We will look at four long-term KPIs for product marketing:
- Conversion rate
- Average order value
- Customer lifetime value
- Shopping cart abandonment
Conversion rate, or CVR, refers to the percentage of visitors to a website who end up fulfilling a specific action. For eCommerce, the most important CVR would be visitors who make a purchase. In terms of non-eCommerce, filling out a form, sending an email, making a call, or some other desired action can be tracked as CVR.
The CVR can be separated into how you acquired that traffic as well as your most effective channels. For instance, you may have a low conversion rate from your organic traffic – is that due to ranking for the wrong keywords? The same could be said for your paid traffic if the CVR is low. Are you bidding on the wrong keywords?
Your conversion rate is directly related to the quality of your PPC and SEO campaigns; however, it is arguably most connected to your site’s UI & UX (user interface & user experience) design. Your marketing campaigns could be excellent at generating traffic to your site, but if visitors are struggling to use your website, they will not convert.
Average Order Value
Your average order value, or AOV, refers to how much each sale is worth to your business. Although improving your AOV implies that each order is worth more, improvements in AOV are entirely relative and can, thus, be misleading.
For example, if you increase your AOV by 100%, it could still indicate your business is not in profit. If you sell items worth 100 AED and your AOV increases by 100%, you are still only selling 200 AED of products. Meanwhile, if you sell one high-end item – such as a laptop – and encourage users to purchase a carry case with it, this could increase AOV by just 5% and yet still add to your profit.
There are numerous techniques to improve AOV, and they mainly revolve around improving your user experience. Here are some ideas that might help:
- Upsell premium items
- Package deals
- Free shipping
- Loyalty schemes
Discover more about the importance of average order value for eCommerce.
Customer Lifetime Value
Customer lifetime value, or CLV, refers to the total revenue a business can (reasonably) expect from a single customer. In other words, it represents a customer’s total to your business.
CLV is calculated by taking:
- The average value of a purchase and multiplying it by;
- The number of purchases every year, then multiplying again by;
- The number of years a customer has used your website.
In theory, if you have an accurate CLV, you can understand how much you should spend on acquiring new customers. If the cost to acquire a customer was £50 (even if they only spend £40 initially), then the £500 a year they will spend will make that acquisition cost worth every penny!
Shopping Cart Abandonment
Having a high shopping cart abandonment rate shows that you are receiving the demand for your products and services but you are failing to convert willing customers. This could be because you are…
- Not allowing users to edit their cart easily
- Not providing a guest check-out area
- Not indicating to the customer that they have updated their basket
- Failing to show the total cost on the first page
- Lacking multiple payment options
- Asking for too much information
Keeping your shopping cart simple, easy to navigate, and easy to edit will help decrease your shopping cart abandonment rate. Check out our guide to shopping cart UX to delve further into this common problem!