The Commerce Club Podcast

S207: How To Analyze Sales In Your Shopify Business

• Sophie Biggerstaff • Season 2 • Episode 7

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If you’re running a Shopify or E-commerce business, you are going to want to watch this to learn how to use your data analytics to drive sales growth. 

I’ve worked with some of the world's biggest luxury fashion brands, and one thing they all have in common is the use of key performance indicators such as conversion rates, traffic, average order value, and return customer rates in their future sales and marketing strategies.

By analyzing these metrics, e-commerce business owners can make better-informed decisions that lead to improved performance and increased sales. 

Learn more about how to use the data in your e-commerce business here! <link to https://thecommerceclub.co/p/step-up-your-sales>

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Incase you just stumbled across this episode and we haven’t met before let’s get formally introduced here: www.itssophiebiggerstaff.com

If you’re an e-commerce business owner looking for support I host my online courses designed for you here: www.thecommerceclub.co

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Sophie (00:00)
Hello and welcome back to the Commerce Club podcast. Today I'm going to be talking about something that any Shopify owner can do to really increase sales in their business, right? So I've worked in the e-commerce world now for 14 years and I've worked for some really big luxury fashion brands during that time. I worked for Burberry, Ralph Lauren, Kate Spade, Diesel. And there is one thing that all of these brands had in common. And the thing that I'm about to teach you is the thing that keeps these brands really successful and

doing really well year on year on year because they are getting really clear on the analytics and the data in their business. They are teaching themselves exactly what is going on in their business so that they can make better informed decisions on how to trade and grow their business moving forward. Now, I get it, you're an e-commerce business founder that created their Shopify business because...

They love the products. You're a really creative person. You wanted to do the marketing. You didn't want to get into the nitty gritty of the numbers. But here's the thing. If you don't get into the nitty gritty of the numbers, if you your head in the sand about the finances of your business or the KPI metrics, you're never going to be able to grow your business because you're never going to understand what actions are going to help you to get to the growth level that you want to achieve, right?

I need you to get a bit more comfortable with talking about and looking at the numbers. And today I'm going to teach you exactly how you can get a bit more comfortable with that. Now, these are all things that I do with my clients on a one-on-one basis. And they are all things that I actually teach as well in my course, Step Up Your Sales, which helps you use my Asta framework, which is basically...

Analyzing, strategizing, target setting and taking action in your e-commerce business to generate more sales. Now, I'm gonna teach you today a little, little snippet of how to analyze your business so that you can start using the data to make better informed decisions in your Shopify business, right? Because you've got access to all of this information, you're just choosing not to use it. So, the first thing that I'm gonna teach you to do today is analyze the key metrics in your...

analytic system on your Shopify account. Now this can also work if you are on WooCommerce or if you are using Google Analytics or whatever other analytics platform that you've got set up for your online shop. Basically, if you've got an online shop, you should have data there available to pull this information from in some way, or form, right? So doesn't really matter what platform you're using. I'm going to speak directly to Shopify because Shopify is what I would personally recommend if you're setting up an online store. And if you want to...

to understand this in a bit more detail, like I say, all of the information is in my online course, Step Up Your Sales. So the first thing you need to recognise, right, is that the data tells you everything that you need to know about how to take action in your business. If things aren't working, it's going to tell you why. If things are working, it's going to tell you why. If you're missing out on things, you're going to be able to recognise it by analysing it. But so many people don't do this because they're scared of the numbers. It's overwhelming. Maybe the numbers are nowhere near where they want them to be. So they just...

disregard this part. Whereas this is one of the most important things that you can do to grow your e-commerce business. And like I said, all of the luxury businesses, all of the high street businesses do this. They analyze their data on a weekly, sometimes daily basis, because they want to know exactly what they need to change to move their business closer to where they want to go. Particularly if you're a huge business and they're like...

listed on the stock market, for example, you've got targets to hit, you've got shareholders that need to be happy with real business, otherwise your share price goes down. for example, when I was working for Burberry, I had to be so meticulous about the numbers of the money that I was spending, the money that I was planning, sales that I was forecasting. I had to know exactly, exactly what was going to happen with the money that I was spending and how I was going to make it back. So I had to be really clear on exactly

what I was going to do and what my metrics were going to look like because, and I could tell this from past metrics, you can kind of read data once you've got a little bit of time under your belt as a business owner, you can start reading the data because ultimately if you've been trading your business for four months, you should have four months of data there available for you to look at. Even if you've looked at it for one month, you can start to recognise some trends. So I think this is a really important step. If you really are serious about...

