Monthly Archives: August 2017

Website Analytics Helps You to See How Your Online Business is Performing

Website Analytics is there for retailers to use. You’ve just decided to start an online retail business. Why not? It’s relatively easy and cheap to do. You can start a Drop Shipping business, or join Shopify or trade your own goods online with a Woocommerce site. According to Quora, there are between 12 and 24 million ecommerce websites on the net. However, only about 650,000 ecommerce websites generate annual sales of more than $1,000. That’s a miserable 2.7% generating very modest turnovers.

Is your online business not performing as planned? Are your paid search adverting and social media marketing campaigns not resulting in sales? Then you’re probably targeting the wrong customers at the wrong place with the wrong products. So how will you know that you’re doing things wrong? You can do the right thing by using a Website Analytics tool such as Google Analytics.

What is Website Analytics?

Web analytics is the process of analyzing the behavior of visitors to a Web site. Indeed, the use of Web analytics is said to enable a business to attract more visitors, retain or attract new customers for goods or services, or to increase the dollar volume each customer spends, says Margaret Rouse in Techtarget.com.

Web Analytics is not just a process for measuring web traffic but can be used as a tool for business and market research, and to assess and improve the effectiveness of a website, according to Salini, Malavolta and Rossi (2016).

Salini et al (2016) mentioned that the four essential stages of Website Analytics are:

  1. Collection of data,
  2. Processing data into information,
  3. Developing Key Performance Indicators (KPIs), and
  4. Formulating an online strategy.

Each of these stages impacts or can impact the stage preceding or following it; in other words they are sequentially connected and not isolated from each other.

  1. Collecting data for Web Analytics

The simplest, cheapest and most used Web Analytics tool is Google Analytics (GA). Indeed, Google analytics offers a free service to its users. But before you can use GA, you need to create a new account. GA will create a tracking code that you can copy into the memory of your website. Your website should now be connected with Google Analytics.

However, your site needs traffic in order for GA to do its algorithms and results. Therefore you need to write a post or promote products to start attracting visitors.

  1. Processing data into information

Google Analytics can track a visitor’s location, device, landing page, and behavior while he or she is using your website. In addition, you can see where the visitor came from (Google, Bing, Yelp, etc.). This can help you to spend those pay-per-click marketing dollars wisely.

Kristi Hines suggests in his blog Kissmetrics.com that Google Analytics help you as follows:

  • Find out which online campaigns bring the most traffic and conversions.
  • Determine where your best visitors are located.
  • Learn what people are searching for on your site.
  • Visualize what people click on the most.
  • Uncover your top content.
  • Identify your worst performing pages.
  • Determine where people abandon the shopping cart.
  • Discover if you need a mobile site.

Before you start perusing the pie charts, line graphs, and spreadsheets available in the user interface of Google Analytics, it’s important to figure out what to monitor.

  1. Developing Key Performance Indicators (KPIs)

Since you’ve identified what works and what does not work with your website, you need to develop KPIs. A KPI, or Key Performance Indicator, is a metric used to measure performance. Drew Strojny of The Theme Foundry advised that SMEs and bloggers using WordPress to keep the following ideas in mind when identifying website-related KPIs:

  • KPIs should align with business goals. The KPIs related to your website should align with a specific action you want website visitors to take. In many cases, this will be a revenue-impacting action, like contacting you for a quote if you’re a service provider.
  • KPIs should correspond to trackable metrics in Google Analytics. Therefore, when you know what your KPIs are, you should connect each one to a specific tool or tool in Google Analytics.

The top 8 metrics and KPIs that online retailers should take into account with website analytics are according to Natalie Pavlovskaya writing in InstantShift:

