Top 5 terms in Ecommerce Analytics

Sangeeta Apr 13, 2015 No Comments

1. Users / Visitors

Definition: the number of people who visited the website within a given time. Also known as ‘unique visitors’, it refers to the number of first time visits only.

 Calculation: Visitors are identified by Cookies and a unique ID assigned. Alternatively, IP addresses are also used.

The number of visitors is calculated for a day, week, month or stated time.

Desired Goals: Higher the unique visitors, the better.

Why are unique visitors measured?

This is used to check the audience, and understand the website’s influence or reach.

There are two calculations, depending upon the report being generated

• The pre-calculated data method – used in reports with a single dimension of time frame, like Date, or Week in a particular year.
• Data calculated on the fly method – used in custom reports over any dimension, like city, or browser. It is applied for computation of large data sets, with reference data in raw session tables.

2. Sessions (visits)

Definition: The length of time that a User spends on each visit to the website, for a given date or length of time.

Calculation: length of time in seconds

Desired Goals: longer the sessions, better the ability to engage the visitor for purchases (transactions) and repeat visits

Significance of Sessions

Average Session Duration and Percentage of new Sessions are yardsticks to understand the interest of visitors and how to engage their interest.

Average Session Duration =

Percentage of new Sessions – The percentage of new sessions or visits indicates how many visitors to the site are first-time visitors.

3. Channel

Definition: The traffic source or origin of the visitors – direct links, email, PPC, search

Significance

• help find important channels for revenue / acquisition
• to find opportunities for incentives like loyalty programs or cashback 

4. Transactions

Definition: Number of closed deals or orders placed and confirmed (after passing through the payment gateway). Where a purchase order is abandoned in the shopping cart, basket or booking points, it is not a transaction, but an abandonment.

Calculation: Each order placed by a visitor / customer is a transaction, allotted a unique Order ID.

 5.  Churn

Definition: measures customers who do not return to the site. For example, a churn rate of 60% means 60 out of every 100 customers do not return to buy

Here, customers refer to visitors who have actually made a purchase.

Calculation: calculated as a percentage of customers lost, or percentage of recurring sales lost

Eg. Number of customers lost last quarter /starting customers last quarter

Desired Goals: lower the churn rate, the better.

Significance of Churn rate

• to influence customers to come back for repeat purchases
• to calculate the Lifetime Value (LTV) per customer, a benchmark of the business policies
• to analyse reasons for high churn rates and take corrective measures for a higher retention