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Business metricsThe 4 Main E-commerce Business Models for Building a Successful Online StoreRunning your own online business can be highly profitable, but it is not as simple as building a store and hoping for the best. You still need to have a set of business goals that will make your e-commerce store successful.
That's why, in this post, we will cover the four main types of e-business models and how they can help you build a successful e-commerce business.
What Is an E-Commerce Business Model?
An e-commerce business model is a company's plan for how it will monetize selling products or services online. There are many ways to do this, but some common e-commerce business models include selling goods directly to consumers, selling goods to other businesses, or providing digital services.
The defining difference between e-commerce and digital marketing is that digital commerce includes all forms of electronic communication, such as social media, text messages, emails, etc., whereas e-commerce only includes transactions that take place on websites.
In addition to understanding the basics of an e-commerce business model, it is also essential to familiarize yourself with the available development platforms. Read the following comparisons to learn more about the three most popular e-commerce platforms:
Wix vs. ShopifyWix vs. WooCommerceWooCommerce vs. Shopify
Maintain a Profitable Edge
You can now automatically calculate profits from multiple sources, saving time and effort.
Analyzes results to ensure consistent, accurate profits.Keep track of data points from multiple sources at once.Both desktop and smartphone versions are available.
Regardless of the e-commerce business model you adopt, the BeProfit analysis dashboard was designed specifically with the goal of making your life easier.
The 4 Major E-Commerce Business Models
There are many types of e-commerce business models. With examples, we cover the most popular ones here.
1. Business-To-Consumer (B2C)
Business-to-consumer refers to transactions in which a business sells its products or services to consumers. B2C is the most common e-commerce business model, and, therefore, many online niches fall into this category. They often use digital marketing for their e-commerce business success.
Example of B2C
Think of a clothing, entertainment, and household supplies retailer like Walmart, which sells products to individual consumers online.
The main advantages of B2C include:
Potentially endless customer base.Greater potential for sales and profits.
The disadvantages of B2C include:
Competitive business niches.Difficulties presented by customer service and return policies.
2. Business-To-Business (B2B)
A business-to-business e-commerce model is one where a business sells its products or services to other businesses rather than to consumers. This model is generally associated with high-end, high-priced products or services in industries in which the bulk of the revenue is generated by business purchases. The business-to-business model generally ends at the purchase stage—the company sells its product to another company, which then sells it to its customers.
Another subsection of B2B is business-to-government (B2G)
Although business-to-government e-commerce models are often grouped together with the B2B business model, instead of a business supplying another private business, they sell goods and services to government organizations. This can include anything from office supplies and technology products to complex consulting services. The B2G e-commerce model has become increasingly popular in recent years as governments seek to find ways to reduce costs and streamline operations.
There are several benefits that businesses can experience when selling to governments through the B2G e-commerce model. First, businesses can enjoy increased visibility and access to decision-makers within government organizations. Additionally, businesses can benefit from cost savings associated with streamlined procurement processes. Finally, businesses can also benefit from opportunities to build long-term partnerships with government organizations.
Example of B2B and B2G
Think of an online retailer like Amazon that uses the B2B and B2G e-commerce business model. Amazon.com sells various products and services to businesses, including books, software, and electronics. In addition, Amazon has developed several web-based applications specifically for government entities, such as Amazon's Web Services (AWS), GovCloud.
The main advantages of B2B or B2G include:
Larger orders.Fewer transactions.Shorter cycle times.
The disadvantages of B2B or B2G include:
Limited customer base compared to B2C.Potentially higher customer demands, like product customization and pricing options.
3. Consumer-To-Business (C2B)
A slightly less common but no less effective strategy is the consumer-to-business e-commerce model. C2B involves a consumer selling their products or exchanging their services directly with businesses. This generally occurs without the need for a middleman, such as a manufacturer or a wholesaler.
Example of C2B
Think of an online review website like Yelp or a social media platform like Facebook where consumers leave customer reviews, participate in company surveys, or even share product-focused social media content as an influencer. This is done in exchange for some kind of perk like the chance to win a prize, receive a discount, or be awarded a free product.
The main advantages of C2B include:
Affordable or free advertising.Potentially limitless brand awareness.
The disadvantages of C2B include:
Unpredictable outcomes.The potential for negative responses.
4. Consumer-To-Consumer (C2C)
C2C, also referred to as peer-to-peer (P2P), is an e-commerce business model where a consumer sells their products or services directly to other consumers. It contrasts with business-to-consumer, where the focus of the business is selling products or services to consumers. C2C is a very popular e-commerce model as it allows business owners to broaden their customer base and reach a larger audience.
Example of C2C
C2C websites are often referred to as P2P selling platforms. The concept is very similar to classified ads, which are often posted locally at a neighborhood or community level. Think of something like Facebook Marketplace, which is essentially a sub-platform of Facebook's main platform—a place that connects consumers with other consumers.
Facebook makes money from the buyers and sellers viewing on-site ads, and the consumer gets the benefit of connecting to another consumer who either wants to buy or sell secondhand goods. Leveraging this business model is a great way for businesses to increase their profit margins by growing their brand awareness.
The main advantages of C2C include:
Potential for high margins.Low to zero manufacturing costs.
The disadvantages of C2C include:
Highly competitive market.Increased potential for scams.
