How many of your online customers return for more?
For the past two columns I've focused on measurements that gauge the success of your e-commerce operations. I'm going to finish up this series with a two-part segment looking at one last measurement: repeat customers/visitors as a ratio to the total number of visitors your site gets, and what you can do to make sure that people keep coming back.
Paying attention to your repeat customers online is as important as paying attention to them off-line. A lot of people are still hesitant to buy online because of privacy and security concerns, and if they've gotten over that hump with you, and you've provided them with excellent customer service on their first order, they are more likely to buy again.
Keep in mind also that the type of business you're in influences the number of repeat customers you should expect. If all you sell are exhaust systems, there's probably not a lot you can do. But if you are a general P&A e-tailer, then you should expect a certain percentage of customers will return.
Your marketing efforts are also a huge factor. For instance, if you start advertising in a lot of new publications or begin an online marketing campaign, you will likely get an influx of new customers. Obviously this is a good thing, but it will play havoc with your repeats measurements. Keep that in mind before you beat up your marketing staff because your repeat ratios keep dropping.
Measuring repeat customers is easy. Just look at the number of invoices generated over the number of unique visitors to your site over a certain period. That begs the question: How do you know how many unique people visit your site?
Software to the Rescue
The analysis of your visitors requires that you have some type of analytics program integrated with your website. An analytics program is a tool that helps you make sense of the huge amount of data that the Web server generates and stores in a large file called a server log. Even basic hosting plans typically provide some type of server log analysis. But if you want to really dig into who's visiting your site and what they're doing there, you'll want something a little more industrial-strength.
Because it's powerful (and, even better, free) I recommend you check out Google's Analytics program (formerly called Urchin). Sign up for the program at www.google.com/analytics. It's easy to set it up, and it only involves you inserting a bit of HTML code on all the pages that you want to measure (usually inserting the code snippet into your site's template's footer will do the trick). Someday I'll probably write a series just on some of the cool things you can do with this program.
After you get your analytics system up and running, let it collect data for a while. Once an appropriate amount of time has passed and you have a good data set to analyze, dive in and see what people are doing. There should be a report, chart or some other way to see what percentage of visitors are new or repeat over the time period.
Keep in mind that this is not a perfect number. Typically these systems work by creating a "cookie" or temporary file on the visitor's computer that acts as an identification number. If the user's system is configured either to clean up cookies or not accept them, then there's no way for the system to know who's on the other end of the line. Also, if Joe Rider visits your site from work and from his home, he's often going to look like two people.
There are a lot of other caveats, but on aggregate, if you have a large number of people hitting your site, an analytic system a good way to gauge what's going on, and to measure the impact of your efforts to attract repeat customers.
Next month: some key tools and techniques that you can use to increase the number of repeats.