Monday, January 6, 2014

Basic eCommerce Terms revisited

When you work in the digital and eCommerce consulting industry, there's the tendency to assume that the person you are speaking to always has enough experience to be able to understand what your saying and act accordingly. However, this is not always the case (e.g. when the person has just been moved or promoted into a new role) and sometimes it takes time to cover the basics with a client, even though you don't always want to make it too obvious.

I therefore thought I would revisit some of the more common eCommerce terms used. Not just in case a current or potential client was reading this blog, but also to help anyone else who may be venturing in the world of online transactions, etc.

Acquisition
The processes and tools used to get new customers to start using / visiting any digital company touch-point (e.g. website, app, social media presence, etc.). Acquisition rates can be increased by using different marketing techniques (e.g. paid advertising or search engine optimisation).
Example KPI = Website visitors

Conversion
The amount of people who complete a required online goal (e.g. a booking or a purchase) divided by the total number that visit. It is sometimes called the 'look to book' ratio and in some markets / companies it is one of the most protected (e.g. Secret) of figures.
Typical average conversion  rates by industry:

Retention
The number of customers who come back to the digital channels and book/purchase again within a given time period (sometimes set as the entire customer lifetime) .
There are no recognised benchmark figures on digital customer retention that I'm aware of and this depends considerably on industry, product, customer type, etc.


AOV:
Average order value is typically the sum of revenue that has been generated divided by the number of orders taken. Again, there are no standard measures for this, as the range of products and prices vary from company to company.
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