This is a series of articles in this first part we are focusing the first five commandments. The basic purpose behind this is to give ideas how to tweak your ecommerce funnel and functionality.

First commandment:

Create a KPI plan for each month.

Recommended KPI’s ( to name a few):

1. Add to basket -rate (benchmark 4% in general, for example cosmetics 7% and so on)

Mentionable things to consider: Think different buyer types and serve them right. Different trickers work with different buyer types, for example ones who are really brand oriented buyers you should serve them with strong brand precense. Those who are deal oriented should be served with good deals. Those who are the type who wants to understand exactly how the product works you should be really sophisticated with your product information. All of these can be done within the same site. All thing considered it’s always also a product game, which type of an products you are selling and which type of consumers you are targeting.  Usually industry focuses too much on conversion rate and usually companies are looking for ways to improve their conversion rate. The basic mindset is, that we have to get X or Y as conversion rate and the conversion rate optimization requires in often cases significant investments to technical tweaks. We recommend that you put your emphasis to earlier stages of your sales process, it  is in analogy with growth hacking methods when you are ramping up your b-to-b sales process.

2. Site speed 

Mentionable things to consider: Some studies says, that you lose 10% of your revenue with each second that consumer have to wait your site. Usually quick wins are related to your site’s structure, CSS, scripts that you drive and pictures that you use

3. Customer Lifetime Value 

Mentionable things to consider: as we all know the last click isn’t the one which determines your strength as a retailer. The most important factor is how many of your customers are going to buy your product(s) in a future. This is of course really dependent on your specific industry and it’s not at all that black&white. You should dig in to your data and recognize the 20% of your customers who are those ones, that actually are buying frequently – use them in a way, that you understand their reasons to buy from you and consider methods that would help you to get more customers like them. There are many simple ways to get your customers to “buy in” to your ideology, of course different bonus schemes, limited offers for them and for example possibilities to open up different campaigns or pre-order possibilities to them will help you a lot. For example Shopify https://www.shopify.com/encyclopedia/customer-lifetime-value-clv and Hubspot https://blog.hubspot.com/service/how-to-calculate-customer-lifetime-value have opened in their blogs how to calculate different factors referring to CLV, but we think, that the single most important thing is to dig in to your data and recognize those ones that are moving your business.

4. Customer Growth (new, returning) – last six months compared to same six months last year 

Mentionable things to consider: Often we the people are measuring it wrong. We are comparing our sales and customer growth month on month basis or too short time period. Six months compared to same six months last year gives a better perspective and seasonality doesn’t effect that much to comparison.

5. Average Order Value (AOV) steadiness 

Mentionable things to consider: One really good blog to follow is GrowCode https://www.growcode.com/blog/average-order-value/ they are compiling different data sources and that way the information is quite solid. Seasonality will create some challenges for this KPI, but if you are capable steadily to grow the AOV you will be having more profit to your company. One thing that you can easily see when looking at international bigger retailers is of course the old trick where you put more expensive products to your recommendations – it will work, you should test it if possible. Sometimes you can see methods that are a bit shady, like putting normal priced products to your “Sale”- category, but at the same time we think, that you have to try different things to see if it works. Anyway AOV is one of the KPI’s that drives your profitability and you should absolutely follow it.

6. Traffic growth (by channel) 

Mentionable things to consider: What we can see from various datapoints with the customers that we have now (retailers) and customers that we have handled during past stints (Since 2007ish), that there are common pitfalls when optimizing the traffic to ones site. For example advertising on social media will boost your traffic on organic channel by increasing your traffic on a) Google Organic, but also b) Direct traffic – so the last click, as been stated many many times before by different talented agencies is not the only thing to follow. Other important issue to understand is of course, that how should you handle your branded traffic in some cases it is really important to advertise with your own branded search terms despite the fact that you are already visible with those in organic search results, but sometimes you will be converting the traffic better way when you are not advertising with your own branded search terms. This is something that you should test patiently during months. One maybe surprising extra thing to follow up on this is your agencys doings with and without your branded terms – in a few cases we have been founding out, that some agencies are tend to put your branded terms to each and every campaign to boost the actual result – without flagging this to customer. We are just stating with this, that it is perfectly ok to do so, if customer is willing to do it that way – but no one should manipulate the actual results without agreeing that with customer.