  1. Average Order Value (AOV). AOV is considered a key metric by many online retailers, because the higher you can encourage AOV to be, the more income your store will get. The basic calculation is: (Sum of Revenue Generated)/(# of Orders) = Average Order Value
  2. Conversion Rate. The conversion rate tells how effective your store is at closing deals. The basic calculation is: (Number of Sales) / (Number of Visits) = Conversion Rate.
  3. Bounce Rate. Bounce Rate is a percentage of visitors who leave your site immediately, probably because they didn’t find what they were looking or the website was too complicated or annoying to use. The basic calculation is: (Number of visitors who leave immediately) / (Total number of visitors) = Bounce Rate.
  4. Shopping Cart Abandonment Rate. According to the Baymard Institute, the average shopping cart abandonment rate is 69% (2017). The basic calculation is: (#of people who don’t complete checkout) / (# of people who start checkout) = Shopping Cart Abandonment Rate.
  5. Cost per Acquisition. Cost per Acquisition is a critical marketing metric. It can tell you which campaigns can drive your sales and which will become a costly pile. The basic calculation is: (Total Cost of Marketing Activities) / (# of Conversions) = Cost per Acquisition.
  6. Traffic. Where does your audience come from? Which channels produce the most customers? What social networks, keywords work best for your business?
  7. Net Profit. Net Profit is the actual amount of profit a business generates after all expenses. It tells you the profitability of your ecommerce business after taking all costs into account. The basic calculation is: (Total Revenue) – (Total Expenses) = Net Profit.
  8. Customer Lifetime Value (LTV). Customer Lifetime Value measures the total amount of money a customer spends in a store during his relationship with it. The basic LTV equation: (Average Order Value) x (# of Repeat Sales) x (Average Retention Time).

Once you’ve got the overall picture of your online store’s performance, you’ll need to formulate or change your online business strategy.

  1. Formulating an online strategy

Formulating an actionable online strategy for your business may be your biggest challenge. Sarah Williams Founder & CEO of 816 New York proposed the following steps to develop a Google Analytics Measurement Plan:

  • Step 1. Document your business’s objectives. Ask yourself as a company: Why do we exist? What is the Core Purpose and Vision of the brand itself?
  • Step 2: Identify strategies and tactics. One Strategy you would adopt is to sell products. The tactics that support that strategy, then, might be to sell online through the website, sell items in stores, or sell via a mobile shopping app.
  • Step 3: Choose KPIs. For an e-commerce site, the KPIs (measurements of strategies and tactics) might include monitoring how much revenue has been generated, and the average order value from online and mobile app sales.
  • Step 4: Choose segments. It’s important to segment your data to drill down to its essence. Not all customers are the same, and it’s often helpful to segment your reporting to identify distinct market segments.
  • Step 5: Choose targets. You must define the targets for each KPI. What indicates success? Where can you do better? Isn’t that what you want to find out, after all?
  • Step 6: Implement and control. Monitor the data regularly to adjust your tactics with the trends.

A Google Analytics result page

Concluding

Lastly, one of the greatest advantages having an ecommerce website is that you can measure the activity and the behaviour of users. However, there is no advantage if you don’t measure the performance of your website and marketing strategies. Therefore, make sure that you target the right customers with the right products at the right places, and, o yes – the right prices. For that reason mastering website analytics tools such as Google Analytics may bring you close to achieve all your KPI goals. Good luck with your website analytics!

A last word from Albert Einstein “Not everything that can be counted counts, and not everything that counts can be counted.”

Read also:

  1. Predictive Analytics helps Retailers to make sense of Big Data
  2. Marketing Automation is enabled by Artificial Intelligence, Big Data and Chatbots

Note

Salini, A., Malavolta, I. and Rossi, F. 2016. Leveraging web analytics for automatically generating mobile navigation models, In Mobile Services (MS), 2016 IEEE International Conference, 103-110.

Images

Pixabay.com

Flickr.com

 

Marketing Automation is enabled by Artificial Intelligence, Big Data and Chatbots

“Marketing automation is growing – sizzling fast, announced Michael Jans recently in his blog AgencyRevolution.com. In fact, there are eleven times more B-B companies using marketing automation than were in 2011 (VBInsight). Most visible marketing automation for retail customers are chatbots.

Advancements in artificial intelligence (AI), coupled with the proliferation of messaging apps, are fuelling the development of chatbots.  Artificially intelligent chatbots or conversational agents can be used to automate the interaction between a company and customer.

What is Marketing Automation?

Marketing automation, in general, complements interactive and direct marketing with the help of automation and further on in CRM and email marketing 4. The goal of marketing automation is to target the right customer with the right content 1. To achieve this goal, the optimization of customer data – e.g. name, contact information, transactional data is critical. Consequently customers can be targeted with the right message. Therefore marketing automation allows marketers to respond instantly to identified opportunities in real-time even outside the marketing plan.

