Analyzing E-Commerce Profitability
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The document discusses key strategies for achieving profitability in e-commerce, emphasizing the importance of analytics, conversion tracking, and managing cookie consent. It highlights metrics like Cost Per Acquisition (CPA) and Customer Lifetime Value (CLV) as vital for assessing campaign effectiveness, along with the need for better reporting to enhance learning and decision-making. The content is drawn from a meetup led by Ben Sufiani, focusing on practical tools and methods to improve e-commerce performance.
Analyzing E-Commerce Profitability
- 1. ANALYZING YOUR WAYTO E-COMMERCE PROFITABILITY MEETUP get.pirateskills.com/analyze Nov 18th 2020
- 2. ANALYZING YOUR WAY TO E-COMMERCE PROFITABILITY 1. Analytics matters in E-Commerce 2. Improve your conversion tracking 3. Manage your cookie consent well 4. Better reporting, faster learning 5. E-Commerce Analytics – Q&A
- 3. Ben Sufiani • Founder since 2008 • Growth Marketer • Host of Pirate Skills • Analytics has turned out to be my most valuable skill
- 5. Why Analytics matters in E-Commerce • Broke or Billions? • CPA > CLV = 🤮 CPA < CLV = 🤑 • Measuring cost per acquisition • Estimating your customer value
- 6. Broke or Billions • One of these two campaigns is going to make you broke and one is very profitable. • Which would you choose now?
- 7. Broke or Billions • Impressions are nothing if they don’t bring people to your shop. • Which would you choose now?
- 8. Broke or Billions • Landing page views are nothing if the visitors are not interested in your product. • Which would you choose now?
- 9. Broke or Billions • ROAS is often your best indicator of profitability. • But how much ROAS is necessary to be profitable?
- 10. PLOT TWIST 🤯 IT WAS ONLY ONE CAMPAIGN
- 11. Broke or Billions • Info: ROAS > 3.5 is profitable • Only the placement split revealed it’s profitable part of the campaign • Now you make a good choice!
- 12. CPA > CLV = CPA < CLV = 🤑 🤮
- 13. Measuring your Cost per Acquisition • Simplify in the beginning • Ignore personal costs • Start with average costs • (Ad) Spent / Purchases • Simple spreadsheets • Plus ads manager
- 14. Estimating your Customer Value • Customer Lifetime Value = Average Order Value x Purchase Frequency • Average Order Value = Total Net Revenue / Total Orders • Purchase Frequency = Total Orders / Total Customers
- 15. Why Analytics matters in E-Commerce CPA > CLV = CPA < CLV = 🤑 🤮
- 16. ANALYZING YOUR WAY TO E-COMMERCE PROFITABILITY 1. Analytics matters in E-Commerce 2. Improve your conversion tracking 3. Manage your cookie consent well 4. Better reporting, faster learning 5. E-Commerce Analytics – Q&A
- 18. From impressions to profits • Write down every step your customers have to take • Traffic sources • Website & landing page • Email sequences • Checkout process
- 19. Let’s do this for some ad campaigns • Impressions • Clicks • Page views • Add to carts • Initiate checkouts • Purchases
- 20. Can you already track your numbers? Ad spent 5,000 € Impressions 500,000 Clicks 5,927 Visitors 5335 Add to carts 1334 Initiate Checkouts 1000 Purchases 500
- 21. How to track each conversion get.pirateskills.com/tagmanager
- 22. A conversion tracking stack • Google Tag Manager • Google Analytics • Google Ads Conversations • Facebook Pixel • All relevant ad & service pixels
- 23. Benefits beyond better reports • Conversions are used as optimization signals for ad campaigns. • Ability to split the conversion data with the ads manager. • Conversions can be integrated in other tools like the CRM.
- 24. ANALYZING YOUR WAY TO E-COMMERCE PROFITABILITY 1. Analytics matters in E-Commerce 2. Improve your conversion tracking 3. Manage your cookie consent well 4. Better reporting, faster learning 5. E-Commerce Analytics – Q&A
- 25. MANAGE YOUR COOKIE CONSENT WELL (#8/15)
- 26. A 5% opt-in rate is not an option
- 27. Consent optimization is real borlabs.io Dashboard
- 28. Constent needs to be IN YOUR FACE www.pirateskills.com/workshops
- 31. Choose your consent tools wisely • Don’t compromise on UX • Pick a solution for your system • Measure your consent rate • Optimize over time • Aim for 50% and more
- 32. ANALYZING YOUR WAY TO E-COMMERCE PROFITABILITY 1. Analytics matters in E-Commerce 2. Improve your conversion tracking 3. Manage your cookie consent well 4. Better reporting, faster learning 5. E-Commerce Analytics – Q&A
- 33. BETTER REPORTING MEANS FASTER LEARNING (#9/15)
- 34. Better reporting means faster learning • A simple E-Com spreadsheet • Shop Analytics = 99% truth • Google Analytics for the basics • Facebook Analytics reports • Rules for scaling up & down
- 35. A very simple E-Com spreadsheet Ad spent 5000 € Impressions 500,000 Clicks 5,927 Visitors 5335 Purchases 500 Purchase Value 15000 € ROAS 300 %
- 39. Shop Analytics are closest to the truth
- 41. Use Google Analytics as the default tool marketingplatform.google.com/ about/analytics
- 42. Best to measure user flow across channels marketingplatform.google.com/ about/analytics
- 43. Facebook Analytics is great for CLV facebook.com/analytics
- 44. And FB Analytics thinks in cohorts facebook.com/analytics
- 45. Why Analytics matters in E-Commerce CPA > CLV = CPA < CLV = 🤑 🤮
- 46. The reason for all the trouble is SCALING • Define your minimum ROAS. • Scale up budget slowly when campaign ROAS is above that. • Scale down campaigns that don’t, after a reasonable ad spent.
- 47. ANALYZING YOUR WAYTO E-COMMERCE PROFITABILITY MEETUP get.pirateskills.com/analyze Nov 18th 2020