Another "Fast-Growing" Business Model
Direct-To-Consumer (D2C)
In this post, we've outlined the four most common and most successful e-commerce business models—but know that there are more than just four. For instance, D2C, or direct-to-consumer, is now becoming a very broadly used e-commerce business model. D2C cuts out the middleman and allows a manufacturer to sell directly to a consumer.
Regardless of which e-commerce model you choose to roll with, just be sure to clearly understand your business goals and which direction you'd like your online store to be heading. You should also take into consideration that you will have to address some of the challenges associated with e-commerce.
Example of D2C
D2C brands like Warby Parker and Harry's have disrupted the traditional eyewear and razor markets by cutting out the retail middleman and selling products directly to consumers online.
The main advantages of D2C include:
Control over brand messaging.Direct access to customers and their buying behaviors.
The disadvantages of D2C include:
Increased liability.Complex internal management.
A great way to boost direct-to-consumer profits is through the use of advertisement.
» Need help with ad management? Read our beginner's guide to effective advertising in e-commerce
Selecting the Best E-Commerce Business Model
There are a few key things to keep in mind when selecting the right e-commerce business model for your company. The first is deciding if you want to sell directly to consumers, businesses, or governments.
Each e-commerce model has its own set of pros and cons, so it's essential to select the right model for your business. Here are a few things to consider when choosing an e-commerce model:
What are your business goals?
Analyze the market to better understand which e-commerce business model suits your business best. What is your target market?
Define who they are, what they want, and how to reach them.What products or services do you offer?
Decide this early on and market it appropriately.What is your budget?
Set realistic budget goals, and stick to them as closely as possible.What is your level of technical expertise?
Decide where your specialties lie, what you'd like to tackle yourself, and what work would be better outsourced to outside contractors.
Once you've landed on a decision for each of these key considerations, you'll need to decide how you're going to reach them by choosing the correct e-commerce business revenue model. Is your new business model going to use an existing platform like Amazon or eBay, or are you going to build your own website? If you're going the self-hosted route, make sure to have a solid understanding of web development and e-commerce platforms. That way, you can create a site that's both user-friendly and profitable.
Business metrics5 Easy Ways to Calculate Shipping Cost to Sales RatioShipping rates can have a significant impact on e-commerce sales and profits. Consider that online retailers often have to allocate around 70% of an average order value (AOV) just to cover the costs of fulfilling orders. So, understanding how to effectively manage shipping costs is crucial for e-commerce businesses to maintain a healthy bottom line and maximize profitability. One way to do this is to calculate your shipping cost to sales ratio.
Shipping Costs and Sales: What to Know
Shipping cost to sales ratio measures how much you're spending to get your products into your customers' hands relative to your revenue.
This metric shows how much shipping costs impact your overall profitability.A high ratio means a significant portion of your sales goes toward covering shipping costs. As a result, your shipping options may be too expensive for your customers causing them to abandon carts and convert less.A low ratio means your current operations are cost-effective.You have more flexibility and can offer your customers cheaper or free shipping options, increasing their loyalty and encouraging repeat purchases.
5 Ways to Calculate Your Shipping Cost to Sales Ratio
Simple formula methodOrder-based methodWeight-based methodCarrier-based methodOnline shipping calculators
1. Simple Formula Method
Shipping Cost to Sales Ratio = Shipping Cost ÷ Total Sales
This is the most straightforward way to calculate your shipping cost to sales ratio.
For example, imagine your online store has total sales of $10,000 for the month and you've spent $1,000 on shipping. Using the formula, your shipping cost to sales ratio would be $1,000 ÷ $10,000 = 0.10 or 10%. This means for every dollar you make in sales, you're spending ten cents on shipping.
2. Order-Based Method
Shipping Cost to Sales Ratio = Average Shipping Cost per Order ÷ Average Revenue per Order
The order-based method is another way to crunch the numbers. Here, you calculate the average shipping cost for each order and contrast it with your average revenue per order. This approach shines when your shipping costs aren't consistent but fluctuate across orders. By monitoring these figures over time, you can spot patterns and sniff out any emerging problems.
For example, you have 100 orders in a month with a total shipping cost of $1,500 and total revenue of $20,000. The average shipping cost per order would be $1,500 ÷ 100 = $15, and the average revenue per order would be $20,000 ÷ 100 = $200. Using the formula, your shipping cost to sales ratio would be $15 ÷ $200 = 0.075 or 7.5%.
» Follow these tips to make sure your order fulfillment process is up to scratch
3. Weight-Based Method
Shipping Cost to Sales Ratio = Total Shipping Cost for Weighted Products ÷ Total Sales
The weight-based method is particularly suitable if your products have considerable weight differences. Here, shipping costs are calculated based on the weight of each product. It's like playing a balancing act: heavier items tip the scale toward higher shipping costs.
However, this method does call for a bit more homework. You need to be well-versed with the weight of each of your products and the corresponding shipping rates. Once you've got that sorted, it becomes a straightforward multiplication: product weight x shipping rate per unit weight.
For example, you sell two types of products: Product A weighing 1 pound and Product B weighing 5 pounds. In a month, you've sold 100 units of Product A and 50 units of Product B. The shipping cost for Product A is $1 per unit and $5 per unit for Product B. The total shipping cost for weighted products would be (100 * $1) + (50 * $5) = $300. If your total sales for the month are $5,000, then your shipping cost to sales ratio would be $300 ÷ $5,000 = 0.06 or 6%.
