does it take to solve a customer’s problem?

    Of all the customer experience metrics a marketer can track, the time it takes to resolve a customer’s problem is among the most critical–and not only for the obvious reasons. Certainly, everyone recognizes that it’s essential to respect the customer’s time and resolve problems as quickly as possible, on the first contact. But how important? According to Buffer, companies that solve their customers’ problems quickly and accurately have higher customer satisfaction ratings than those rare companies that don’t seem to generate complaints.

  5. Speaking of satisfaction, get real-time data in real time

    Tracking customer satisfaction (CSAT) with proactive emails after each transaction has become standard practice for many companies, but the ability to quantify and assess responses in real time provides marketers with invaluable data for improving and optimizing the customer experience. The information gleaned can identify weak spots in the customer journey and allow for rapid corrections.

  6. Customer experience measurement goes to the bottom line

    When all is said and done, the point of tracking and measuring customer experience is to optimize CX in order to build brand loyalty and ensure long-term business success. The key to that is found in the conversion rate, of course, and the ability to not only track revenue KPIs but to also tie them to the metrics of the customer journey gives marketers the hard data that has traditionally eluded them.

Ultimately, marketers will determine for themselves the specific metrics they need to best understand the customer experience, and they will need to be creative to zero in on the innovative metrics that can best serve them and their brand.

But what will remain constant across all the brands and all the marketers is the increasingly compelling fact that no customer journey can really be viewed as complete until it has been measured at every touchpoint along the way and then optimized to ensure that the lessons are learned and the appropriate improvements are put in place.