What is eCommerce
eCommerce is any online transaction where there is an exchange of money, often through a website. Whether you sell products, services or subscriptions. B2B or B2C, if you sell via your website or are planning to in the future, this guide will help you.
Your website is your company's biggest and best asset. It is an always-on, 24/7 salesperson who holds all the answers to help your customers overcome their challenges and satisfy their desires.
The key to a website which successfully attracts visitors, engages them with useful content and then steers and guides strangers into customers is SMART goals. But are you using SMART goals correctly?
Popular belief is that S.M.A.R.T stands for:
However, at Xune we believe action is the tinder which ignites the plan so use the following:
So we drop the 'Achievable' and 'Relevant' and swap in 'Actionable' and 'Realistic'. Achievable and Realistic are close enough that in the context of goal setting they mean the same thing and if you want a sure fire way to set relevant eCommerce goals download the Xune eCommerce SMART goal calculator. This calculator will change the way you set your future eCommerce SMART goals for the better.
Download the Free eCommerce SMART Goal Calculator
Setting SMART goals
Often the one thing which will define whether a company is successful or not. S.M.A.R.T goals drive a company forward in ever increasing increments of success.
What do you want for the future of your business? Chances are you're probably thinking along the lines of more revenue, increased sales and more people knowing your business exists.
But what if you make an extra 0.01% revenue over last quarter? You get one extra customer or you notice that someone shares one of your blog posts. Congratulations you've succeeded!
To ensure your goals are worthy of your time, attention and money they need to be big enough so that achieving them is going to put actual value into your business.
To get specific we first need to isolate a key component of our online success. Often called a Key Performance Indicator (KPI), you can set goals to drive specific parts of your eCommerce growth.
Examples of specific goal KPI's:
- Increase website traffic (this can be broken down further depending on how granular you want to get)
- Increase website traffic from social media
- Increase website traffic from organic search
- Increase leads generated via the website
- Increase checkout funnel conversion rate
Consider the two examples below:
- I want to increase my brands reach and awareness.
- I will increase my website traffic by a multiplier of 2x, taking it from 10,000 average monthly visitors to 20,000 monthly visitors, by this time next year.
Which do you think is most likely to get meaningful results?
Measuring your progress
The simple rule of all goals, is that what gets measured, gets done.
When you have clearly defined goals, it's easy to know your progress towards these. You're able to see how your digital marketing affects the goals which matter most to you
Getting started is important, but first, you're going to run some numbers and perform a bit of an eCommerce health check. This will allow you to set realistic goals based on your current position, see the effects your actions have on driving your specific goal and know whether you've succeeded or failed - and by how much - by the deadlines you set.
While the maths isn't too heavy, feel free to use our eCommerce website grader for help setting S.M.A.R.T goals for your business.
We use this tool with our clients to help them set S.M.A.R.T targets to accelerate eCommerce growth.
It allows you to see at a glance the overall effectiveness of your website and help you decide which specific areas deserve your focus. Finally, it gives you an easy way to define what your digital marketing spend could look like to help you reach the goals you have set.
Increasing website traffic
Increasing website traffic is like turning on the tap at the top of your business, and just like water flowing downhill, allow your customers to find their path of least resistance to your conversion.
Write down your current monthly website traffic and if you are following along with the website grader, submit the values in the appropriate location in the tool. You can find your average monthly website visitors in Google Analytics or your websites CMS (Content Management System). Do reach out to us if you need assistance in finding these figures, we're always happy to help.
Next, write down your website traffic growth target. If you've already got your growth goals in mind then great, use those. If you don't then it might help if you think about where you want your ideal website traffic to be next quarter, in 6 months time or this time next year.
The difference between your current website traffic and your target traffic is the raw monthly average value that you need to drive between now, and 12 months time.
Using multipliers to set realistic SMART goals
A good rule of thumb when setting S.M.A.R.T goals for your website is to work out what your new target is as a multiple of your current performance This can often provide an insight into how realistic your new goals are.
To find out your multiplier simply divide your new target by your current performance. So in this example we'll keep the maths simple, if you decide your new target for web visitors is 10,000 per month, and you currently get 5,000 visitors per month. Then 10,000 / 5000 = 2. Your future target is 2x the value of your current one.
Don't worry, as we go through setting goals for each of the KPI's we'll suggest possible multipliers you could aim for based on what it is you want to achieve.
In the eCommerce S.M.A.R.T calculator, the multiplier is automatically worked out for you, and is found in column I.
