Economy
8/14/2020
How E-Commerce Companies Can Drive Profit with Behavioral Analytics
To say that e-commerce is beginning to dominate the world of retail would not be an exaggeration. Retail e-commerce sales are expected to surpass 2 trillion according to an eMarketer report, with double-digit growth projected to continue beyond 2020. In the U.S. alone, 8 in 10 Americans make online purchases.
Retail e-commerce sales projected to pass 4 trillion (14.6% of total retail sales) by 2020.
Consumers are more than ready to buy online. That’s not the challenge.
If you’re new to e-commerce, or thinking about expanding to a new region, it can be intimidating to figure out how to start driving profit—especially if all you have to go on is your gut.
Understanding how customers act as they navigate to and through your site is the first step in building an e-commerce company that will thrive. You need to supplement your own business intuition with careful analysis of customer behavior to come up with a solid data-informed strategy that will instill confidence in your team to take the company to the next level.
Here are some of the most essential ways interactive behavioral analytics can up-level e-commerce businesses.
Understanding your customer’s journey, inside and out
Some of the largest retailers in the world are using data analytics to get a better read on their customers. Even big-box giants like Walmart (yes, you read that right), have been actively been trying to understand how their customers shop online and map their digital customer journey. Walmart, incidentally, recently reported 29% growth in U.S. e-commerce sales.
An advanced behavioral analytics solution (like Interana) lets you unveil the entirety of a customer’s decision journey and “crack the digital-shopper genome,” as McKinsey puts it. For example, you can:
- track where the majority of your shoppers come from, whether it’s through social media, an ad on a shopping search engine, or through organic search;
- see exactly how many of them then search, browse, and/or make a purchase;
- see how many of them view reviews and ratings before adding an item to their cart;
- determine how many visitors to your site actually end up completing an order and what those who don't do instead
- figure out how many customers are acting on your website, mobile web, or mobile app.
- figure how customers behave differently according to region and demographics
Understanding the modern customer’s journey in an omni-channel world means understanding behavior, not just on your native site or mobile app, but across all platforms.
Facebook's insights on the omni-channel shopping journey.
Online shoppers may browse products on their laptop, maybe click on a promotional Instagram photo on their mobile device, open up your app, and place an order, all in a couple hours.
This means making sure you can not only be discovered on multiple channels, but also that you track conversion across them.
The ability to track critical metrics like conversion rate and answer questions about your customers’ behaviors across platforms quickly lets you come up with (and iterate on) a business model that’s based on data, not just intuition.
Discovering regional differences
If your business has been successful in one part of the world, expanding to other markets is likely the next logical step. And if you’ve already been successful once, it should be easy to do it again… right?
Not always.
Customer behavior can be vastly different in different regions of the world.
If you’re a North American retailer that relies heavily on social commerce, for example, you’ll most likely have to rethink how to establish your brand and reach your market in China or Japan.
In fact, even Jeff Bezos admits that rolling out what worked for Amazon in several countries—Japan, Germany, the U.K., Spain, France, Italy, the U.S—didn’t work for them in China. To be successful, they needed to understand the local market better.
When running ads or promotions on social networks, e-commerce companies should note that different social networks dominate different parts of the world. (Source: Vincos)
With the right analytics in place, you won’t have to guess at how customers from different parts of the world behave. After soft launching your store, you can easily investigate how differently (or similarly) customers in your target region behave from your other digital customers. Or, you can zero in on a specific behavior of interest—e.g. adding an item to the cart, submitting a product review, completing an order—and see how often your target customers perform those actions.
With region-specific insights into customer behavior, you can iterate on your business model for expanding into new territories.
Knowing where to promote your product
If you want to do e-commerce the right way, then you shouldn’t be waiting for customers to come to you; it’s all about going to where your customers already are.
A good analytics tool can tell you where your customers originate from—and therefore give you a good idea of where to invest your marketing and promotional efforts. Are your customers coming primarily from your brand’s Facebook page? From sponsored external links on Amazon? From promoted content on Instagram? From shopping search engines like Polyvore or Google Shopping? Or, are most people discovering your brand organically?
Being able to answer basic customer acquisition questions like these is table stakes.
A great analytics tool allows you to take your curiosity one step further, and ask how the folks coming through these channels behave.
This, in turn, can help shape your overall business strategy. For example, is conversion through Google Shopping much higher than shoppers who enter your site organically? In that case, it makes more sense to devote resources to figuring out how to boost your product’s discoverability on that platform.
Optimizing the online shopping experience
Diagnosing where potential customers drop off in your e-commerce checkout flow can be a powerful way to boost sales. Funnel analysis (a type of behavioral analysis) can pinpoint how many users moved from one step of the checkout process to the next and how many abandoned the process at each step. You'll be able to see exactly what percent of your potential customers actually make a purchase.
Amazon's checkout flow on mobile (Source: ConversionXL)
Investigating this flow can also give you a starting point for optimizing your website. Are users suddenly dropping off between adding an item to the cart and proceeding to checkout? Maybe there's a bug or usability issue in the flow. Are users hitting the back button or ending their session before getting to the checkout page? Maybe there are issues with flow's copy or design. Do users from a certain region have an extremely high drop-off rate after the first step in the flow? Perhaps there's a language barrier that needs to be overcome.
The behavioral insights that come from asking questions like these allow you to formulate data-informed hypotheses about your website and uncover opportunities for optimization. A/B testing these optimizations can lead to you to build an even better experience for your shoppers and drive even higher conversion and sales.
Conclusion: Buying into behavioral analytics
Every bold initiative—whether it’s a marketing campaign, a website redesign, or the launch of your business in a new region—is regarded with fear and uncertainty. That’s simply human nature.
An analytics solution like Interana, and the customer behavior insights gleaned from it, can provide validation at critical stages of a new initiative and go a long way toward boosting internal trust and confidence. You won’t be flying blindly on intuition; you’ll have the data insights you need to back you up.
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