Analytics
Tracking
Analytics are essential to measuring the success of your e-commerce campaigns. If you do not currently utilize an analytics package, we can suggest a free or inexpensive one that will serve the purpose. If you already track your site with a popular analytics package we will use it - you do not need to change vendors.
If you are currently outsourcing your SEM or affiliate program and you want to maintain that relationship, we will work with those vendors. If you are not getting the results you should be getting, we will gladly assume those responsibilities at your request.
Financial & Product Analysis
How do we determine your number? First, we perform an in-depth analysis of your costs - both historical and projected (budgeted). After separating fixed and variable costs by profit center and performing a breakeven analysis, we factor in sales and profit expectations, as well as other selling and marketing costs. The result is a number (THE number) that is specific to your company and cost structure. The number is a factor that represents the return you must achieve on your e-commerce marketing to ensure that all costs and profit is covered.
For example, if your number is 5.07, then your ROI (ROAS or other name you may call it) must be 5.07 or higher to ensure your sale/click-thru/action is profitable! If the ROI is 5.06 then you just lost money on that transaction! Does that matter? Probably, if you are only selling one product! But if you are like most of us you are selling more than one product, so don't panic quite yet. It is always better to take a larger view of your results, whether it is a day, a week or a month. (Also see the discussion on Product Mix and Margin Mix.) The number enables you assess every action individually, as well as multiple sales over time.
What is in a number? If your number is 5.07 and your ROI is 5.06, that .01 may only represent 1/10th of a percent loss on an item. If your number is 1.55 and your ROI is 1.54, that .01 may represent as much as a 3 or 4 percent loss on that sale. The higher the number, the less sensitive it is. Keep in mind, most strictly e-commerce companies (without a brick-and-mortar location) usually have a very low number and a relatively high level of sensitivity.
Inventory and Pricing
When performing the financial analysis and calculating your number, one of the side benefits to our clients is the definition of the individual breakeven point of each item in your inventory. We will work with your purchaser to set up the framework necessary to allow periodic analysis of product breakeven and profitability. This ensures that your product mix and margin mix have a healthy balance. It also ensures sound decision making and holds buyers accountable. There is nothing wrong with a "loss leader" - but it should be done deliberately!
Follow Up
Since the number is a factor of your cost, sales, pricing and profit structures, the number will change over time, especially as the results of our E-Commerce Solutions implementation take affect. Our custom analytics and reporting provides you with any change that occurs in the number.