This use of marketing intelligence provides valuable management insights to markets, customers and campaigns and leads to enhanced efficiency. Also, this same use of data enables customers to receive personalized, relevant messages and offers at appropriate times. As result of this, customer experience is improved significantly. Indeed, Sarah Burke of Spokal concurs: “Marketing automation is a super effective tool when it’s used to supplement our marketing efforts in an attempt to make the lives of our customers even better”.

However, marketing automation is facilitated by Artificial Intelligence.

Artificial Intelligence

Techopedia defines Artificial intelligence (AI) as an area of computer science that emphasizes the creation of intelligent machines that work and reacts like humans. AI is becoming part of our lives ever more. Today we can ask a computer questions, sit back while semi-autonomous cars negotiate traffic, and use smartphones to translate speech or printed text across most languages. For AI to work properly, the machines or robots needed to be ‘learned’.

Machine learning is the process that offers the data necessary for a machine to learn and adapt when exposed to new data. Nello Cristianini suggests we should think of it as training a machine: “It depends on the other two methods by reading mined data, creating a new algorithm through AI, and then updating current algorithms accordingly to “learn” a new task.”

For most retailers and marketers in the digital economy, the intelligent ‘machines’ of choice are chatbots. However, chatbots are dependent on a host of interconnected and emerging technologies, many of which rely on machine learning and require massive amounts of data 3.

The use of data to enable Marketing Automation

Douw G Steyn, owner of the Bricks2Clicks (this blog) had this to say about Big Data: “One of the fall outs of the digitization of business is the massive amount of data that are everywhere. Every time a customer makes a purchase online or registers online, data is generated. The data can potentially tell you almost everything about consumers.”

Randy Bean in MITSloan commented on the use of Big Data with AI: “The impact of Big Data goes well beyond simple data and analytics. Big Data and AI in combination are providing a powerful foundation for a rapidly descending wave of heightened innovation and business disruption. While the first wave of Big Data was about speed and flexibility, it appears that the next wave of big data will be all about leveraging the power of AI and machine learning to deliver business value at scale.“

Data mining can find the answers to questions that you hadn’t thought to ask yet. What are the patterns? Which statistics are the most surprising? What is the correlation between A and B? (upfrontanalytics.com).

“Intelligent machines need to collect data – often personal data – in order to work. This simple fact potentially turns them into surveillance devices: they know our location, our browsing history and our social networks. Can we decide who has access, what use can be made of the data, or whether the data gets deleted for ever? If the answer is no, then we don’t have control” says Nello Cristianini in the New Scientist.

Chatbots as interactive conversational platforms

By definition, a chatbot is a computer program that responds to natural language text and/or to voice inputs in a human like manner 2. Chatbots can run on local computers and phones, though most of the time they are accessed through the internet (Chatbots.org). Moreover, the effectiveness of Chatbots is depended on the quality of the source data and how well they are programmed. They are after all robots! And robots need to be learned…

Once a customer starts to interact with a chatbot, the chatbot’s software identifies the customer. The chatbot will then have the demographic information of the customer, her purchasing history – such as what products she’d purchased most frequently, what time of the year she does most of her shopping, and when last did she purchased? The scope and depth of information can be never-ending.

The  of a typical conversation between a chatbot and a retail client (image: Chatbotsnewsdaily)

Eric Samson writing in Entrepreneur.com mentioned 7 benefits using chatbots as marketing tools

  1. Customer service – by providing the chatbot option for customers, you will lower the stress of dealing with customer service and increase customer satisfaction with your brand.
  2. Consumer analysis – chatbots can play a large role analysing customer data, and optimizing sales and marketing strategies in light of this analysis.
  3. Personalized ads – another chatbot strategy that’s proven to be successful is the creation of personalized ads.
  4. Proactive customer interaction – chatbots are ideal for “reach out” initiatives. To do this, the accompanying action should be something small, like inquiring whether or not the customer needs assistance.
  5. Site feedback – chatbots are great for reaching out to customers via simple questions and the gathering of feedback. This strategy is useful, especially for website optimization.
  6. Lead-nurturing – using the information that chatbots collect about a customer, you can create customized messaging that guides the consumer along his or her “buyer’s journey,” ensuring movement in the right direction that achieves higher conversion rates.
  7. Maintain a presence on a messenger act via a chatbot – by maintaining a presence on a messenger app via a chatbot, you can save money while simultaneously remaining available for your customers 24 hours a day.

