Developing an on line shopping strategy is not easy: markets and customers are volatile and even your successful ecommerce business could be affected, if you don’t know how to reduce complexity and don’t have an analytical useful framework to track your business online.

In this article we will see how to track the effectiveness of your ecommerce, in other words its long-term sustainability.

 

1.Effectiveness

In order to grant a good paved way to your ecommerce, you should pay attention to the effectiveness (the capability to reach the objectives), just as to the efficiency (the relation between costs and results).

The difference between effectiveness and efficiency sometimes could reveal to be subtle.

For example, two armies, the Green and the Blue Army, can win their own wars; in this way, we can say that are both effective.

By the point of view of the efficiency on the other hand, if the Green Army for example has spent 5 times less than the Blue one, we must consider the first far more efficient than the other.

Nonetheless, focusing just on the achievement of the efficiency sometimes can result in the lost of the effectiveness: in other words can lead to a defeat. In our example, just imagine that the Green Army was the most efficient, but if it had lost the key battle against its enemy, it could have been defied at all, being ineffective.

The business history is full of the fossils of old big blue chip corporations that proved to be absolutely efficient in maximizing the revenues but missed the achievement of the effectiveness.

They were like Goliath the giant, and they focused too much on efficiency indexes than to win the battle against the smart annoying little David that dared to challenge them. Just imagine that comparing the Fortune 500 Firms in 1955 vs. 2011; 87% of the first ones are gone.

As in the picture below, the average lifetime of top corporations is constantly reducing.

ecommerce strategy

Average Lifetime of S&P 500.

Keep in mind that strategic issues count even more under certain conditions of your business area: in a competitive business sector, in a volatile environment where technology changes at a high pace, where new competitors can easily enter into the market arena, and where the start-up average cost declines.

It sounds like the ecommerce arena, doesn’t it?

Everyone can erode your market share, if you don’t track the effectiveness of your efforts in order to oversee your market position.

 

2. The strategic objective of an ecommerce

What is the effectiveness of your e-commerce? It’s in other words the long-term strategic objective that can ensure the existence of your e-commerce.

So what is your long-term strategic objective that can keep sustainable your business during the years?

I know the answer, something like ‘to earn 10 million of dollars before selling it to Amazon’.

Ok, money counts, but if you change your point of view to the sake of your customers, you can surprisingly discover something else laying in your business area.

Your strategic objective on the long-term is the same for every e-commerce: it’s to give answers to the problems of your target customers better than your competitors do.
Of course, it doesn’t mean that you don’t have a significant ROI (return on investment). But this definition as long-term objective focuses more on your market main elements: your customers and your competitors.

Probably the only reason that your customers don’t prefer other competitors is the fact that you are giving more value than the others.

But which value? It’s the real value of your market proposition (the benefit for your customers), or it’s just the related communication (the perception of the benefits)?

It’s both.

So you must have 2 things, that are deep linked together like two pairs of legs: a real benefit value (better prices, better products, better logistic) and the ability to communicate it to your target audience.

The bad news are that if you don’t transfer value to the market, your long-term sustainability of your e-commerce is put at risk: if you sell a luxury expensive niche product, without a good communication that give a reason to the unaffordable price, you’re out.

On the other side, the good news are that if you are able to communicate your value and to track the communication KPIs, you can be successful, even if your real value is the same as of your competitors.

In other words, the main objective of the customer oriented communication is to transfer a relevant value to your target.

 

3.How to track the effectiveness of your ecommerce: the Track Funnel Method

So, if the objective is to give value to your customers, how can you set the KPIs in order to increase the efficiency on one hand, keeping another eye opened to the effectiveness of your marketing actions?

Just starting from the customer’s point of view, the framework starts from the purchasing decision funnel. On modern website you can have reports of everything related to your Brand and to the purchasing stage of your potential or actual customer, off site or on site.

With the Track Funnel Method, you can set different KPIs through the purchase funnel, just like some infrared sensors that track what is the behavior of your customers.

purchase decision funnel

the purchase decision funnel

Each KPI should be weighted, in order to have an overall synthetic KPI index that reflects the changes in the funnel optimization process. For example, the views of the banner must be far less weighted than the number of orders; nonetheless they have to be tracked, as indicator of the Brand Awareness.

For example, if you consider just one KPI like the number of orders, it is not enough because it can’t track the effectiveness of a remarketing campaign in a small niche target.

So each stage of the funnel of the purchase process is important to track the effectiveness of the campaign, in order to have a swift glance to which part of the purchase funnel could have problems.

For example, if after a remarketing campaign its report shows that there are a lot of info requests from the visitors but fewer orders than expected, it can point out the need to change the layout of the product detail page, or the offer price at all.

You must track a KPI at every stage of the funnel considering that the are mutually related: for example if the visual display is effective, your target visits your website with a good brand identity mood, in a way that, surprisingly, can lead to a higher first purchase conversion rate.

In a further article we will go deep in the choice of the relevant KPIs for every stage of the purchasing funnel, giving the model of the Channel → Result → Target behavior.