During all of our years of working with online brands and retailers, we’ve learned that most ecommerce businesses eventually face the same two challenges: winning customers and retaining those customers to minimize cost and maximize sales revenue.
In order to meet these challenges, retailers must ask themselves several overarching questions about their products, prices, and processes; such as:
- Which marketing and sales channels attract the best leads and customers?
- Where in the shopping journey are people getting stuck or leaving?
- What percentage of our visitors are converting to customers? What percentage of these make another purchase—and when?
- What characteristics does our ideal customer have?
- Which products are the most popular and which generate the most profit?
- How can I adjust pricing to maximize customers, sales, and revenue?
To answer these in-depth questions, ecommerce marketers and managers have to be able to track a user from the moment they first learn about your shop through their last day as one of your customers.
How is it even possible to meet such a challenge? With product analytics.
What Product Analytics Are—And Why You Should Care
Product analytics gives you a robust view of shoppers and customers to help you uncover who they are, what they want, and what you can do to keep them.
Especially with digital channels, product analytics can give you all the data you need to answer questions about and maximize the performance of your products, prices, and processes.
In fact, McKinsey found that companies that deploy product analytics end up generating twice as much profit as those that don’t bother with product analytics technologies.
With the huge volume of business data being generated every day in the information age, only those ecommerce businesses that choose to derive value and insight from product analytics will stand apart from the pack.
More than ever, ecommerce businesses need to know how to leverage product analytics to track, measure, and optimize sales due to the new reality of ever-changing, omnipresent shopping and ever-growing shopper expectations. So here are four steps to help you do just that.
The Ultimate Guide to Using Product Analytics to Track, Measure, & Optimize Online Sales
In this section, we’ll dig into the 4 steps that will help you effectively measure and optimize online sales with the help of product analytics. With a focus on timeless tips instead of today’s trendiest tools, you’ll be able to rely on this foundation guide for sales optimization no matter how your ecommerce channels, software, and even language change over time.
1. Determine How You Stack Up in Key Segments like Location, Product Categories, and More
If you want to grow, it’s important to first analyze where you are so you know where to focus your efforts for maximum effectiveness. We recommend figuring out your best-performing locations, products, traffic sources, and search terms to understand and improve the performance of your ecommerce business.
Find Your Top-Selling Locations
To avoid spreading your marketing and customer support efforts thin, it’s important to use product analytics to identify the geographic location(s) where you’re generating the most and/or best sales.
We hear from companies all the time that their target market is an entire country or continent. Unfortunately, we find that this kind of marketing “plan” does little more than waste a lot of money on acquisition due to too wide of an audience and too much exposure to competitors.
Instead, we like to apply the Pareto principle and say that 80 percent of sales come from 20 percent of locations. No matter what kind of advertising campaigns you’re planning or already have in place—we recommend everyone take a second look at their product analytics to hone in on those locations where their products are performing the best.
Know Your Best-Selling Products and Categories
Chances are you’ve got tens, if not hundreds, of products for sale in dozens of different categories. However, there’s no way they’re all generating the same volume of sales or profit. That’s why you need to find what’s selling the best—then sell even more of it.
There’s no point in pouring money into promoting products and categories that just aren’t working for your audience. When you know what’s performing best, you’ll be able to focus on promoting and tweaking those specific products and categories to optimize sales.
If figuring out and maxing out your best-selling products and categories sounds like a heavy lift, you’re not wrong. That’s why we built a product information management tool specifically for busy ecommerce managers. Plytix helps you centralize, optimize, distribute, and analyze your product data and performance so you can effectively track, measure, and optimize products and sales.
Figure Out Where Shopper Traffic is Coming From
Understanding your key locations, products, and categories all comes together when you’re able to figure out what channels are driving shoppers to your online selling platforms.
Once you have the traffic sources pinned down, you can focus on improving your performance on them to sell more products. For example, if you find that the bulk of your top-performing traffic is coming from organic searches on Google, you’ll know that focusing on SEO is a good way to promote your best-selling items. You’ll also be able to save or relocate any spending on PPC, Facebook, or other advertising campaigns that aren’t performing as well.
Drill Down to the Most Effective Search Terms
If you’re running search marketing campaigns, knowing which keywords are doing best is vital to improving performance.
In addition, we recommend checking out which search terms shoppers are using to find products on your website and other selling platforms (if possible). Knowing what shoppers are searching for—and which of those searches lead to the best sales—can inform your marketing and inventory strategy to make sure you’re laser-focused on providing and promoting the best performing items.
2. Learn to Connect Your Product Analytics to Defined Business Goals
Product analytics can’t help you grow your sales and business goals if you don’t have any specifically outlined.
Once your goals are crystal clear, you’ll be able to optimize your products, marketing methods, and sales based on what you’re trying to achieve—whether that’s increased sales volume, more overall revenue, more shoppers, better return customer rates, and so on.
The best product analytics improvement projects are the ones that start with a defined objective.
3. Choose the Right Product Analytics Tool(s) For Your Unique Needs
Luckily, there are plenty of product analytics and information management tools on the market that will help you with all the steps we listed above. Unluckily, the options are almost endless.
When it comes to product analytics, many people immediately think of Google Analytics. It’s a fine tool if you don’t mind digging around the overbuilt, one-size-fits-all platform or the privacy concerns that come from partnering with the most powerful data company on the planet.
However, we all know that the best way to improve product analytics is to consistently tweak and measure them, so we’re not suggesting you give up on analytics tools altogether. Instead of compromising your shoppers’ privacy or your legal and ethical boundaries.
4. Develop Actionable Reports Based on Product Analytics
Now that you’ve got your product analytics tools and top performers all figured out, you’ll want to develop regular reports that give you the information you need to promote your best products and develop powerful sales and marketing campaigns.
For example, a weekly report on which products people bought together can help you put together and promote bundles that boost sales. While it’ll depend on whichever analytics tool(s) you decide to work with, other actionable reports may include how people move through the shopping experience, a cohort analysis that explores retention, page traffic that informs you on what kinds of information shoppers like to see, and so on.
Product analytics are more important than ever for ecommerce companies who want to keep up with growing competition and changing customer demands. We hope that our 4-step foundation will help you find your top performers in key segments, connect your product analytics to business goals, choose the best analytics tool(s) for your needs, and develop reports that help you take effective action.
While you’re busy doing all that, Plytix is here to make sure your product information doesn’t fall to the wayside. Our product information management (PIM) software was developed with busy ecommerce marketers and managers in mind. That’s why we’re the only PIM tool on the market with a simple yet powerful framework that can be applied by any size company to improve their revenue per employee.
Learn more about Plytix’s methodology, set up your free account in just minutes (no credit card required), or get in touch with our awesome customer support team and get your questions answered.
Free Download: The Ultimate PIM Buyer's Guide
Want to know a little more about what PIM can do for your business before you take the plunge? Grab our free, comprehensive PIM guide that we created specifically for online retailers and brands who are ready to build their ecommerce empires.