4. Carrier-Based Method
Shipping Cost to Sales Ratio = Total Shipping Cost with Carrier ÷ Total Sales
This approach focuses specifically on your chosen shipping carrier. Different carriers charge different rates for shipping, based on things like the weight, size, and destination of the package. So, you might use one carrier for local shipments and another for international shipments. By understanding the carrier-based method, you can choose the right carrier for each shipment to keep costs down and ensure that your package arrives in a timely manner.
For example, you spend $800 on shipping with Carrier X and $500 with Carrier Y. Your total sales for the month are $10,000. Using the formula, your shipping cost to sales ratio for Carrier X would be $800 ÷ $10,000 = 0.08 or 8% and $500 ÷ $10,000 = 0.05 or 5% for Carrier Y.
» Carriers also offer shipping insurance options: Here's how to choose the best one
5. Online Shipping Calculators
Online shipping calculators are like your personal math helpers. You input your data, like shipping costs and sales, and they spit out your shipping cost to sales ratio.
But these calculators don't stop at just that. They're designed to be versatile, offering a suite of additional features. They can trace the trajectory of your ratio over time, providing visual graphs that highlight trends and shifts. Plus, they can simulate different shipping scenarios, helping you anticipate costs and make informed decisions.
Sync all expenses to one dashboardLink all your stores and shipping profiles to one platformCustomizable reports and interface
» Not sure which shipping metrics to look at first? Here's a core list
Optimize Your Shipping to Sales Ratios for Better Profits
By understanding the different methods for calculating shipping costs and choosing the right carrier for each shipment, you can keep your shipping costs under control and ensure that your customers are happy with their purchases. Additionally, offering free or discounted shipping on larger orders can incentivize customers to spend more money and help increase your overall sales.
In the dynamic world of e-commerce, staying flexible and adaptable is key. Don't shy away from experimenting with different shipping strategies and utilizing innovative tools at your disposal. By doing so, you can find what works best for your business, optimize your operations, and ultimately, achieve a more profitable bottom line.
Business metricsAverage Cost Per Order (CPO): Definition, Formula & ExampleOnline shopping is growing rapidly. In fact, Statista estimates that 20.8% of retail sales will be online in 2023 and can increase to 24% by 2026. This means that e-commerce sellers should make the most of online advertising techniques that can increase sales and profits. After all, in e-commerce, success can often be measured in orders received.
Many expenses that e-commerce sellers incur go toward encouraging customers to place an order. And that's where the cost per order (CPO) metric comes in.
What is Average Cost Per Order?
CPO refers to the total cost it takes to acquire and fulfill a single order. Costs can include marketing, manufacturing, storage, shipping, and other miscellaneous expenses, depending on the type of business.
When evaluating an online marketing campaign, you can include the CPO and other metrics like cost per impression (CPI), cost per thousand (CPM), and cost per click (CPC).
Analyzing your CPO can offer insight into areas for improvement and areas that are working. This can include:
Where to optimize the supply chainIf your pricing strategies need adjustments, like introducing dynamic pricingHow effective your advertising and marketing campaigns are in attracting customersIf your budget allocations are driving sales and profits
Evaluate Your Marketing Performance Easily
Use real-time data metrics to help identify conversion rates and product profitability.
Create and export custom data reportsIntegrate multiple stores and advertising platforms into one dashboardTrack your CPO and revenue-based metrics
BeProfit offers an intuitive way to keep an eye on your expenses and profits, so you can easily see the results of your marketing techniques.
What is the Formula For Average Cost Per Order?
To calculate your average CPO, use the following formula:
Average CPO ($) = Total Advertising & Marketing Expenses / Number of Orders Received
This should be calculated at regular intervals for the most accurate baseline, like monthly, quarterly, or yearly. A low CPO indicates that the campaign is successfully generating higher sales and profits. A higher CPO can mean the campaign does not have the desired effect.
You can also adjust the formula for the following costs, depending on what you'd like to track:
Cost of goods sold (COGS): This includes material and labor costs, and other expenses associated with producing goods. Some products may have higher manufacturing costs, which can increase your CPO if included in the calculation.Packaging: This should secure the product and promote brand identity. Cost-effective packaging can help lower your CPO.Storage: Depending on how fast inventory ships, you may need various storage sizes. So, storage and warehousing costs can fluctuate your CPO.Shipping: If you factor in location, carrier, and turnaround times, your shipping costs can vary greatly. This can, in turn, significantly increase or decrease your CPO depending on the shipping methods you choose.
So, if you're considering all these expenses in your evaluation, the advanced CPO formula is:
Advanced Average CPO ($) =Total Advertising & Marketing Expenses + [COGS + Packaging + Storage + Shipping] / Number of Orders Received
» Unsure about your COGS? Find out how to calculate COGS for your Shopify store
Example of Average Cost Per Order
Imagine an e-commerce retailer that sells designer shirts and launches an ad campaign to promote its new collection. It spends $200 on creating the campaign and $300 on promoting it. After a month, the retailer sold 50 shirts for $15 each.
Average CPO ($) =Total Advertising & Marketing Expenses / Number of Orders Received= [$200 + $300] / 50= $500 / 50= $10
Now, what happens when you factor in additional costs for selling the t-shirts, like $150 for COGS, $30 for packaging, and $90 for shipping?
