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#MetricsMatter: Why Grocery eCommerce Needs to Get Better at Tracking KPIs

The imperative: Knowing the key data points of your most valuable customers

Just five years ago, popular digital media site Mashable seemed to have one very important message to get across on its social media posts—#MetricsMatter.

From analyzing site traffic to optimizing marketing campaigns using A/B testing and beyond…. to drive bottom line, the editors of Mashable argued, you’ve got to take practical steps to understand your most valuable customers’ shopping wants and needs. Then, you’ve got to apply those insights in a meaningful way, to deliver shopping experiences that cater to each unique consumer’s expectations, presenting them with the right products or services at just the right time to encourage them to spend their shopping budgets with your brands.

Fast-forward to the digitally-inundated marketing landscape of today, and it’s clear that #MetricsMatter more than ever. This is especially true in the grocery eCommerce sector, where leading retailers have figured out how to harness the huge stores of consumer data available from on-line and offline interactions to provide personalized e-tail experiences that drive deeper engagement over time.

Being able to mine your customer metrics is a competitive advantage

When you know how to capture, collect and mine insights from your customer data, you’re several steps further along the path to an individualized approach that can drive higher levels of customer satisfaction and generate better sales over the lifetime of your customers.

But first, you’ve got to understand which #MetricsMatter most to your day-to-day business, and then, use tools available to you (including the eCommerce platforms that Mercatus offers to grocery retailers) to deliver exceptional online and in-store shopping experiences to your customers with every interaction.

Understanding your metrics: the difference between “interesting” and “business critical”

While most of today’s leading MarTech platforms have been pre-programmed to capture standard customer demographic and psychographic data points, it takes some finessing to be able to go beyond those stats, to differentiate between the “interesting” and the “business-critical” KPIs.

To begin, you’ll want to go as granular as you can with your customer-specific stats, without losing the big picture of what the metrics mean in a practical sense (i.e., to your business’s bottom line).

These three business-critical metrics can make a real difference to your financial returns:

Total revenue divided by the number of orders taken equals the Average Order Value.

  1. Average Order Value (AOV) – “the total  sales volume from your grocery eCommerce site, divided by the total number of transactions for a given period of time.” Why it’s business-critical: Offers important insights into the amount of gross revenue you’re getting out of every customer interaction and, in turn, out of every dollar you’re spending to acquire a new customer. While margin generated from gross revenue will vary depending on the mix of products purchased, AOV can be used to influence key business factors, from product pricing and discounting to infrastructural investments, as well as the marketing mix you use to reach your target consumers. To optimize your AOV: Offer bundled packs or push higher margin, relevant add-on products or services to your eCommerce check-out page that are personalized to each user’s previous purchasing history.

Reasons for cart abandonment include high delivery costs, customers who are not ready to order, high order price, a complex checkout process, and a lack of guest checkout option.

    1. Cart Abandonment Rate (CAR) – “the percentage of visitors who added products to their shopping carts on your eCommerce site but didn’t complete the checkout process.” Why it’s business-critical: When you multiply your typical AOV by the number of people who come to your site but exit before completing a transaction, you quickly understand the amount of lost gross revenue you’re incurring every day from cart abandonment. To optimize CAR: If you’re losing sales at this stage, something is likely standing in the way, such as a complicated checkout process or too few delivery options. Consider ways to make your customers’ shopping journeys faster and easier, such as offering one-page checkout with pre-populated account information (especially shipping address, zip code and contact number). Or, shift to a segmented checkout that makes data-collection easier and is a better choice if you’re promoting bundle offers and loyalty program details. And if you find that customers tend to drop out of the sales funnel once they get to delivery method, consider offering a wider array of customer-centric fulfillment options, from two-day and same-day delivery to click-and-collect services, and beyond.

Average transaction plus Annual Purchase Frequency plus Expected Years of Relationship equals the Customer Lifetime Value.

  1. Customer Lifetime Value (CLV or LTV) – “the projected gross revenue that a customer will generate for your brand throughout their customer lifecycle.” Why it’s business-critical: As a high-level measure of the amount of profit you can expect to generate from a customer across the number of times they do business with you, CLV is deeply customer-specific and can be highly influenced by even small factors, including seemingly small steps you choose to take to improve their customer experience or build a better relationship with them via promotions. And when you know the CLV of your existing customer base, you’ll be able to determine which audience segments could use an added incentive to spend their grocery budget with you on a more regular basis. To optimize CLV: Boost customer satisfaction, diving into your other conversion metrics to understand what sales and promotional tactics may have driven better buy-in from your customers. For instance, for value-oriented shoppers, offer special flash discounts for multiple purchases. Or, for busy households, up your convenience quotient with a concierge service or pre-populated digital shopping lists with product recommendations based upon their purchase history.

When it comes to customer metrics, knowing is half the battle.

It’s only once you drill down beyond basic statistics like ‘number of sessions’ and ‘click-through rate’ to look at more meaningful customer-specific metrics like AOV and CLV that you begin to develop a more vivid understanding of what drives your most valuable customers to shop on your eCommerce site. These insights, in turn, can help you to cater your digital retail offering to attract the best possible returns and make the biggest difference to your business’s bottom line.

Learn more about these and 7 other business-critical metrics that can drive your retail performance. Download "Measuring Success in Grocery eCommerce: 10 Metrics You Should Be Tracking" now!


Kelly McLean
Kelly is an experienced marketer and business development strategist, with more than 15 years of expertise in both grocery retail and consumer loyalty sectors. Kelly’s approach to pragmatic marketing principles has lead her teammates to successfully meet and exceed their corporate growth goals.
Marketing

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