The 4 Pillars of a Data-Driven Ecommerce Strategy

By Abby Healy
June 13, 2019
12 Minutes Read

If you manage an ecommerce business, you know that one of the biggest challenges is accurately reporting on your performance.

Most businesses use multiple tools, from their ecommerce cart to their advertising platforms to marketing automation, point of sale, shipping, inventory and more – each of these tools has their own (often conflicting) metrics and reporting.

Trying to make sense of all that data can take time and resources (not to mention countless Excel spreadsheets). And that’s before you start to consider which metrics you should actually focus on – or what they mean for your business.

The good news? Developing a data-driven ecommerce strategy doesn’t have to be hard. You just have to know where to start – and have the right tools at your disposal.

The fundamentals of ecommerce analytics

There are (literally) hundreds of metrics that ecommerce merchants can look at to measure performance. It’s easy to get overwhelmed – and lose track of the data that actually matters.

One easy way to break it down? There are four pillars to a data-driven ecommerce strategy – and the things you should focus on to drive growth typically fall within one of these buckets.

  • Who are you selling to?
  • What are you selling to them?
  • Where are you selling to them?
  • When are you selling to them?

Who you’re selling to

It’s pretty simple – you wouldn’t have a business if you didn’t have customers. That makes who you’re selling to one of the most important things to consider when it comes to developing a successful strategy.

What does that mean for you? It means that you need to have a deep understanding of who your customers are. one that’s goes beyond basic demographic data and focuses on their tastes and behavior as your customer. This allows you to understand your performance among unique segments of your customer base, as well as create targeted strategies to drive loyalty, sales and lifetime value.

A few things segmenting your customers allows you to do:

  • Understand which percentage of your total revenue is coming from certain customer segments (like VIPs, one-time purchasers, repeat purchasers, full-price customers and more)
  • Understand which customers you should send sale emails to, and which ones you should market full-price products to
  • Know which of your customers you should proactively reach out to prevent them from becoming lost
  • Send targeted emails to turn your first-purchase customers into repeat customers, or encourage abandoned cart customers to purchase
  • Find your highest-value customers – and use that information to find more customers like them

What you’re selling to them

The where of ecommerce analytics? Where you’re selling to your customers – as in, the channels they use to find your store and make a purchase.

If you’re like most ecommerce businesses, you drive traffic to your site and acquire customers through a number of channels, such as, Facebook, Instagram, paid and organic search, email, influencers and more.

The real question? How valuable each of these channels are to your bottom line, and how much time and money you should continue to invest in them?

Doing a deep dive into your channel performance can help you evaluate not only how your channels are performing big-picture, but also how they’re performing among different parts of your customer base (who you’re selling to) and as a platform for the different products you sell (what you’re selling to them). See how this is all coming together?

Look for data points and actionable insights like:

  • How much revenue and profit are each of your channels driving?
  • Which channels do your highest-paying (or lowest-paying) customers find you through?
  • What’s your return on ad spend (and lifetime return on ad spend) for your paid channels?
  • How much is your customer acquisition cost for each channel – and how does that compare to the lifetime value they’re providing?
  • Which products tend to sell best through which channels?

Use this information to drive your marketing strategy, and decide where (and how) to invest to get the biggest return.

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Where you’re selling to them

Understanding your product performance is the next step to developing a truly data-driven ecommerce strategy. once you have the right customers, it’s about driving them to the right products. That’s the what you’re selling.

The action item here? Use your product and inventory data, combined with your customer segments, to match customers and products in a way that maximizes your profitability.

Some questions this analysis can help you answer:

  • In what order do my highest paying customers buy things from me?
  • which products do my highest-paying or highest-LTV customers tend to buy?
  • What products do my lowest-paying or lowest-LTV customers tend to buy?
  • Who are the products that are commonly used to upsell customers?
  • What products are commonly used to turn first-purchase customers into repeat customers?
  • Which products can I use to attract more customers like my highest-value customers?

in short, use your high-LTV products to attract customers, and your low-LTV products to upsell. The goal should always be to maximize your LTV per customer through a smart product strategy.

When you’re selling to them

Maybe the most important – and often overlooked – piece of the ecommerce analytics puzzle? When you’re selling to your customers – and how you can optimize that timing to drive more, and more profitable, sales.

for example, At Glew, we calculate something called lapse point for our merchants – it’s the number of days you have to upsell a customer before they’re likely to never buy from you again, and it’s different for each store. Where customers fall in relation to your lapse point determines whether they’re active, at-risk or lost.

Understanding this timing – and making it work for you – is critical to keeping your business growing in the right direction. So how can you do that? Understand what your lapse point is, know which customers fall into those active, at-risk and lost buckets at a given time, and develop rock-solid strategies for communicating with them.

Here are a few tips:

  • Active customers just bought from you. There’s no need to pressure them to buy again – yet. Focus on getting them the product, making sure they’re happy with it, showing them how it can add value to their life, welcoming them to your brand and community, and making it feel like their idea to come back and buy from you again.
  • At-risk customers are starting to get close to that “lost” bucket, so it’s time to start applying the pressure. And that’s okay, because you’ve earned the right to – by proving your value. Increase your email volume, share some discounts or coupon codes, and make them feel like they need to buy from you again.
  • Lost customers are those who have passed your lapse point without purchasing – but they don’t have to stay lost. Focus on a defensive rather than an offensive strategy, and think long-term to keep them engaged with your brand – things like brand anniversary campaigns, notifying them about new product launches or sending happy birthday emails.

The bottom line

Ecommerce analytics are complex, sure – but they don’t have to be complicated. Breaking your store’s performance down into these four fundamentals – who, what, where and when – helps you see where your opportunities are – and how these key elements of your store work together to drive growth.

One thing to remember: Data points and metrics are great, but they don’t mean much if you’re not using them to guide your decision-making. Make reporting on your performance – and seeking out actionable insights – a part of your day-to-day, and you’ll see results.