There’s a lot of talk about how new technology and trends are changing the face of shopping. Rightfully so, you need to keep up with the shopper, and your brand needs to take a stand on how to apply the new technologies in a shopper-centric way. That’s a given.
But you also have the need to let those around you know how the business is performing. And over the years, you’ve developed your dashboards and your metrics. But today, if you are using your old tried and true metrics to measure performance, I’ve got bad news – do not trust your numbers, because they lie.
The problem is, most of those tried and true performance metrics don’t fit today’s retail reality. At Demandware, I have a great asset to investigate: the activity of millions of global shoppers. As I’ve dug into our metrics, there are a few that I’ve found to be either too volatile to trust or too staid to monitor.
The old standby: conversion rate gives way to order per shopper
As I’ve previously written, and my colleague Vinod Kumar later expounded on, conversion rate has (at best) lost relevance, and at worst is misleading and harmful to your reporting. The digital landscape has changed, and two elements are placing downward pressure on conversion rate: visit inflation and increasing mobile traffic share. The real issue is that conversion rate is framed around a ‘visit’ – and shoppers today are visiting more often and using different devices. The concept of a visit is antiquated, and thus the metric itself can’t be your north star. Leading retailers should start to widen their dashboards to include shopper-specific metrics, like orders per shopper. By framing your reporting around the shopper, you can see the growth or decline in shopper retention. This should be a natural extension of where most retailers are placing the ecommerce efforts.
The new device view: Device Index
Understanding how traffic converts to a sale is still an important and reasonable goal, but you must go deeper to give it meaning. Here’s a metric to consider: Device Index. It’s a really simple calculation: (order share by device) / (traffic share by device). So, if you have 25% of your orders and 50% of your traffic coming from mobile, 25%/50% = .5. Now, you get a sense of how each device is converting in relation to each other. More importantly, you can benchmark your performance against others. In the Demandware Shopping Index, we publish the order and traffic shares for your use in benchmarking. As always with benchmarking, it is absolutely critical that you benchmark your performance against a comparison set that you trust. For those readers that are already working with Demandware’s Retail Practice, you know the power of benchmarking already.
Glass half full: instead of cart abandonment rate, consider add-to-cart rate
And finally, Abandoned Cart Rate has long been a focal point in digital. Many have taken steps to convert carts through email campaigns and retargeting. But, so much emphasis has been put on reducing abandonment, I worry we’ve lost sight of the more important goal – generating demand. Would you rather reduce cart abandonment or create more carts? Undoubtedly, creating carts provides more value – with the opportunity to turn a cart into a sale. Or, allow the shopper to share the cart and even bring the cart in the store. In fact, with the explosive growth of mobile cart creation – 79% more carts were created YoY in Q4 – shoppers now bring their cart, aka their wish list, wherever they go. That mobile shopping cart is the ominchannel utility. So, if there is one metric to watch and focus on improving, think about add-to-cart rate – especially on mobile, where shoppers are increasingly adding to cart, at a 22% higher rate than last year.
Shoppers are transforming your business – make sure you are evolving your metrics too.