Advanced Average CPO ($) =Total Advertising & Marketing Expenses + [COGS + Packaging + Storage + Shipping] / Number of Orders Received= $500 + [$150 + $30 + $90] / 50= $500 + $270 / 50= $770 / 50= $15.40
Naturally, when factoring in other costs, the CPO is higher. So, if you take into account the $15 of revenue per order, you can see that the basic formula shows a $5 profit, and the advanced formula shows a $5.40 loss.
This can indicate that marketing efforts are effective, but that the fulfillment process is not cost-effective enough.
Tips to Manage Average Cost Per Order
If you're struggling to reduce your CPO, tracking your e-commerce expenses and your sales performance can provide the insight you need to make result-driving changes to your budget.
Here are a few steps you can take:
Track your expenses accurately: Make sure you're looking at the complete picture when it comes to costs. You should try to keep supply chain expenses low, automate tasks to lower labor costs, and optimize your ad spending.Analyze relevant data regularly: Staying on top of industry trends and comparing your metrics can help you keep your CPO optimal and make production adjustments according to demand. You can use tools like Google Ads to track conversions.Set realistic benchmarks: Use industry-wide benchmarks as a guideline to identify problem areas. This can help you plan your sales strategies to reach future targets. But remember that your goals should be relative to your business size, product offerings, and means.Use an e-commerce analytics solution: You can streamline your data for real-time monitoring through tools like BeProfit. This can help you keep up with your business's performance.
» Discover what ad trackers are and how you can use them in e-commerce
Waste No Expense—Improve Your Average CPO
Your average CPO can reveal valuable information, from your marketing efficacy to your shipping efficiency. And knowing your CPO can help you optimize and strategically use your budget while reducing profit losses. Plus, it can be hassle-free.
Using data analytics dashboards like BeProfit allows you to access all your data, including CPO, in one place and carry out precise profit analyses. With a real-time view of your business's sales, marketing, and profit metrics, you can act fast and make educated decisions about your customer acquisition, product advertising, and fulfillment techniques.
Business metricsCustomer Acquisition Cost in E-Commerce: How to Find YoursEvery business needs customers to survive and grow. Customer acquisition costs (CAC), or what it takes to acquire a customer, can vary greatly depending on the type of industry and size of your business. For example, a small business looking to acquire new customers might incur low customer acquisition costs, such as one-time advertising costs. Conversely, a larger company with more established brands might have higher customer acquisition costs, such as annual marketing budgets.
Here, we'll provide an easy-to-understand customer acquisition cost definition, detail how to figure out customer acquisition cost, and define what makes a good CAC.
What Is Customer Acquisition?
The process of customer acquisition is best understood as the procedures, strategies, and tactics used to generate new customers. This encompasses all activities undertaken by a company or product to generate interest in its products and services. The CAC includes advertising, sales promotions, direct marketing, and advertising agency expenses.
What Does Customer Acquisition Cost Mean?
A company's customer acquisition costs will include any expenses incurred to generate a new customer, including advertising, sales promotions, direct marketing, and advertising agency expenses.
Customer acquisition costs are important because they reflect the cost of generating revenue from a new customer. For example, if the revenue generated from a new customer outweighs the cost of acquiring them, a business' marketing and other outreach costs are worth the time and money.
Conversely, suppose the cost of acquiring a new customer outweighs the revenue generated. In that case, it's either time to shake up the strategies a business uses to generate new leads or, perhaps, it's time the business concentrated more of its efforts and resources on customer retention by pleasing their existing customers.
How to Calculate Customer Acquisition Costs
In order to determine customer acquisition costs, an entrepreneur can use the following formula:
CAC = [Total cost of acquiring a customer + total sales expenses] / [the number of new customers acquired]
While the above formula is a great starting place, it's important to understand that a few key factors can influence these values. One of the main factors is customer lifetime value (CLV). The customer lifetime value (CLV) is the worth of a customer over the time they are with the company. The CLV would influence customer acquisition costs because the longer an organization can get a customer to do business with them, the cheaper it becomes to have acquired them in the first place.
Expenses that Contribute to Customer Acquisition Cost
There are various expenses that determine the average customer acquisition costs across all industries. These typical customer acquisition costs include:
Advertising - Advertising costs are the expenses generated by promoting a product or service.Marketing - Marketing costs are the expenses that arise in the process of marketing products or services.Sales - Sales costs are the expenses incurred by the company to generate revenue.Training - Training costs are the total of all training personnel, equipment, materials, and facilities required to produce a trained staff member.Staff wages - Wage costs are the amount of money an employer spends to compensate employees for their work.Product shipping - Product shipping costs are the set of costs that go into sending an item to a customer.Taxes - Tax costs are the expenditures incurred by an organization to comply with the legal demands of taxation.
Average Customer Acquisition in E-Commerce
The average customer acquisition costs for e-commerce businesses vary between different niches and the size of an online store. Some of the larger guys, like Amazon and eBay, pay between $150 and $200 per customer.
For smaller online stores, however, this figure is generally closer to $20 per customer.
Basically, for a small to midsize business, you'll want to aim to keep your expenditure-to-revenue ratio around 1:3. To stay sustainable as a business, this means that for every dollar spent, your business needs to earn about $3 back.
Customers and Their Costs
Customer acquisition costs are always contextual, meaning that they are dependent on a variety of different variables and factors that will influence the overall costs to a business of acquiring new customers. Keep this in mind when managing your marketing and outreach costs. If it costs your business too much to acquire customers, this will soon become an unsustainable business model that is likely to fail.
