While we can all agree that eCommerce is critical for brands in this increasingly digital world, not all channels are creating equal.
So how do you know if your eCommerce channel is working for your business - or if your business is working for it?
Return on Investment (ROI) has long been an important metric for businesses of all kinds. From measuring the success of digital marketing campaigns to determining what products are most profitable, ROI calculations can provide you with incredible insights that guide your brand’s decisions.
And while there are basic guidelines for calculating ROI, it’s shortsighted to rely on a single formula that doesn’t account for any of the nuance or complexities of your business and your eCommerce channel.
Guidelines for Calculating ROI
Nonetheless, there are some principles that are helpful.
In order for an ROI exercise to be worthwhile for your eCommerce company, you’ll need to:
- Identify what information you really care about. Sure, you can look at expenses for your eCommerce site vs. revenue, but what about specifics? Digging more deeply into specific metrics can help inform decisions like whether or not expanding self-service capabilities would cut down on costs associated with customer service while simultaneously increasing customer satisfaction.
- Determine the metrics needed in order to measure that activity. So for self-service, perhaps you would need to know how many customers currently use your existing self-service features; how much time account managers are spending on activities that customers could handle themselves if properly equipped?
- Establish how you plan to collect and segment this data. Do you need to conduct surveys, time logs, can you track user activity?
- Understand the complexity of the data. Are there flaws in the data collection process for which you must account? Did unusual outside circumstances impact results?
Key Metrics & Tracking
In addition to the above guidelines, there are also some key metrics that are worth tracking. These will certainly vary by business, but some examples include:
- Average customer acquisition cost
- Conversion rates
- Conversion rates by device/source
- Customer lifetime value
- Paid search
- Organic search
- Email marketing click-through rates
- Social media sales (if you offer them)
- Impacts of your content marketing strategy
- Which marketing channels and types of content are popular
The list goes on. Some of this can be acquired via Google Analytics, which even offers a specific eCommerce tracking setting.
You can also track a significant amount of this via manual UTM tags in each of your channels. These tags will help you determine if your email campaigns are boosting sales, or it’s really coming from a recent blog post.
Even with these great tools, truly insightful ROI calculations often require far more comprehensive collection, segmentation, analysis, and reporting.
Outsourcing ROI Calculations
Most eCommerce companies don’t have the resources in-house to properly manage ROI calculations.
One solution is to outsource that analysis and reporting to subject matter experts. Many Object Edge clients do so via our Managed Services.
Through our Business Operations Services, we offer a variety of solutions, including weekly analytics reporting and recommendations that keep your eCommerce on track.
Your business can leverage trained and certified eCommerce and information technology experts; lower your operating expenses; decrease time spent on collecting, measuring, analyzing, and reporting; and increase results - which equals revenue.
To learn more about Managed Services, or how to better calculate ROI on your eCommerce channel, contact our team of experts today.