7 questions to take your marketplaces & eCommerce analytics to the next level
Aug 6, 2018
Competition as an eCommerce or marketplaces business is fierce. Consumer expectations increase a little with every new website or app that launches: more options, the ability to customize, lower pricing, and seamlessly speedy service. How do you keep up with the competition let alone exceed expectations to stand out?
Here are 7 questions the best companies, like Amazon, Deliveroo, and Etsy ask themselves:
1. Where are your customers coming from?
There are a few things you should know when paying to acquire customers. You need to know where they’re coming from and how much it costs to bring them to your store. To which channel can you attribute these acquisitions? Exactly how many customers were acquired, and at what cost?
With the right tools, you can build your own cross-programme metrics that empower you to take control of customer attribution claims, and any charges that may ensue.
SmugMug, a premium photo-sharing service, discovered that the numbers from one of their vendors directly contradicted their own data. The vendor claimed to be the source of a certain category of new subscribers, but SmugMug had concrete data to prove those subscribers had started a SmugMug trial before seeing their first ad from the source in question.
Once you have a source, you can then look at the number of new customers different sources are delivering to your business. You can also group your most valuable customers—those who spend a lot, make frequent purchases, buy products with high margins, and/or rarely return—and see where they’re coming from and how much you spent on the source(s). Together, this information equips you to make better, more informed marketing decisions.
2. What are your most valuable referral sources for customers?
Whether it’s providing rewards through referral programmes or offering discounts for friends, every e-commerce business employs various guerilla marketing tactics.
Ask yourself: Are your referral tactics working? Or are people gaming the system? Who are your referrers and what is their customer value? What are the characteristics of referred customers versus organically sourced customers?
HotelTonight, an app for booking hotel rooms from your phone, has a program that gives referrers a discount on their next hotel stay. An analyst at HotelTonight observed there were people who referred a lot of customers and collected the reward but had never used the app themselves. He wondered, “Are we getting gamed?” When he investigated further, he discovered their programme was working in an unexpected, but very beneficial way. It turns out there are professions—taxi drivers, flight attendants, airport information staff, etc.—who are often asked for last-minute hotel advice. These individuals never used the HotelTonight app for paid stays, but got a lot of credit for free hotel stays by driving of HotelTonight business.
3. Who are your most valuable customers and their lifetime value?
You can use your transactional data to calculate what a customer is worth to you, so you can focus your best efforts on those with the highest lifetime value. To calculate customer lifetime value, calculate the lifetime revenue less the cost of getting and maintaining the business. Somebody who buys a lot from you already may be a great person to target with specialised offers—for example, those that build brand loyalty with minimal impact on margins—saving your discounts for customers you’re hoping to win over.
Things get even more interesting if you add referrals to the mix. You can calculate the lifetime number of referrals for a customer, calculate the value of all those referrals, then determine the average value of a referral for the customer. Afterwards, you can build different classes of referrers and create offers that incentivise each one appropriately.
4. How are customers engaging on your site?
In addition to third-party data sources and first-party transaction data, online retailers can capture event-level data that describes customer interactions in great detail. By combining granular event data, consolidated across all digital sources, it’s possible to roll up your data into sessions for a very interesting view of customer behavior. How often do people visit and not purchase? What percentage of customers bounced? Does the percentage change over time? How did people from one referral source engage compared with people from another source?
Lyst is revolutionizing the way people shop by connecting millions of consumers to the world’s leading fashion designers and stores all in one place. At the heart of Lyst is an enormous amount of data, generated by tracking implemented on their website to better understand their customers' online behaviour.
By tracking everything, from a .gif loading in the background to the products a visitor browses, the Lyst team gains insight into how their customers navigate the site, and can then optimize it to create a painless shopping and checkout experience.
Analysis of event data can suggest opportunities to improve your site or create new tools for better engagement. It can help you determine which prospects are worth something, so you can remarket to them in a way that will delight them. It will reveal the sources that drive the behaviours you want, so you can take action in just the right way, with the right level of resources.
5. How can you turn help requests into happier customers?
Customer Support requests are chock full of information about friction points in your customer experience. Unfortunately, this info is often trapped in single solution tools and company bottlenecks.
The Dollar Shave Club customer service team improves customer experience by tracking the volume of help tickets. For example, if 25% of tickets are unresolved at the end of the day, the team can add an extra shift or otherwise reallocate resources to make sure a bigger backup doesn’t occur. Customers stay happy because their issues are resolved quickly and the Dollar Shave Club team never gets too deep in the weeds.
The customer service team also tracks the relationship between help requests and churn. By connecting all their company data, they‘re able to see how shipping errors were leading to lost customers and recommended improvements to the shipping process.
6. Where can you be more efficient?
For each SKU, you can compute “days on hand”— available inventory divided by average daily sale—to see how fast the warehouse will clear out of a product and to understand how big your bu er is. For available inventory, you track how many of the SKU were in inventory at multiple points in time to understand how fast inventory is going down or how fast it’s increasing as it’s restocked. For daily average sale, you can collect data over a relevant period of time and divide by the number of days.
ThredUP, an online consignment shop specialising in “practically new” clothing and runs their business on data ThredUp tracks and analyses the variables that impact operational efficiency and overall productivity. For example, ThredUp inventory managers evaluate performance and Units Per Hour against metrics for each processing station in its distribution center, enabling them to quickly make changes to improve outcomes. In addition, the company generates regular productivity reports, maintains a dashboard of activity, and distributes weekly awards in its warehouse to create incentive among employees.
7. How do I scale growth for both sides of the marketplace in balance?
Marketplaces face the added trick of needing to balance customers on multiple sides of the interactions: those interested in providing a service and those interested in paying for a service. Both sides come to the table expecting to walk away with something they need—be it payment or a good, say a uniquely handcrafted gift or a ride between locations—and both sides expect the process to be much more easier by going through the marketplace. Are people coming back on both sides?
Deliveroo, an award-winning environmentally friendly delivery service, is on a mission to deliver the best selection of food in the fastest time possible and with the best customer service. Data is key to make sure Deliveroo meets the supply and demand for hungry diners, restaurant orders, and delivery jobs. Everyone at Deliveroo has access to data, allowing employees to go beyond asking the basic question of ‘what happened’ to asking ‘why’ certain things happened.
By looking at how regional and seasonal differences impact orders, Deliveroo has been able to speed up the time it takes for a customer to get their meal, thus leading to higher customer satisfaction and repeat purchases. Deliveroo then shares these insights with their restaurant partners, which have helped to identify prime spots for new locations, where consumers are hungry for their food but previously had to travel farther or wait longer to get it, opening up new revenue streams for these restaurant partners.
The repeat customers and thriving restaurants are providing lots of work and earning opportunity for Deliveroo riders, thus growing all sides of the marketplace.
With what feels like new competition popping up everyday and so much data to try and make sense of, it can be easy to lose sight of what matters -- your customers. We hope these questions help you take a step back, think about the big picture, and really focus on the questions that matter most.
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