If your acquisition costs are high, it might be time to really knuckle down, direct your efforts elsewhere, and focus on fostering the relationships you have with your existing customers. After all, turning a one-time customer into a lifetime customer is not only much more cost-effective but also time-saving.
Business metricsCTR Manipulation: 5 Expert Tools & TechniquesDepending on the industry or ad and site type, the click-through rate (CTR) can differ drastically. For example, Wordstream reports that arts and entertainment have an average CTR of 16.29%, but furniture businesses have an average CTR of 3.49%.
Even a small increase in CTR can have a significant impact on business growth, insights, and profits. So, manipulating your CTR can aid in adjusting your site's search ranking for better traffic, understanding user behavior, and helping you stay competitive in your industry.
What is CTR?
CTR is a key metric that measures the number of clicks your ads or website receive in relation to the number of impressions they generate.
A higher CTR typically means:
More people are interested in your content, which can lead to increased sales and profits.Search engines identify your site or ad as valuable and relevant, which can increase traffic and engagement.
But this can vary depending on the type of content, frequency of posting, and use of relevant keywords. Businesses can use strategies such as keyword research, optimizing content, and A/B testing to find a solid CTR benchmark specific to them.
» Learn how to calculate CTR and why you should track it
Monitor Your Ad Metrics With Ease
Save time by auto-syncing data from numerous ad platforms into one easy-to-use dashboard.
Uncover actionable insights to improve your profitability.Access on desktop or mobile devices.Get customizable data reports.
BeProfit offers an intuitive one-stop platform where you can keep track of sales and ad data from various stores.
CTR Manipulation Tools & Techniques
CTR manipulation can help increase a website or ad's CTR to boost search engine ranks and traffic.
This is typically done with various optimization methods, but some less favorable tactics can bring risks, like fines or search rank losses. These are known as 'Black Hat' SEO strategies and include click bots and human CTR services.
But 'White Hat' SEO strategies leverage organic search, which accounts for 53.3% of traffic, and can foster more sustainable growth. These strategies include:
1. Email Marketing
Email marketing allows for optimized subject lines, body copy, and CTAs to entice recipients to engage. Personalization takes it a step further by offering emails tailored to the recipient's interests, preferences, and behavior. This can lead to higher open rates, CTRs, and conversions. Additionally, email marketing can help previous visitors complete conversions, such as recovering abandoned carts.
2. Social Media
Social media offers various strategies, such as improving organic social media presence by:
Connecting with customersIncorporating social commerceUtilizing push notifications
This helps extend brand reach and familiarity, which can lead to higher conversions. Using targeting and retargeting through social media can help improve customer retention because more tailored posts and social ads can attract them based on interests and relevancy. Higher retention can help lower ad spend and increase CTR.
3. Improve Copy
Copy optimization can help maximize the relevancy and persuasiveness of your brand message to your target audience. Varying your copy with images and incorporating videos can help keep your content dynamic and engaging. Updating copy with more targeted language or visuals can also help increase CTR with particular desired target audiences, which can help boost conversions.
4. Paid Ads
Optimizing paid ads' copy can help target the right audience. This can be done by selecting appropriate keywords and conducting research to find the best platforms for your ad to meet your conversion goals. Social media platforms offer various formats, such as:
Sponsored postsIn-feed adsBanner adsVideo ads
Pew Research reports that 95% of teens prefer YouTube over other social media platforms. So, let's take this example: If a brand wants to target teenagers, they can run short, dynamic video or banner ads on YouTube to increase engagement with their target audience.
» Find out the best platforms to advertise based on CTR
5. Optimizing Your Website
Optimizing your website can improve CTR by prioritizing a better user experience. This can include:
Creating more intuitive site navigation through a better visual hierarchy.Ensuring your site is compatible with and runs seamlessly across devices.Optimizing your SEO to increase visibility in search engine results.Leveraging the design based on your product offerings and audience preferences.
How to Manage CTR Manipulation
Even with an improved CTR, tracking it regularly is still essential. Luckily, many social media business platforms have tracking capabilities, like Google Analytics's cohort analysis feature or BeProfit's ad data tracking functionality.
Through monitoring, you can gain better insight into the success of your CTR manipulation techniques. It can highlight which strategies aren't cost-effective and which are effective. Using data like CTR, conversion rate metrics, customer retention rates, and other sales metrics can help businesses streamline their methods for better metric outcomes, revenues, and profits.
» Using Shopify? Check out the benefits of customer retention analysis
Elevate Your Content With CTR Manipulation
CTR manipulation offers numerous ways to increase organic traffic and CTR. By tracking ad metrics like CTR, you can assess your performance and identify areas for targeted improvement.
With BeProfit, profit and performance tracking is streamlined into one place for easier analysis. This can help you take control of your marketing data and make informed strategic decisions that manipulate your CTR creatively. Establishing a better CTR that aligns with your ROI and ROAS goals can help keep your expenses low and conversions and profits high.
Business metricsCalculating CTR For Beginners: Formulas, Guides & ExamplesClick-through rate (CTR) is an essential metric that can help businesses evaluate their advertising campaigns' performances. Depending on the industry and platform, CTR averages can vary. For example, Wordstream shares that business services' paid search CTR average is 5.17%, whereas apparel has a 2.24% average CTR. So, this metric should be treated as more of a guideline than a definitive benchmark. Understanding your CTR can also provide insight into revenue and profits by highlighting how effectively you're utilizing your marketing budget.