According to Chatbot Conference, the 3 main disadvantages of chatbots are:

  1. Too many functions – most of developers strive to create a universal chatbot that will become a fully-fledged assistant to user. But in practice functional bots turn out not to cope with the majority of queries.
  2. Primitive algorithms – AI chatbots are now considered the best as they can respond depending on the situation and context. However, complex algorithms is required for this purpose. Meanwhile, only IT giants and few developers possess such powerful technological base.
  3. Complex interface – talking to a bot implies talking in a chat, meaning that a user will have to write a lot. And in case a bot cannot understand the user’s request, he will have to write even more. It takes time to find out which commands a bot can respond to correctly, and which questions are better to avoid. Thus, talking to a chatbot does not save time in the majority of cases.

Concluding

With Big Data, Artificial Intelligence and Chatbots there aren’t a clear ‘pecking order’. The Upfront Analytics Team explain it as such: “Data mining, artificial intelligence, and machine learning are so intertwined that it’s difficult to establish a ranking or hierarchy between the three. Instead, they’re involved in symbiotic relationships by which a combination of methods can be used to produce more accurate results.”

The speed at which technology is moving forward – “software is developing software” and “machines are building machines” an affordable, practical usable chatbot for customer care and marketing is not far away…

Read also:

  1. Predictive Analytics helps Retailers to make sense of Big Data
  2. Chatbots in Retailing – a Fact or a Fad?

Notes

1 Mattila, J. 2016. Customer experience management in digital channels with marketing automation, Master Thesis, University of Oulu, Department of Information Processing Science.

2 D’Haro, L.F. and Lue, L. 2016. An Online Platform for Crowd-sourcing Data from Interactions with Chatbots. Proceedings of WOCHAT, IVA.

3 Etlinger, S. 2017. The conversational business: How chatbots will reshape digital experiences, Altimeter.

4 Sandell, N. 2016. Marketing automation supporting sales, Master’s Thesis, University of Jyväskylä.

Image

Pixabay

 

The Value Proposition for Bricks and Clicks Retailers

I’m not aware of one retailer that does his/her business without customers. Indeed, retailers that have plenty of loyal customers enjoy a competitive advantage and are doing well. So, how do they do it?  Retailers with a clear and effective value proposition at least know who their customers are, what they want and need and why are they coming back. Above all, retail customers can also be found online…

With the advent of the internet and subsequent social media networks, the way that retail customers interact with retailers, products, and patrons has changed. In fact, in today’s tech savvy society, shoppers have access to brands 24/7, from websites to mobile apps to storefronts. Therefore Bricks and Clicks retailers (retailers that use both the physical and online retail channels) need to develop a value proposition for their store and online customers.

What is a value proposition?

A value proposition is an entire set of experiences, including value for money that an organization brings to customers 1. Importantly, customers may perceive this set or combination of experiences to be “superior, equal or inferior to alternatives”.

The customer value proposition can also be explained by this equation: value = benefits less (-) costs. The equation suggests that customer value comprises positive consequences (benefits) and negative consequences (costs). When customers perceive greater benefits than sacrifices, customer value is created 2. Perceived benefits and costs for retail customers are shown in the Table below.

Customer perceived benefits Customer perceived costs
Transactional – lower prices, lower interest rates; Monetary – maintenance costs, running costs, disposal costs;
Relational – product quality, service support, delivery, personal interaction Learning costs – time and money needed to learn how to use a product;
Functional – finding the right products, convenient shopping hours. Logistics costs – delivery costs, time to deliver.

How do customers perceive value?

Customers perceive value on the benefits of the product or service they receive. Consequently, as the environment changes, and the customer experience and their needs change, the value they seek also changes. Before the advent of the internet, retailers that had the most knowledgeable sales persons were valued by customers, especially when they shopped for specialty products. However, nowadays, in the digital era, customers can not only get comprehensive product information online, but they also can read product reviews and compare prices.