running your business in the long term and you want to get really strategic about selling and making more sales in your e-commerce business, this is something you're to have to do. So I'm going to talk you through some of the key metrics to look at so that you can start understanding how it's going to be able to tell you the information that you need to know to drive your business forward, right? So first things first, if you are on Shopify or whatever platform you're on, go and log in now before we even start to your accounts because you're going to be able to follow along with this tutorial. If you are watching on YouTube, I will also put a little screenshot up.

so that you can see as well. So the first thing is login, and then you're go down to your analytics tab in whatever platform of your choice. Now the first thing you're gonna do is if you've got analytics where you can change the dates of like which period of time you're looking at, that's what you're gonna do. You're gonna look at a time period that you think is substantial enough for you to start understanding the data. So that could be last week, that could be last month, that could be the past year.

However long you wanna be looking at it for, but make sure that you are looking at it for a period of time, not just like a day, for example, because that doesn't give us a real read. We wanna look at a week, for example, or a month. And then we also wanna analyze that versus last week or last month, because we want to start recognizing trends within the data that we've got. We don't just want to like look and be like, that's nice, this week we did X. No, no, no, we wanna recognize what has been happening over the past period of time that we've been training our business to start really understanding what is happening.

because it's all well and good looking at one day, but that's not really gonna give you an accurate full picture read. So you're gonna have a look at a specific time period, and then you're gonna also, if you've got Shopify, you can also set your compare to periods to the previous month or the previous week that you were looking at. Now, the first metric and arguably the most important metric that I would suggest looking at is your online store conversion rate. So your conversion rate should be above or around the average e-commerce conversion rate of 2%. Now,

That is the average e-commerce conversion rate. know a lot of business founders are way lower than that and I know some are quite a lot higher. Like one of my clients actually secures conversion rates of up to 14 % sometimes based on the strategies that we've put in place. So I know that this is very variable, but let's base it off of the industry average because ultimately one thing I will say is if your e-commerce conversion rate is below the industry average, there's more opportunity for you to sell in your business. So what you're going to look for here is...

what your conversion rate is over that period of time. Now, if it's sitting on or around 2%, that's great. You're sitting around the industry average. But what we wanna understand is whether it is higher or lower than it was this time last month, this time last year. Because if you're seeing over a period of time, your conversion rate increase, brilliant. That means things are working on your website and you are doing the right things to get any browsers that come onto your website converting into customers. But if it is stagnant or it is decreasing,

then there might be more that you can do on your website to get that improving. And that would mean that it's a website issue. If you've got problems with your conversion rate, that is means that people are coming onto your website are not actually buying from you. And there will be a reason behind that. So your focus area can then be on improving your website experience to get more of your browsers turning into buyers.

The second metric I want you to look at is your online store sessions, so also known as your traffic. Now, if you are looking at sessions, that is not individual people, that is people that have maybe multiply clicked on your website multiple times. So that is the number of web pages that have been opened basically for your website. If you look at online store visitors, that is the number of people.

that you have actually bought on your website. Now I personally prefer to look at online store visitors, whereas Shopify always looks at it from a sessions point of view. That's okay, you can look at it like that and your Shopify conversion rate will based off of that as well. Personally, from industry experience, we've always looked at a visitor's level because that is actual people, as if they were coming into your shop, actual people.

that are looking at your products that you have opportunity to convert. But like I say, you can look at it from both angles. It doesn't really matter. So for this purpose, we're to talk to Shopify language, which is sessions. So that is how many clicks onto your webpage have happened. Now, if we look at your online store sessions, let's just say, for example, you have a thousand people on your website this month, but let's say last month you had 900, the month before that you had 800. That means over the past three months, you've grown 100 people coming onto your website every single month or 100 sessions onto website every single month. So you're...

Traffic is actually up, which means your marketing is doing its job. It's bringing in new people onto your website every single month and you are increasing your traffic numbers, which gives you more opportunity to sell, right? Because if you've got more people onto your website, you've got more chance of converting people if your conversion rate is on or around the industry average of 2%. Whereas if your online store sessions are going down month on month,

That means that there is a problem with your marketing. Something isn't getting people to click onto your website. And that is why you need to address your attention to figure out what is going on. So this is quite normal. Sometimes you will find that your traffic is down, but your conversion rate is up, which means actually it's okay because you are still converting more people on your website than you would even if you had more traffic. Whereas if you're getting traffic on your website, your conversion rate is really low or below the industry average of 2%.