Example traffic goals
Increasing website visitors is an obvious starting point for any online website, however, websites with an eCommerce element to them can usually trace how a spike in online traffic leads directly contributes to a spike in online conversions.
To see how this works in practice and to give you an idea of the sorts of multipliers you should be looking at, let's consider two different companies.
Paul, is a successful Amazon Seller and knows the platform like the back of his hand. But is frustrated by the very low visitors he gets to his own brand website. He makes more profit for sales there so decides he needs to focus on tactics which drive more traffic.
Paul currently gets an average of only 250 average visitors per month. Paul decides to set a target of 5,000 monthly visitors which generates a high multiplier of 20x
In the example above there are two concepts to take away.
- Low starting traffic is an opportunity for big success
- Look for a multiplier at the very least in the high teens
- [Bonus Takeaway] - Third party sellers should look to establish strong website sales on their own branded assets.
Next up, we've got Suzie.
Suzie sells beauty-box subscriptions on her own branded website and enjoys average monthly traffic of around 4,600. Using the previous example with Paul, if we aimed for a multiplier of 20x, then Suzie's target number would need to be 92,000!
Suzie decides that while that would be very nice indeed and is something to aim for in the future. A more realistic target of reaching an average of 10,000 monthly visitors would be a solid shorter term goal to aim for. This provides a multiplier of 2.2x
To keep your website traffic goals S.M.A.R.T consider
- Higher starting traffic means a lower target multiplier
- Be positive, daring and stretch your targets.
- Keep your goals realistic using the multiplier as a guide.
If you find yourself caught between two figures go higher rather than lower. The more traffic you aim to drive through your website, the more opportunities you will get to engage your visitors and help them purchase your products and services.
Add-to-Cart & Website Leads
The ability to generate company leads is a vital component of any successful website. Is your website filing your conversion funnel?
When reviewing your websites leads you are essentially asking the question, "How responsive is my audience to the content on my website?"
And can actually be measured in a variety of different ways depending on the type of business you are running. For example:
- Number of Adds to Cart per month - customers who initiate the checkout process on your website
- Number of B2B Leads per month - distributor enquiry, franchise enquiries or bulk selling opportunities
- Number of B2C Leads per month - mailing list, booking demos or requesting more information
Your choice on what type of lead to focus on is determined by the type of eCommerce transactions you want to be generated towards the end of the customer buying journey.
For example, Let's explore these in more detail.
In the S.M.A.R.T goal calculator, use the drop-down box to choose the type of lead you care about the most.
'Adds to Cart'
A more traditional eCommerce business you may want to simply focus on how many people start the buying process. Because the remarkable thing about an eCommerce checkout funnel, is that over time all other things remaining equal it will tend to convert roughly the same percentage of people.
Therefore, when you push more traffic through your website and optimise for an increased number of add-to-cart events you can practically bank on your website being able to guide that certain percentage of customer checkouts through your funnel to the final thank you screen.
B2B Leads per month
When eCommerce is B2B (business to business) the amounts involved may be significantly higher than consumer purchases. So whether you allow people to checkout on your website or not, you're likely seeing a much longer sales cycle and a tendency for your customers to start their journey on your website, but finish it with a salesperson.
This then makes the amount of interested leads your website generates critical for influencing the number of opportunities you can try and close.
Harriet wants more small business owners to fill out a form on her website to enquire about business rates for buying her health food items in bulk or becoming official distributors.
B2C Leads per month
Pure website sales is a great metric to focus on, as it contributes directly to your companies gross profit, however, that's not all your website can do. Remember that it is your most valuable salesperson and can multi-task like a boss.
Consider the value of growing your list of subscribers who land on your website and find value in your message. These website visitors are the perfect fit for your brand and they want the opportunity to enter your fun competitions, get involved in discussions which your brand passionately cares about. Or even download your content guide.
These people will likely not only buy from you now, but they will often keep coming back to you in the future to meet their needs. Brand loyalty is not dead, to those brands who are loyal to giving their customers engaging content.
Quick tip: If your B2C leads are low don't be discouraged, chances are there are loads of potential optimisations you could do to increase the rate of opt-ins and a high multiplier should be aimed for.
Your website is your company's greatest salesperson, optimise your checkout funnel and target increased sales.
Website sales are often viewed as the
When choosing your conversion goals keep that in mind and in the example above, the sunglasses shop may set year-on-year growth targets rather than 6 month targets which carry with them an unfair bias.