Anyway, you should follow: a) different channels separately b) analyze the effect between channels (meaning, that if you put extra amount from your budget to social media, what will happen with different other channels) c) analyze the actual result from each of the channels d) and evaluate the possible effect to CLV and e) evaluate the return of invest. And did we say it already? You should aim to profitability with last click also. 

7. Basket to order value  

Industry as a whole focuses too much on conversion rate, one of our experiences on issue of conversion rate is, that it is usually attached to KPI’s. In our opinion it can be one fo things to follow, but brutally said, it’s the one, that you really can’t affect that much. You should mainly focus on earlier stages on your funnel beacuse of two main reasons a) optimising the earlier stages will increase volume of started transactions that will convert and b) it’s considerably cheaper to fix.

Mentionable things to consider: Think it this way, usually when we receive a brief from our customer they are mainly worrying about their conversion rate. Our basic response for that is; keeping conversion rate in your KPI will guide you only to optimize your conversion, not the whole funnel. Conversion rate optimisation is of course important, but it will be probably the very last of the issues to fix and we should focus on fixing the other  issues before the conversion rate. Why? As stated  earlier –  significantly cheaper, doesn’t need technical implementation, usually inhouse teams can handle most of the issues and you don’t need to wait centuries to fix different issues. Basket to order benchmark rate is totally up to your specific industry. The first KPI that we are suggesting is Add to basket – value, and this Basket to order is of course as important one.

8. ROI (return on investment on marketing + return of investment in development) 

Usually retailers are calculating ROI from marketing activities, but they are tend to forget the development from that equation.

Mentionable things to consider: 

You should always calculate technical development costs with a method where you evaluate a) what are the actual costs b) what are you able to get with that cost and c) what are the possible effects that you are getting with those. If you are not sure what you are getting from the development, then you shouldn’t do those. Marketing ROI should be handled via two main methods a) last click, if that is positive, put all the effort to that channel b) attribution model, which shows you different marketing channels and how they are creating effect to your marketing ROI and ecommerce funnel.

How to drive towards your KPI’s:

You should recognize KPI’s that are relevant to your retail; by this we mean that you should aim to that kind of an KPI’s that you can rely on. Normally some of these mentioned ones are that level KPI’s that you have to understand your customers and your performance quite deeply. Some of the mentioned ones are that level KPI’s that you have to invest quite a bit of €’s to be able to get those history numbers from your reporting system, but when you are able to get those numbers together you can quite soon see the patterns and equations to get your numbers in balance sheet to better position. If part of these seem to be imbossible to track, then you shouldn’t, but most of the time some of these are quite easy to track and that way they will guide your online performance to significantly better level

Mentionable things to consider: Think different buyer types and serve them right. Different trickers work with different buyer types, for example ones who are really brand oriented buyers you should serve them with strong brand precense. Those who are deal oriented should be served with good deals. Those who are the type who wants to understand exactly how the product works you should be really sophisticated with your product information. All of these can be done within the same site. All thing considered it’s always also a product game, which type of an products you are selling and to which type of consumer (or customer).

Other interesting KPI’s can be: returns, changes that consumers make to their order, work load of customer service, omnichannel effect to your business, sessions with product view, from order to order confirmation and so on. There are plethora of indicators that you can find from your processes, but probably the most important thing when considering KPI is how trackable it actually is.

Second commandment:  Recognize changes, be proactive on those, embrace change, don’t do things that used to work, be honest to your numbers

Why: to be able to deliver world class customer service and world class selection you have to be on the map with changes that might affect to your site. Follow trends, follow leaders of your niche, take actionable steps to grow your business

How:

Third commandment: Be brave to learn new things – don’t underestimate the power of beginning. 

Why: what did you do when you started? Have you lost something on the road? It’s significantly important to understand those early days strategies which got you this point.