There's a big problem there because that means you've got people there, but they're not buying from you. Now, ultimately it's great. Get all of the traffic on your website that you can, because obviously you've then got more chance of making sales. However, your conversion rate is really what's going to tell you whether that traffic is actually going to be spending money with you. Now, the other thing that I would suggest you look at is the average order value. So the average order value is basically how much people actually spend with you every single time they make a purchase from you.

So your average order value, the higher that is, the less units you have to sell to hit higher revenue goals. That is really important because sometimes if you've got a really low average order value, you need way more people on your website buying from you to buy more units from you than you would if you've got a high average order value. So it's really worthwhile thinking about how you can increase that average order value. For example, getting people to...

buy into extra products like add-on sales, increasing your price points, not offering promotions because all of these things bring your average order value down. The higher you can get it, the less people you need to be buying from you and the less transactions that you need to go through your till. So that's really important. Definitely want to have a look at and see if you can do anything to increase it. Because if you could increase it, you need less people to actually buy from you.

The other thing I want you to have a look at is your return customer rate. So your return customer rate is really important because for two reasons. One is that it's really important to have return customers, right? You want a high level of return customers because that means people love your brand and it's like that they trust you. You've got credible, your credibility is high. People are coming back. They're with you over and over again. That's brilliant. On the other hand,

If your return customer is too high and you are not converting new customers, that means your return customers are having to spend extra money with you to make up for the fact that new customers are not converting, which means you can identify that you've got a bit of a problem there in your customer journey and warming up those new customers that they're not ready yet to buy from you. So I see this happens with quite a lot of my clients actually where they have like quite decent return customer rates, but their new customers aren't converting, which isn't a problem.

as such because your return customers are there and they are shopping with you. That's great for brand loyalty purposes. However, it's not great if you want to grow because you're only going to have like a kind of a bit of a cap on how much those customers that are returning are going to spend with you. So you ideally do want to be focusing on converting those new customers as well. So they are the four key metrics that I would suggest looking at if you are starting to analyze your e-commerce business.

With those four key metrics, you can really start to paint a picture of exactly what is happening in your business. And then you can identify which areas you need to focus more attention on to actually move your business closer to your sales goals. So for example, if your traffic is down, you know then that you need to invest more time into marketing. If your conversion rate is down, you need to invest more time on to figuring out what is happening on your website. If your average order value is low, you need to figure out ways to increase that because it's gonna...

allow you to make less sales but more revenue. And then if your return customer is too high and your new customer purchase rate is really low, you need to be thinking about what to do to warm up those new customers to try and balance that out a little bit. So yeah, like I say, I go into all of this in way more detail in my course, Step Up Your Sales. It's available at [www.thecommercelab.co](http://www.thecommercelab.co/). And it basically teaches you all of this in way more detail and exactly

how to take action based on all of these different metrics that I'm talking to. And I also give you my KPI tracker, which basically allows you to track all of the metrics that we've spoken about today, to see the trends that happen in your business over a period of time. And then you can start building a strategy and taking action, which is also something that I cover in way more detail in the course. So if you are interested in that, make sure you head over to [theconversesclub.co](http://theconversesclub.co/) and you will find it there.

I hope you enjoyed this and I hope it gave you some insight into how to analyze your Shopify or your generally your e-commerce business to make informed decisions about how to trade your business. If you start looking at this information, I promise you, you will start to see better results because you are going to take better informed actions on how to actually trade your e-commerce business and you're going to get such better sales and results from all of the things and actions that you need to do. Because this really is the core of your business. If you ignore this data,

fine, like you're missing out on like a gold mine basically because this data literally tells you exactly what actions you need to take. And if you, if I, like I say, if you look at all of the big brands that making it, like the biggest ones in the industry, they are all doing this on a really fine detail every single week, sometimes daily in their businesses. And that is how they know exactly what actions they need to take to grow their business even further. So yeah.

Hope that helps you in some way, shape or form. it did, I'd love to your feedback. So feel free to DM me on Instagram at itssophiebiggerstaff. And in the meantime, I will see you next week