chapter 1

Why You Need Ecommerce Analytics

Introduction

When you run a retail store you get a feeling for how your business is doing because you see people coming in, you talk to them and can physically see their reactions. In an online store you don't have access to customers in the same way, so analytics become your eyes and ears.

However, the signals you get from analytics are very different from the words people say and the facial expressions they project offline. You don’t get to hear your customers’ stories online, so you need to “visualize” them based on the numbers you see on your dashboard. This guide is about helping you to understand and get comfortable with this new language.

While ecommerce experts refer to hundreds of data points on a regular basis, this guide is specifically designed for beginners, identifying the terms you need to know and the numbers you should be looking at. No more, no less. With a deeper understanding of your customers’ actions, you can better serve them, engage them and ultimately increase sales. Equipped with the basics, you’ll have what it takes to make the right decisions as you get your business off the ground.

How Data Can Illustrate Stories

There’s as much art as there is science in analytics, because a good data analyst will be able to tell you a story from the numbers she is analyzing.

Among thousands of clicks, visits, bounces, seconds, conversions, etc. (we’ll explain each of those terms later in this guide, but for now let’s call them "data points"), there are dozens of stories to be told.

You can learn, for example, from the total number of visitors to your site in a given week, that only a few of them (say, 50%) enjoyed your website enough to even spend some time on it. A small percentage of those 50% actually made a purchase, while another part got stuck at the checkout page, became frustrated and left.

That’s a story of a group of individuals who, by reasons you will be wondering about, took very different actions on your online store. Having that kind of knowledge (and we’ll show you how to look into this in this guide) will already put you ahead of most of your competition, but it will also end up raising more questions with it: Is 50% good or bad? How many seconds (or minutes) is enough to be considered “some time”? How many people should I expect to buy from that sample? How do I find out why some of them aren’t buying?

Depending on the type, size, industry and stage of your company, the answers to these questions will be vastly different. It’s not enough to know that some people made a purchase while others didn't. The story only ends once we learned more about them because you will want to know why they didn’t, and then do something about it. And the answers to those questions depend on the context.

For example, in the context of a social networking site such as Facebook, the average time spent by users on the site needs to be much higher than on an ecommerce site. Social networks need you to spend as much time as possible there, so you'll be more likely to click on ads. Online stores may be happy that you spent only a few seconds on it, but managed to buy something on that quick visit.

Even among ecommerce stores there will be a difference. For complex and expensive products, for example, people need to research more. So it’s often a good sign that they spend several minutes on the site, learning more about the product. But if you’re selling something cheap and simple, a lot of time on site probably means shoppers are just confused.

Our purpose is to help you become fluent in ecommerce analytics, be able to tell your own stories from the numbers you see in your analytics dashboards and improve them. In the following chapters of this guide you’ll understand what are the data points that should be important to your store, how to measure them and how to use them to sell more online.

 

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2. Analytics for Ecommerce Beginners

3 min

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