Understanding CTR
CTR measures the engagement of online ads and other digital content, such as emails or website pages. To understand this engagement's correlation to revenue, you would need to also calculate metrics like conversion rate, cost-per-click (CPC), and others.
CTR can be analyzed by subsections, such as micro conversions, search ads, and display ads. Each of these could provide different results, which can offer data for comparison to find from which ad type, for example, you garner the most conversions.
Why Should You Track CTR?
Tracking your CTR allows you to understand your marketing strategies' strengths and weaknesses. It can help better your business with:
Increased conversions - Knowing where your campaigns are successful can help you identify and utilize effective techniques more widely, resulting in higher interaction and conversions.Insight into marketing campaigns - This can guide you to points in your campaigns that need optimization or costs that should be cut. By tracking CTR, you can better understand user behavior and, therefore, tweak your marketing approaches for better conversion and customer retention.Improved ROI - With a better understanding of your marketing campaign, you can increase the chances of users completing sales actions and the likelihood of turning profits.
Track Profits From Your Marketing Conversions
Automatically integrate your advertising data and easily track sales profits.
UTM-based tracking allows you to analyze and optimize all engagement from social media to ad campaigns.Get an aggregated view of your business performance.Accessible on mobile and desktop devices for real-time team collaboration.
BeProfit offers a customizable platform to track your advertising performance using key metrics.
» Looking to do some CTR manipulation? Here are 5 expert tools and techniques
How to Calculate CTR
CTR is the ratio of clicks to the number of users who viewed the page, email, or advertisement. Some metrics to decide between before doing any calculations are unique clicks and overall clicks. If you want to categorize every time the same user clicks on the same link as one click, that's considered a unique click. Whereas overall clicks count every click, even on the same link and by the same user, as numerous clicks.
Aside from industry benchmarks as a guideline, it's worth having your own benchmarks so you can measure your improvement from one period to the next. Although the CTR can vary based on platform, content, and channel, calculating it uses the same method and should be done at regular periods.
CTR (%) = (Clicks / Impressions) x 100
Example of a Good CTR
CTR (%) = (Clicks / Impressions) x 100= (75 / 3,000) x 100= 2.5%
In this example, a call-to-action (CTA) button in an email campaign had a CTR of 2.5% Because email marketing CTR averages at 2.3%, this result is positive. This high CTR may have been achieved through extensive user behavior analyses or retargeting to ensure it was reaching people more likely to be interested. Successfully reaching a desired target audience can help businesses assess their marketing prowess and retain customers, which can improve conversion and help maximize profits.
» Want to know more? Here's how email marketing practices can improve your ROI
Example of a Poor CTR
CTR (%) = (Clicks / Impressions) x 100= (50/10,000) x 100= 0.5%
With the average CTR for Facebook ads at 1.4%, this example of a display ad that appears on Facebook feeds shows a low CTR. This may be a result of poor ad type selection, weak copy, and inefficient audience targeting, among other practices. This highlights how lower CTRs can cause businesses to lose out on potential conversions that could, in turn, lead to wasted costs with little to no ROI.
Ways to Improve Your CTR
Using data insights from tracking your CTR, and other metrics can inform new ways to use that can optimize CTR. Some of these ways include:
Personalization - This includes web personalization, which targets your potential customers' specific interests and fosters a familiarity that can encourage engagement and loyalty.CTAs - By implementing CTAs for more strategic direction and redirection, you can increase the opportunity for users to visit specific pages or product pages.Retargeting - You can leverage social retargeting. This creates display pop-ups when a user interacts with your social content through likes or comments.Improve Ad Copy - Performing keyword research, rewriting, and making use of images and video marketing can optimize your ad copy with data-driven adjustments that can help drive engagement.A/B Testing - Testing various versions of an ad and comparing the metrics can highlight more precise areas of your ad that resonate best with users. You can use this insight and apply it to other ad campaigns for an improved CTR.
» Discover steps to build a successful hybrid e-commerce marketing campaign
Leverage Your CTR to Help Increase Conversions
CTR is a key metric in understanding the success or failure of any given digital marketing campaign. Analyzing which platforms, techniques, and ad types are most successful, and which target audiences are most responsive to certain campaigns, can aid businesses to optimize their strategies for increased sales and profit-driving conversions.
That's where BeProfit comes in. With a customizable dashboard that can easily track your profits and integrate your advertising data for real-time monitoring, you can focus more on spearheading informed strategies to continually improve your CTR.
Business metrics5 Expert Ways to Lower Your CPA Through Ad SpendWith global ad expenditure at $822,756 million, digital advertising is at the forefront of businesses' strategies. Specifically, cost per acquisition (CPA) can make or break your profitability. The lower your CPA, the more revenue you'll be able to generate from your ad spend. But achieving a low CPA isn't always easy—it takes a strategic approach to optimize your ad campaigns and make the most of your budget.
Understanding CPA
CPA is used as a metric to measure how much it costs for each successful acquisition or conversion.
CPA ($) = Total Advertising Costs / Number of Conversions
A successful acquisition from an online advertisement could be:
A signupPurchaseSubscription to a newsletterAnother goal that you want customers to complete
Monitoring CPA in conjunction with other metrics, like marketing ROI or customer conversion rates, can provide a more complete overview of how successful your campaigns are at obtaining and converting customers.
