eCommerce Metrics That Matter
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This document presents a solution for gaining insights into e-commerce channel and customer profitability. It proposes a platform to identify the most profitable channels, customers, and products by analyzing metrics like contribution margin, variable marketing spend, and customer lifetime value. This would allow marketers to increase profitability and optimize spending. It provides examples of dashboards and analyses that could be created using the platform, including stacked cost per order, lifetime contribution margin by customer, and category performance over time. The goal is to understand true customer and channel profitability to make more informed marketing decisions.
eCommerce Metrics That Matter
- 1. Christian Rodericks June 2016 E-commerce Customer and Marketing Insights The one metric to rule them all….
- 2. Confidential 2 Problem Traffic, Clicks and Sales metrics provide limited insight into channel and customer profitability ‘Stacked’ marketing costs and contribution margins are missing from the equation. In-store customer and promotional insights aren’t tied-into the digital world No easy way exists to view the most profitable channels and customers
- 3. Confidential 3 Solution A platform where marketers can quickly gain channel and customer insights to: Increase Profitability Identify the most profitable channels and customers Increase Share of Wallet Retain and replicate the best customers and channels Optimize Spend Understand stacked digital, loyalty and promotional costs
- 4. Confidential 4 It starts with understanding the… Contribution Margin In Cart Sales Product Margin Gross Margin - Remove COGS - Remove Cancelled & Returned Margins + Add Variable Marketing Spend + Payments @ x% Maturity
- 5. Confidential 5 But - Variable Marketing Spend is Slippery
- 6. The eCom Data Landscape Is Vast • Segment customer base using static data Member Acquisition & RetentionMember Brand and Member Engagement Media, Member & Product Profitability • Segment customer base using product / event data. • Segment customer base using CPA/LTV data. • Segment customer base using dynamic data. Inventory COGS Product/Brand Margin Campaign Tracking/ Response Orders Acquisition Channel Browse Add to Cart Events LTV Media Channel Channel CPA Customer Segment Fraud Geography Member / Tombstone Category Preferences Loyalty Demographic Social Shipping Timelines Promotions/Offers Postal Code / Geo Visit Cancels & Returns Engagement Predictive Models Repeat Product Reviews Membership Type Acquisition Date Channel CPO Affiliate Costs eCom ESP CSR OMS Google Other Calc Affiliates Pricing / %age off Web Analytic s Actual COGS GL Payment A/B Test Product Recommendation Credits
- 7. Confidential 7 What are my stacked costs to acquire & retain customers? Understand the TRUE Stacked Cost Per Order (CPO) – including Promos, Loyalty, Affiliate, SEM, etc..
- 8. Confidential 8 Channel Sales $ Margin $ Last Click Costs Loyalty & Rewards Costs Commissions Costs Profitability $1000 $800 ($450) ($200) ($50) 0.05 $500 $300 ($300) ($100) ($200) -0.6 $100 $80 ($0) ($15) ($0) 0.6 What are my most profitable channels? CRM SEM/Affiliate Organic & Direct
- 9. Confidential 9 Who are my most profitable customers? Category Sales $ Gross Margin $ Last Click Costs Loyalty & Rewards Costs Promos Costs Profitabilit y Ratio $1000 $800 ($450) ($200) ($50) 0.05 $500 $300 ($300) ($100) ($200) -0.6 $100 $80 ($0) ($15) ($0) 0.6 1 2 3 4+ RetentionLTP 60% 20% 15% 5% Life Time Contribution Margin and Retention Scores for every customer What are the top 10% of profitable customers buying? How often do my most/least profitable customers repeat?
- 10. Confidential 10 Methodology VisualizationData Collection and Analysis Risk Appetite Business Constraints Regulatory Drivers Industry Practices Technology Trends Economic and Environment Forecast Geographical Considerations Acquisition Strategy Retention Strategy Segmentation and Personalization Media and Offer Spend Optimization Customer Life Time Value KPIs Channel Profitability Brand Profitability Category Profitability Customer Analysis Cost Analysis Organization Analysis P&L Business Metrics OUTPUTSINPUTS Order Analysis
- 11. Confidential 11 Sample Marketing Analysis Dashboard
- 12. Confidential 12 Sample Life Time Contribution Margin Analysis Year 1 Year 2 Higher Repetition & More CM+ Customers CM Climbing Up Acquiring Profitable Customers from the start Large # of CM –ve Acquisitions Pattern of negative CM, repeating customers Small % of CM +ve customers • Customer Retention Scores and Total Contribution Margin Values are plotted and grouped • % increase Contribution Margin Positive Customers
- 13. Confidential 13 Sample KPI Trend Dashboard
- 14. Confidential 14 Sample Active & Repeat Analysis
- 15. Confidential 15 Sample Fraud Dashboard
- 16. Confidential 16 Sample Category Performance Dashboard
- 17. Confidential 17 About As a founding partner at SHOP.CA, Christian helped disrupt the Canadian eCommerce industry by helping build Canada's first and largest online multi-merchant marketplace. Christian helped conceive and build SHOP.CA's vision, mission, operating model, unique intellectual property, and the team that helped secure over $72MM CAD in funding. As part of the Executive Leadership Team, Christian is currently responsible for shaping SHOP.CA’s growth strategy by using data, analytics and insights to anticipate and capitalize on market opportunities. Prior to SHOP.CA, Christian was a Management Consultant with Deloitte and a Senior Product Manager with Cyberplex and Janna Systems, which was acquired by Siebel for $1.4B CAD. Christian’s academic background includes a Bachelor of Mathematics degree from the University of Waterloo and he is PMP, ITIL and TOGAF certified.