If you're already on top of your game in terms of eCommerce, then your improvements may come in increments through A/B testing rather than huge leaps.
If your website sales are currently poor or non-existent, then I do have some good news. There are probably tons of optimisations which you could test, if your website isn't generating you much revenue. Act now to improve it and turn your website into your business's biggest asset.
Book some time in our calendar for a quick chat where we'll learn about more about you and business to see if we can help.
Otherwise, go ahead and set your target website conversions per month, and choose a target which gives you a high multiplier. Your website conversion sales goals are yours to set although, it's worth noting that they do work together nicely with customer lifetime value which we'll cover in the next section.
Customer Lifetime Value (LTV)
LTV is the gift that keeps on giving, you may also see this written as 'CLV'.
The lifetime value of your customer (LTV) is one of the most powerful metrics to focus on. You are much more likely to have a past customer buy from you again than a new visitor.
According to Matt Lawson, Vice President of Ads Marketing at Google "If you don’t have some type of lifetime value calculation, even at a broad level, it will soon be impossible to compete."
Wow, powerful words from Matt, he uses the term CLV (Customer Lifetime Value) instead of LTV (Life-Time Value) but these two marketing terms mean the same thing.
So how do we get started?
In order to write down and work out your customer lifetime value we're going to use the average amount that a customer spends with you, and multiply that by the average times a customer repeat buys from you. Using the LTV, we can see the effect your S.M.A.R.T goal targets would have on your website performance and its ability to translate tangible revenue into your business.
Work out the following:
How much does your average customer spend per purchase? (value)
Write down the average monetary amount per item or service that you sell. We're talking about the cash influx as a result of you getting a conversion, or a sale or even one month of a monthly subscription.
How many times does the customer buy? (Lifetime)
Do you give great customer service and aftercare so that people who buy from you once generally repeat purchase further down the line? Do you sell B2B and get regular quarterly bulk orders? Or perhaps you sell a B2C monthly subscription service and your average number of recurring payments before the customer cancels is 12 months? Whatever this figure is, go ahead and write it down.
How to calculate the estimated total value to your business of acquiring a new customer (LTV)
Really simple maths are required for this one, just multiply the average amount that your customer spends per purchase by the average number of times your customers will come back and buy from you again. This figure is your LTV and gives you a powerful insight into how much revenue each new customer brings into your business.
Use our free template to have the calculations done for you.
Factoring in New customers per month
Here, we need to refer back to the website conversion targets you set, as you're going to use the difference between your current monthly conversions and your target new conversions - your new customers acquired per month.
So simply multiply your target new customers by your companies existing LTV, to give you your new monthly revenue that you will have at your disposal upon reaching your S.M.A.R.T goals.
We call this: Customer Lifetime Value (LTV) created per Month and should accurately reflect your future business revenue once you've fulfilled the 'A' from the acronym S.M.A.R.T - Actionable steps to reach your goals.
A vision without action is just a dream...
So what's next? Now you have your S.M.A.R.T goals set and a figure for your future Customer Lifetime Value created per month that should get you salivating, carrying on as you are, may not be enough to break through the next level.
Want to know the definition of eCommerce insanity? It's doing the same thing, driving paid traffic through the same pages yet expecting different results.
So if there is only one takeaway you get from this (and thanks for sticking in there btw, it's been quite the journey).
Creating a detailed digital marketing strategy and then putting it into practice is the one single thing that by itself going to propel you much closer to your goals than any other activity.
Deciding how much to allocate to your digital marketing budget
Therefore, you should allocate a proportion of your new LTV created per month into the digital marketing and eCommerce optimisations needed to transform your website into your company's greatest salesperson.
We recommend assigning an amount which you feel comfortable and this is called 'Allocated monthly marketing and growth spend as a % of LTV' and the amount will vary company to company.
As a minimum, we would recommend 10% of your future LTV per month is dedicated to your digital marketing efforts in helping you reach your business goals. However, if you want faster more explosive growth or your business exists entirely online then you will have a greater reliance on digital marketing for your growth and a recommended allocation should be closer to 30% of your Customer Lifetime Value (LTV) created per Month.
Discuss your SMART goals with anyone you share your business responsibilities with and feel free to reach out to us to discuss your findings or for a better understanding of the opportunities which exist for your business.
- Set specific targets
- Measure your progress
- Always take action on your plan
- Rely on realistic goals
- Tie yourself in to a deadline
eCommerce is the future - Go and get yours.
Get in touch to see how we can help