Good ad spend can differ depending on the industry, target audience, and desired ROAS. The higher the CPA, the more expensive it is to acquire each customer, so lowering this number, typically, should be a top priority. Using CPA data to adjust advertising tactics and budget allocation can help drive profits and minimize overspending.
Monitor Your Ad Data Easily
Simplify your performance and profit tracking with integrated data.
Pull and optimize ad data from various platforms in one intuitive dashboard.Access custom reports in real time.Pinpoint ROAS and conversion rates per platform.
BeProfit provides a hassle-free platform to help you assess your ad metrics and identify your most profitable products or services.
» Discover the ROI and ROAS differences
How to Lower Your CPA
Making the most of your ad spend with data-driven strategies can include a number of techniques based on your marketing goals.
1. Personalization
Personalized ads are a cost-effective technique to avoid irrelevant advertising that doesn't turn into conversions. Personalization AI can produce tailored advertising by using data about:
Customer preferences and interestsBrowsing historyGeographic locationSales data
Personalized ads can help increase engagement and conversions, which can decrease your overall CPA. Additionally, personalizing ads gives customers the feeling that they are being seen as individuals rather than just another face in the crowd. This can inspire trust and encourage better customer retention.
2. Targeting and Retargeting
Targeting involves ads tailored toward specific groups or demographics of people based on their interests or location.
For example, Facebook Ads allows for keyword targeting and tailored audiences so that there's less wasted ad spend on uninterested audiences.
Retargeting allows you to serve specific ads only to those customers who have already interacted with your website in some way, such as clicking on an ad or making a purchase. By appealing to specific interests and demographics, advertisers can make strategic budget decisions and increase the likelihood of customer acquisition through less costly means.
» Using Facebook? Learn how to advertise on facebook like an e-commerce pro
3. Optimize Paid Campaigns
With paid campaigns, you can use audience segmentation based on different criteria like age, gender, interests, location, and more, and performance metrics to analyze efficiency. Then, specific methods can use this data to maximize engagement, including:
Changing when an ad runs based on higher site or page traffic timesLimiting geographic locations where certain ads run based on demographicsTargeting the ads to specific devicesImproving keywords and copy based on relevancyOptimizing landing pages
Additionally, monitoring performance metrics such as click-through rate (CTR), conversion rates, and cost per click (CPC) regularly can help identify any underperforming campaigns that need adjustment. It can also highlight if an ineffective campaign should be paused entirely to minimize wasted ad spend.
4. Leverage Video Marketing
Research from Wyzowl shows that 89% of consumers have been convinced to purchase a product or service after watching a video, and 51% are more likely to share video content than any other online content. This can lead to a higher click-through rate and more chance of lowering CPA. Advertisers have various options, like:
Banner videosIn-feed videosCross-platform social media videosInteractive videos
Incorporating videos in your e-commerce marketing can help prospective customers understand your offerings and provide interactivity, which is useful in increasing engagement and retention. Because customer retention is cheaper than acquiring new customers, this can also help lower ad spend.
5. Analyze Your Strategies
But let's not forget about analytics. Performance metrics, such as CTR, CPC, and sales conversion rates, can help you assess campaign success. Using tools like Google Analytics is one great way to pinpoint areas for improvement. By monitoring any underperforming campaigns closely to determine why they aren’t performing well, you can implement new ad spend and optimization strategies.
For example, if a strategy gets the customer to click on your page, but they don't convert. This could mean you need to revamp your page copy or change ad redirection with more fine-tuned personalization.
Regularly tracking and adjusting your ad strategies and performance can help improve conversion by streamlining or retargeting rather than increasing CPA.
» Check out the ultimate guide to effective e-commerce ads
Optimize Your Ad Strategies for a Lower CPA
Optimizing ad spend shouldn't stop after initial implementation. By adopting omnichannel strategies like expanding reach across various platforms using different paid social types, you can curate customer experience based on location, interests, or channel.
To help, BeProfit provides an all-in-one platform to monitor advertising metrics and profits with ease. This way, you can focus on reducing ad spend waste and optimizing tactics to help keep your CPA low, your conversion rates up, and improve your ROI and profits.
Business metricsAOV Beginner's Guide: What Does It Mean For Your E-commerce Business?For an e-commerce business, conversion rates and average order value (AOV) go hand in hand. While these can differ between industries and market sizes, recent statistics show that the average conversion rate for e-commerce businesses is around 1.72%, while the average AOV sits at around $116.72.
So, consistent conversions can help increase AOV because it means more people are completing purchases while maximized AOV can improve revenue and profit margins.
» Want to know more? Learn the best conversion rate metrics for e-commerce startups
What is Average Order Value?
AOV calculates the average amount of money spent by a customer per order over a certain period. This metric directly impacts profits because if an e-commerce business doesn't make enough sales or only makes low-value sales, it may turn a low profit or no profit after expenses are paid.
How to Calculate it?
AOV ($) = Total Revenue / Number of Orders Received
Let's look at an example. An online clothing store received 200 orders and made $10,000 in a month.
AOV ($) = Total Revenue / Number of Orders Received= $10,000 / 200= $50
A lower AOV, like this, may imply that customers are spending less per order, which can hamper profitability.
But a high AOV indicates that customers are willing to spend more money on the business. So, let's say the same online store made $20,000 and received 200 orders in a month.
AOV ($) = Total Revenue / Number of Orders Received= $20,000 / 200= $100
This higher AOV can enhance profitability and highlights positive customer engagement with the store.
