Customer metrics help online retailers understand behavior and interaction your customers have with your brand. Sales metrics on the other hand help you gauge performance of your business within different categories. Every marketer knows that to be successful, you need to use both sales and customer metrics, track them over time and correlate them with the campaigns you are running. With the right sales and customer metrics in place, you will get a more accurate measure of campaign performance and ROI.
Mineful makes it very easy to integrate your shopping cart data. Once integrated, it shows right away 8 very important sales and customer metrics every retailer should look at to understand your customers’ behavior. Here are the 8 sales and customer metrics e-commerce businesses quickly have access to:
1. Revenue per Customer (trailing 365 days)
This metric compares the average revenue a customer gave your business in the last 365 days with how much it was 365 days before that. So if you are using Mineful, or any other customer retention tool to increase repeat business, customers should on average be giving you more revenue. The calculation is very simple since it is just averaging total revenue by the number of customers who made a purchase within the specified time period (if you hover your mouse over the chart, you will see the dates of the period).
2. Average Number of Purchases (trailing 365 days)
Similar to the metric above, except that this one measures how many times has a customer made a purchase in the last year. Another important metric for repeat business as you want more revenue yes, but also more interactions with your company. This number should be increasing with any customer retention program. Even a small decimal increase can mean big revenue impact.
3. Re-Order Frequency The average number of days between orders for customers with more than 1 transaction. Some people call it Velocity, which I think it’s a cooler name. Re-order frequency is an important customer metrics that measures how fast people come back to purchase more of your products. This metric would be useful too if separated by product so you know when it would be a good time to send an automated email based on a specific product.
4. Customer Lifetime Revenue
The total amount of revenue that a customer is likely to get in for the company. Note that since we don’t know your cost of acquisition, we can’t compute customer lifetime value. This can help a business in arriving at the starting point of the marketing budget; something that is done in an arbitrary manner in many cases. Once the aggregated lifetime revenue of the customers is known the marketing budgets can be arrived at by looking at the return on investment that one expects.
5. Sales and Transaction Trends
Simple sales and transaction trends on a daily, monthly, quarterly, and yearly period can provide insight on the progress of your business in comparison to other time periods. Two of the metrics trended over time were mentioned before and the other ones included are revenue total number of orders per period.
6. Purchase Frequency
The number of customers who have made 1,2,3,4, or more than 5 purchases in the given time period. Which customer have made more than one purchase in a year? This metric speaks to the inescapable truth that email marketing strategies figure prominently in online marketing and brand positioning campaigns. Many online retailers have more than 75% of their clients order only once. When one creates procedures and strategies to improve this, the purchase frequency metric will help measure the performance of these efforts.
7. Number of New Customers
So far we’ve focused on metrics regarding customer retention and the value of the customer. This sales metric trends how your customer acquisition programs are doing. By period, you have the total number of NEW customers so you can track the success of inbound campaigns. Many business intelligence tools and even the shopping cart platforms track number of orders by month, but tracking new customers by period allows you to measure the performance of inbound marketing strategies.
Recency is simply the number of days since the last purchase. After you integrate your data, we compute 3 segments of customers based on recency and they are defined as follows:
New – Those customers whose last order is before your re-order frequency metric (defined above). So if your average re-order frequency is 60 days, new customers are those that made their last purchase in the last 60 days.
Inactive – We look, as in new customers, at the average re-order frequency from all your customers. If a customer is on the bottom 20th percentile in terms of average frequency, then they are considered inactive. Hover your mouse on the customer segment count to see where the threshold lie.
Engaged – Basically the rest, those that are neither New or Inactive.
If you are thinking about using automated emails with Mineful, now you know other metrics that you will get quickly after you sign up. Yes, we also have email metrics that address click and conversion rates.
But if you are not using Mineful, you can gain some knowledge just by hooking up your data and accessing these metrics within minutes. What are you waiting for? Contact us today.