How: test the learnings from the very beginning – imagine that your business is starting daily from zero (like it does) and try to find activities that could work now, when your scale is higher

Fourth commandment: Invest to development. Development of  your process, develop a site, hack the barriers that are blocking your growth. If you don’t, then you are playing the game wrongly

Why: 

How:

Fifth commandment:

Create offers, that are shaking the competition. If you find killer offer (bundle or similar) no one dares to copy them (do it like big ones do: be unique)

Why: often it’s impossible to match the best price on the market, but as often it’s possible to bundle different products to be able to create good deal for consumer, but at the same time make decent profit out of it. It’s not very likely, that your competitor can match all of your products and pricings

How: Be creative, understand the limitations of certain products and bundles – related products or product bundles are often the key to healthier gross margins and eventually profit. Know your products.

Sixth commandment: 

Make the site personal, use personalization as a tool, make it to stand out from peers

Why:  Imagine to create site just for one person. When you are able to serve that one customer – you will probably be able to serve multitude of customers at the same time. If you are able to do this, you will be better than many of your competitors

How: Eat your own dogfood. Would you buy from your site? Does it serve you in a way that your customers are happy with? 

Seventh commandment: 

Be clever: don’t sell the same things than others do, be unique,speak with your own voice,  recognize the killer products. eCommerce is not about the price, it’s a combination of various USP’s (availability, delivery, customer service, UX, marketing, and yes price, but availability is always more important factor)

Why: when understanding the basics you will understand more than your competitors (at least most of them). Availability is the key to success, if you are advertising prodcuts that you don’t have, you will e ruining your KPI’s

How: Know your products, know your inventory, create simple methods to scale for example marketing down when you don’t have an inventory to sell.

Eight Commandment: 

Don’t do marketing, that you can’t track. Don’t do website development for the sake of development.  Believe the data (unless your KPI’s are wrongly set). Be strict to your vendors (agencies, platform providers), that you are constantly optimising their performance. Set clear targets. 

Why: kind of obvious. If you do stupid things, stupid things happen in your balance sheet. 

How: measure everything. Excel is a beutiful thing. Evaluate your vendors and their performance weekly, guide them, tell them what you are expecting. Be clear. Be very clear.

Ninth Commandment: 

Save costs in everything: Lower cost in back office is a surplus to your P&L, optimise your logistics, optimise your buying prices, optimise your payment prices. Be smart.

Why: if you are able to cut for example 20 euro cents from your logistic costs and you are delivering 50 000 packages per year, that 10 k€ will end up in your result. What about 0.1% discount on payment solutions – where does that end. If 40% of your shipments will be delivered after the weekend, but you don’t have enough resources on warehouse on Mondays, could it be possible to create system where all resources are committed to work on those days where you have more deliveries on warehouse instead of working 9to5

How: be curious. Often process related issues are very very common sense problems to solve and at the same time you can save pile of cash with it

Tenth Commandment: 

Create minimum and maximum budgets for marketing. Spend more when advertising is performing well, spend less when marketing is not performing well. Don’t have a fixed marketing budget – use marketing as a sales channel. If some channelsl are returning good profit, cancel others and change weight between channels; if not everyday then weekly, if not weekly then monthly.

Why: seems quite obvious, but when discussed with customers marketing is usually driven by budget –  not sales. If some channel is performing exceptionally well – why would you limit its budget?

How: analyze and optimize marketing budget via sales – set the target CPA and drive towards that. If your agency is not performing well, change the agency or take activities inhouse. 

Eleventh Commandment: 

Be creative on UI/UX, be strict when it comes to warehouse and customerservice. Strong process will win on operative issues – always.

Why:

How:

Twelth Commandment: 

Competitors are usually idiots, don’t copy them. Seek the few ones to look up to

Why:

How:

Thirteenth commandment: 

Understand the factors behind your conversion, remember, that conversion is always combination of different things

Why:

How:

Fourteenth Commandement: 

Don’t test to fix the obvious – if something seems to be broken fix it

How:

Fifteenth Commandment: 

Buying the right product  at the right time is significantly easier – learn to use different free tools to recognize ”hidden gems”

How:

Sixteenth Commandment: 

If your internal search shows, that consumers are looking certain product that you don’t have – buy the product – internal search provides you the best insight to your future hits. It explains you the fact what people are relating you

How:

Seventeenth Commandment: 

If you have an problematic product area – that doesn’t sell – be true to yourself and get rid of that, it’s always better to make a small minus, than keep those not performing products in your warehouse

HoW:

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