A Familiar Scenario
You’re a successful e-commerce company, but recently you’ve encountered an issue: sales numbers aren’t increasing. How can this be? Your number of emails sent has gone up, click-thru rate (CTR) is looking great and site visits are up, so what’s the issue? Let’s examine this classic scenario of tracking CTR specifically and look beyond external factors like the merchandise, pricing, etc and drill down to 3 web metrics that are key for any e-commerce organization. These 3 metrics should be nothing new to seasoned e-commerce vets and a nice intro guide for those burgeoning in the field.
When looking beyond CTR, the most important metric to examine is your conversion rate. NNgroup defines Conversion Rate:
“The conversion rate is the percentage of users who take a desired action. The archetypical example of conversion rate is the percentage of website visitors who buy something on the site.”
For the sake of an e-commerce marketer, conversion rate is the rate of people that click to your site from a referral or email and actually make a purchase. Knowing this, one of the first questions you should ask is:
“What could cause CTR to be high and conversion to be low, considering that they are so intertwined?”
Just like Brick and Mortar, E-Commerce suffers from the same phenomenon commonly referred to as window-shopping. You could be sending 100 emails in the morning to your customers with 75% clicking to your site and enjoying a high CTR, but you might fall short in conversion if no one actually makes a purchase; customers love to see what is available and just because you have a sale on a hot item, people want to shop around and often don’t make a purchasing decision based on the first visit from an email or ad campaign.
User Loyalty (aka Retention)
Another incredibly important metric to track is user loyalty. It is essentially a measure of the percent of clients that return to your site after the first time. CTR and user loyalty are invariably tied together in any referral or email campaign, and as such they should be tracked very closely. One of the biggest red flags to look for is if you have a very high CTR from a campaign but a very low user loyalty percentage, which is the number of returning visitors divided by the total # of visitors. This means that you are garnering a high amount of unique and new users from campaigns, but none of them are returning. Not having any sort of user loyalty can lead to long term problems with revenue and growth as loyal users are 8x more likely to make purchases than first time users. Some ways to combat this churn is with more personalized campaigns or cart abandonment emails.
Bounce Rate (Beyond the Obvious)
The final metric we’ll cover here is oft overlooked and under-appreciated, but very important to be aware of: Website bounce rate. I know, we have been trained to look beyond bounce rate, however, we cannot ignore it. An awesome infographic on bounce rate can be found here, but to paraphrase, bounce rate is the rate of people who visit your site via organic search, referral, paid, etc. and leave almost immediately. There could be a multitude of reasons for this, but for relevance sake we’ll look at it in the context of CTR from an email campaign. If you send an email campaign and enjoy a high CTR but sales remain unchanged, bounce rate should be one of the early metrics to look at. Second step is to put yourself in the shoes of the recipient and see what went wrong and what would cause a bounce. Sometimes the wrong page is linked (we’ve all made this mistake), sometimes the page is not functional (check those 404s!), but whatever the case, looking at bounce rate can save you from wasted time, lost sales, and unhappy subscribers. Run A/B tests on those landing pages!
As a bonus, I’ll touch briefly on referral source and examine the opposite CTR-to-sales scenario presented above. Let’s say that you send an email campaign and have an incredibly low CTR but enjoy a high conversion rate and number of sales. It is crucial to keep an eye on referral source as it will be able to show you what may have caused this phenomenon and provide key insight into correct attribution for your efforts. For example, if your email CTR is low, maybe a paid search campaign gained significant traction or a social media post went viral or maybe someone posted a link to your promotion (without the tracking tags you had included in your emails). Keeping an eye on where your success stems from is always a great practice to be in the habit of. And I’ll guarantee you’ll find some interesting sources of traffic – some you can exploit and expand upon, others you may need to investigate further, and still others that could do long-term harm to your brand reputation.
All in all, CTR is a baseline metric and should always be a component to analyze campaign efficacy – be it an email, paid, referral or other campaign. The single most important takeaway is that you shouldn’t just accept a great CTR without examining the metrics directly associated with it. Take a healthy CTR rate with a grain of salt and then follow that down the path to track some of the aforementioned metrics and that will more thoroughly demonstrate how successful or unsuccessful a campaign ended up being.
(And ask us about our onsite personalization too!)