Retailers need therefore to communicate their value proposition also in the online channel, through their websites and in social media networks.

The value proposition for online customers

Retail customers are rapidly engaging in the online channel. Indeed, there are, according to Dr Dave Chaffey, Smart Insights, 27 Apr, 2017, 2.8 billion active social media users. With these billions of social media users, retailers are no longer in control of customer relationships. Instead, customers and their highly influential virtual networks are now driving the conversation, which can trump a retailer’s marketing, sales and service efforts with their unprecedented immediacy and reach 3.

Kumar and Reinartz 4, 2016 said the following about how customers perceive value online:

For many online services (e.g., Google Maps, Facebook), customers are not expected to pay in monetary terms. The core benefit is free of monetary charge from the end user’s perspective. The monetization comes mainly from advertising revenues, with ads targeted at narrow segments or personal individual profiles. However, in the context of digitization, a new cost related aspect has been emerging.

“Customers now have to understand the value of the personal information that they will give up in this exchange. Thus, customers pay in terms of less privacy instead of monetary outlays. In fact, some customers value privacy of personal information privacy so much that they would be willing to pay to preserve privacy – this then creates a market for privacy” concluded Kumar and Reinartz 4.

What if you don’t have a value proposition yet?

The purpose of retailers is to create value for their customers. Therefore a value proposition equates to a positioning statement because it defines “who is the target customer?” as well as “why should the customer buy it?” and “what are we selling?” 2. According to Rintamäki, Kuusela and Mitronen, 2007, a value proposition should:

  • Increase the benefits and/or decrease the sacrifices that the customer perceives as relevant;
  • Build on competencies and resources that the company is able to utilize more effectively than its competitors;
  • Be recognizably different (unique) from competition; and
  • Result in competitive advantage.

GetToGrow mentioned the following advantages of a value proposition

  1. Gives direction. A value proposition gives you direction by defining your ideal target audience right up-front, and then identifying and understanding a core need that you look to satisfy with your planned solution.
  2. Creates focus. A robust value proposition gives you and your team focus by identifying the fundamental initiatives, activities and aspects of your business that will have the greatest impact on meeting your defined target audience’s needs.
  3. Breeds confidence. Confidence comes from knowing that you’re making a difference to the people that you’re serving, that you’re doing so in a way that’s meaningful to them, and that your actions are aligned to delivering an overall remarkable experience.
  4. Improves customer understanding and engagement. By grounding your solution in an understanding of your audience and their specific need, you can engage with them in a much more compelling and effective manner.
  5. Provides clarity of messaging. The value proposition frames not only how you’re creating value for your audience by addressing a core need, but critically why your solution is better than what they are currently doing or using, or versus whatever else is potentially out there that could do so.
  6. Increases effectiveness of marketing. By truly understanding your desired customers and their core need that you’re solving for, you’re able to focus on the channels and vehicles that are most relevant, and will effectively communicate the benefits and advantages of your solution.

Concluding

Retailers that know and understand their customer’s needs, want and wishes the best can communicate a superior value proposition to them. By using ‘big data’ or your internal sources of customer data, your firm’s value proposition can be customized and personalized. However, care should be taken not to infringe on the individual’s privacy.

Further reading:

Implementing Social Customer Relationship Management in Retail

Video: Value Propositions and Positioning

 

Notes:

1 Hassan, A. 2012. The value proposition concept in marketing: How customers perceive the value delivered by firms–A study of customer perspectives on supermarkets in Southampton in the United Kingdom, International journal of marketing studies, 4(3):68.

2 Rintamäki, T., Kuusela, H. and Mitronen, L. 2007. Identifying competitive customer value propositions in retailing, Managing Service Quality: An International Journal, 17(6):621-634.

3 Heller Baird, C. and Parasnis, G. 2011. From social media to social customer relationship management, Strategy & Leadership, 39(5):30-37.

4 Kumar, V. and Reinartz, W. 2016. Creating enduring customer value, Journal of Marketing, 80(6):36-68.

Image:

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