Why Should You Calculate it?
Calculating and monitoring AOV can help businesses understand their sales strengths and weaknesses and their customers' buying habits. Some ways include:
Tracking revenue and sales metrics to identify areas where they can cut costs.Businesses can make data-driven decisions to improve sales and revenue.Analyzing AOV can help identify techniques that need improvement to increase customer loyalty and drive sales.
Seamlessly Monitor Your Sales Data
Make sales data and revenue metrics easy to digest with an intuitive one-stop platform.
Use cutting-edge analysis for insights into marketing performance.Access the app using desktop or mobile devices.Create and export custom data reports to assess revenue and profits.
BeProfit offers a user-friendly platform to make conversion, profit, and sales data easy to monitor and comprehend.
Understanding Average Order Value's Impact
Customer retention can lead to a high AOV because when customers are loyal to a brand, they tend to make repeat purchases. The trust and loyalty the business has built with its customers can increase the likelihood of higher-value purchases.
Poor customer retention can negatively impact revenues and profits and can indicate a business is not appealing to customer needs.
For example, this happened when I first started in e-commerce and spent a significant amount on marketing but failed to convert those leads into conversions.
The AOV and profits increased through employing effective sales techniques, like web personalization, because costs were optimized.
» Find out ways to boost product profitability for your e-commerce store
How to Improve Average Order Value
Finding the best techniques to improve conversion and increase AOV is essential to improve a business's bottom line. Here are a few to help your business achieve this:
Upselling and cross-selling: By suggesting related or complementary products to customers based on their browsing preferences or past purchases, businesses can encourage them to add more items to their cart.Customer support: Various channels such as live chats, phone calls, and personalized emails can enhance customer satisfaction, leading to repeat purchases.Digital marketing: Using various digital marketing techniques such as email marketing, social commerce, and other targeted advertising can attract more customers and encourage them to spend more.Product bundling: Offering products in bundles based on customer interests can encourage customers to buy more as it offers them more value for their money, resulting in a higher AOV.Loyalty programs: Rewarding customers for their repeat business through loyalty programs such as points, discounts, and exclusive offers can incentivize them to spend more.
» Discover the best Shopify apps to increase your AOV
Track Average Order Value To Help Your Business
Tracking AOV can help businesses identify opportunities to reallocate funds or cut unnecessary marketing costs, plus assist them in making informed decisions about pricing, advertising strategies, and promotions.
With BeProfit, you can track your revenue-based metrics, retention rates, and profitability in an integrated platform. This way, you can identify your sales trends and make data-driven decisions about your marketing strategies to help increase AOV.
Business metricsRevenue vs. Product Revenue Discrepancy in GA4—Resolved Are you, like many others, having a tough time understanding the difference between "revenue" and "product revenue" in Google Analytics 4 (GA4)? It may seem like these two metrics report on the same thing—but they don't. In fact, these two metrics, used in tandem, will give you a deeper and clearer understanding of the financial health of your business.
» Need more insight into generating revenue? Learn how to perfect your sales funnel with GA4
Revenue in Google Analytics
Revenue is the aggregated metric from your web e-commerce or in-app stores. This is the value that's used most frequently in reporting, because it aims to give you an overall picture.
Beyond wondering how sales revenue is calculated, it's important to bear in mind that revenue represents the value of an entire purchase or cart. Therefore, it can include tax and shipping costs as well as discounts, because these values are applied to the entire purchase and not individually to each item.
Let's look at an example. Let's say a customer buys a T-shirt from Joe's Tees (an online e-commerce store). Here is an example of the code that's generated for the revenue metric. Take special note of the bold, underlined coding:
ga('ecommerce:addTransaction', {
'id': '5678', // Transaction ID. Required.
'affiliation': 'Joes Tees', // Affiliation or store name.
'revenue': '5.99', // Grand Total.
'shipping': '1', // Shipping.
'tax': '0.50' // Tax.
});
This code highlights the grand total, and includes shipping and tax in the final revenue report.
» Discover the benefits and difficulties of revenue analysis in e-commerce
Product Revenue in Google Analytics
Product revenue focuses on the value that individual products contribute to the total revenue. It looks at each product's value and quantity in the cart separately. Therefore, you may have situations where the values of revenue and product revenue don't correspond, even though you're analyzing the same products in the same cart.
Here's another example so that you can compare the coding. Sticking with Joe's Tees, have a look at the bold, underlined section:
ga('ecommerce:addItem', {
'id': '1234', // Transaction ID. Required.
'name': 'Black Rambo T-shirt', // Product name. Required.
'sku': 'AA12345', // SKU/code.
'category': 'Rambo Range T-shirts', // Category or variation.
'price': '5.99', // Unit price.
'quantity': '1' // Quantity.
});
The value of the revenue is $7.49, while the product revenue is $5.99 because revenue also calculates tax and shipping.
» Worried about product performance? Use these tricks to analyze your products with GA4
Final Takeaway
So, revenue will provide you with a baseline of your overall performance, while product revenue will show you the weight of each individual product's contribution. This is good for determining which products are your bestsellers and which need a marketing boost or should just be discontinued.
If you're still struggling to understand the difference between these metrics, you can call on BeProfit. Their solution will demystify all the GA4 discrepancies. The bottom line is that the success of your business depends on accurately understanding the metrics and data you can extract from GA4.
» Want to see what BeProfit has to offer? Schedule a demo