E-commerce Beginners Guide – Part 1: Metrics

When it comes to account management there are largely two different types of accounts: lead generation and ecommerce. Many account managers find they gravitate to one or the other and there are very few account managers that are truly gifted experts in managing both types of accounts.

I happen to love all things ecommerce and have an affinity toward these types of accounts. However, if you’ve been used to managing lead generation accounts for the bulk of your career, ecommerce can be scary. We’re dealing with a totally different set of metrics and a whole bunch of new data you probably haven’t experienced yet.

In-fact, there is an additional Google Analytics code set up to capture ecommerce data that will need to be set up prior to accessing all this new data. Google Analytics ecommerce tracking will reveal the ecommerce reports that house the post-click ecommerce metrics. Justin Cutroni over at Analytics Talk has a pretty great compilation of Google Analytics for Ecommerce information to help you through getting this set up properly and digesting the reports.

GA_Ecommerce_Reports

Let’s start this series with the metrics specific to ecommerce accounts you’ll need to know about:

*Note: These metrics are found in Google AdWords and Google Analytics, depending on your ad platform or tool they may be calculated differently.

Revenue Based Metrics

Revenue

This one seems pretty obvious right? Well, that’s because it is. As defined by Google Analytics, Revenue is the total revenue from ecommerce transactions. Depending on your implementation, this can include tax and shipping.

That’s right folks, ecommerce accounts often provide clear post-click data. We can actually see whether or not our efforts are resulting in a conversion, but beyond that we can see the quality (value) of that conversion.

Revenue per Click (RPC)

Once we can see revenue, we can break it down by the number of clicks that are coming through from our ad platform to see just how valuable our clicks are on average.

Google Analytics definition: revenue-per-click is the average revenue (from ecommerce sales and/or goal value) you received for each click on one of your search ads.

Average Order Value (AOV)

AOV is one of my favorite metrics. Google Analytics definition: average value of e-commerce transactions.

This is basically the average value of a basket or shopping cart on your site. This metric comes in handy when looking at trends and fluctuations in accounts. If revenue is down but traffic and conversion rate are steady, then it may be that the average purchase size on your website has changed.

Return on Ad Spend (ROAS) or ROI

This metric is one that is hotly debated in terms of how it should be calculated. There are a ton of different ROI calculations so I like to rephrase and talk about ROAS or return on ad spend when dealing with the ROI metric reported in Google Analytics. Google Analytics definition: return on Investment is (Ecommerce revenue + Total Goal Value – Cost) / Cost.

When dealing with ROI, make sure you know how your actual ROI is calculated for reporting to execs and clients so you’re speaking the same language. For example, if you are using the straight revenue divided by cost calculation then the ROI reported in Google Analytics will be about 100% less than your ROI calculation.

Also keep in mind that Google Analytics includes any goal values you have included in your set up so the metric may be skewed.

Margin

Margin may be the least understood ecommerce metric. Google Analytics definition: margin is (Ecommerce revenue + Total Goal Value – Cost) / Revenue.

Margin is more geared toward profitability than simply return, here’s a good walkthrough on How to Calculate Gross Margin Percentage that may help you understand how this metric is used.

Conversion Metrics

One per Click vs. Many per Click Conversions

You’re probably used to this metric. One per click conversions are the standard conversion metric in Google AdWords. Google AdWords definition: conversions (1-per-click) count one conversion for every click that results in a conversion within 30 days of the click.

If you’ve been working lead gen, you should use Conversions (1-per-click) as this will count at most one conversion per ad click. So, even if more than one conversion follows a click, only the first one will be counted. This is important when working a lead gen account since duplicate form completions from the same user (same cookie) are usually erroneous. If you’ve been using many per click by accident, you might be inflating your conversion data.

Many per click conversions are a bit of a different animal and are important to use in ecommerce accounts to ensure you are accounting for all conversions. Google AdWords definition: conversions (many-per-click) count a conversion every time a conversion is made within 30 days following an AdWords ad click. Conversions (many-per-click) will count multiple conversions per click.

Since revenue is tied to conversions in ecommerce accounts, a conversion (whether one or many) are valuable each time they happen. We need to account for all conversions even if they are on the same cookie or click. So to get a true CPA value we must look at cost/conversions (many-per-click) or our optimizations may work in the wrong direction.

Transactions

Google Analytics provides us with a transactions metric, which is similar to the many per click conversion metric in AdWords to make things a little easier. Google Analytics definition: transactions are the total number of completed purchases on your site.

There you have it. A run through of all the additional metrics you’ll need to know and understand to manage ecommerce accounts.

Remember folks, with more data comes more, well, data!. Ecommerce accounts provide a higher level of transparency into what is happening post-click. This is why I think they’re so much fun!

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5 Responses to “E-commerce Beginners Guide – Part 1: Metrics”

  1. […] E-commerce Beginners Guide – Part 1: Metrics, http://www.clixmarketing.com […]

  2. […] E-commerce Beginners Guide – Part 1: Metrics, http://www.clixmarketing.com […]

  3. […] E-commerce Beginners Guide – Part 1: Metrics, http://www.clixmarketing.com […]

  4. Its pretty interesting how these metrics have been expanded. I guess account managers for ecommerce sites would find this post most helpful. Its sure a guide to help improve marketing decisions for clients.

  5. […] in your eCommerce metrics like AOV, ROAS, and Margin. You can read more about eCommerce KPI’s in part one of this […]

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