If you’re running an ecommerce business, it’s important to be familiar with the most commonly used terms in the industry. This will help you better understand how the industry works and how you can improve your own business.
In this blog post, we’ll discuss 7 of the most important ecommerce terms that you should know which are very helpful for your digital marketing or ecommerce busienss. We’ll also provide a brief definition for each term so that you can have a better understanding of what they mean.
What is Churn rate (aka customer churn rate)?
With churn rate, you can better understand how many customers you are losing and why. This information can be used to make changes to the operation to reduce the customer churn rate and keep more customers. It is the percentage of customers who stop doing business with a company over a given period of time. A high customer churn rate can be a sign that something is wrong with your operation, such as poor customer service or a lack of product selection.
What are the consequences of having a high churn rate?
A high churn rate can have several consequences for your online business. First, it can lead to a loss in revenue as you lose customers who are no longer doing business with you. Second, it can also lead to a decrease in customer loyalty and customer satisfaction. This can be a problem because it can make it more difficult to retain existing customers and attract new ones. Finally, a high churn rate can also damage your company’s reputation.
What are some ways to reduce churn rate?
If you want to reduce your churn rate, there are a few things you can do. First, you can focus on customer relationships with your existing customers to boost their brand loyalty. This includes things like responding to customer inquiries and complaints in a timely manner, providing helpful and accurate information, and resolving problems quickly. Second, you can offer incentives to customers who stick with your company, such as discounts or loyalty programs. Finally, you can improve your product selection so that customers have more reasons to do business with you, maintain existing customers and re-acquire those who left.
What is CTR (Click-Through-Rate)?
Your business will likely have a lot of traffic, but what you want is for that traffic to convert into sales. This is where CTR comes in. CTR is the percentage of people who click on a link or ad and then take the desired action, such as making a purchase.
It is one of the indicators that online businesses use to measure the success of their marketing campaigns.
What are the consequences of having a low CTR?
A low CTR can have some consequences for your business. The most serious one is that it can lead to a loss in revenue as people are not clicking on your links or ads and making purchases.
What are some ways to improve CTR?
There are a few things you can do to improve your CTR. First, you can focus on your marketing efforts and make sure that your ads are well-targeted and relevant to your audience by analyzing your customer data.
Second, you can also focus on search engine optimization so that they appear higher in the results pages of search engines. Search engine optimization is the process of improving the ranking of a website on search engines. This can be done by optimizing your ecommerce website for certain keywords and improving the quality of its content. It allows search engines to better understand what your website is about and match it with relevant searches. Your strategy for different search engines may vary to get the best search engine optimization result.
Finally, you can improve the design of the web page of your online store so that it is more visually appealing and easy to navigate.
As a result, you can attract customers and keep them coming back.
What is Customer Retention?
Customer retention is the number of customers who continue to do business with a company over a period of time. A high customer retention rate is a sign that your operation is doing well and that customers are happy with your products or services.
What are the consequences of having low customer retention?
A low customer retention rate can cause numerous negative impacts on your business. For one, it can lead to a loss in revenue as customers take their business elsewhere. Additionally, it can reputation damage as potential new customers may be turned off by the high churn rate. Finally, it can also put a strain on your customer service team who must constantly deal with upset customers.
What are some ways to improve customer retention?
To combat these issues, you can first focus on creating customer relationships with your target audience. This includes providing helpful and accurate information, responding to customer inquiries and complaints in a timely manner, and resolving problems quickly. You should also apply Customer Relationship Management (CRM) to track and manage your interactions with current and potential customers.
Second, you can offer incentives to customers who click on your links or ads, such as discounts or loyalty programs. If you would like to have more details, please read our previous blog. Finally, you can improve your product selection so that customers have more reasons to make a purchase.
What is the Conversion Rate in e-commerce?
Conversion rate is the percentage of people who take the desired action, such as making a purchase, after they have been exposed to your business. Many factors can affect conversion rates, such as the quality of your product descriptions, the clarity of your call to action, and the overall design of your website. Therefore, if you want to improve your business, focus on improving these factors.
What are the consequences of having a low conversion rate?
If you have a low conversion rate, it can be an indication that your business model is not effective and that customers are not interested in what you’re selling. This can lead to decreased sales and revenue, as well as a loss of customers. In addition, a low conversion rate can also damage your reputation and make it difficult to attract new customers
What are some ways to improve the conversion rate?
There are many ways to improve conversion rate, understanding customer behavior is one of the key tasks.
First, focusing on customer acquisition, make sure you’re targeting the right audience and that your marketing campaigns are effective.
Second, improve web page design: Use colors, images, and fonts that are visually appealing and easy to understand.
Third, make your ecommerce website easy to use, make sure customers can easily find what they’re looking for and that the checkout process is smooth.
Fourth, improve customer experience and customer satisfaction by providing excellent customer service and making it easy for customers to contact you with questions or concerns.
What is Customer Lifetime Value (CLV/ LTV)?
Customer lifetime value is the total amount of money that a customer will spend on your business throughout the customer lifetime. It is important to know your customer lifetime value because it can help you make decisions about how to best invest in your operation.
For example, if you know that each customer spends an average of $100 on your business, you may want to invest in marketing campaigns that target new customers. Or, if you know that each customer spends an average of $500 on your business, you may want to focus on retention efforts to keep them coming back.
What are the consequences of having a low customer lifetime value?
If you have a low customer lifetime value, it means that your customers are not spending much money on your business. This can lead to decreased sales and revenue, as well as a loss of customers. In addition, a low customer lifetime value can also damage your reputation and make it difficult to attract new customers.
What are some ways to improve customer lifetime value?
There are many ways to improve customer lifetime value. First, focusing on customer acquisition, make sure you’re targeting the right audience and that your marketing campaigns are effective.
Second, improve web page design: Use colors, images, and fonts that are visually appealing and easy to understand.
Third, make your ecommerce website easy to use, make sure customers can easily find what they’re looking for and that the checkout process is smooth.
By following these tips, you can improve your lifetime customer value and increase sales and revenue for your business.
What is Cross-selling?
Cross-selling is a selling technique in which you sell a related product to a customer who has already purchased something from you. For example, if someone buys a dress from your business, you may cross-sell them a pair of shoes.
This selling technique can be effective because it allows you to upsell customers on products that they may be interested in. Additionally, it can help you boost your average order value, which is the amount of money that each customer spends on your business.
What is A/B Testing?
A/B testing is a valuable tool that ecommerce businesses can use to improve their operations. It is a method of testing two or more versions of something, such as an online advertising campaign, or landing page, to see which one is more effective. This type of testing can be used to improve the effectiveness of your operation.
For example, if you’re not sure which call to action is more effective, you can test two different web pages and see which one gets more people to click. Or, if you’re not sure which product description is more effective, you can test two different versions and see which one converts better.
Conclusion
There are many important ecommerce terms that you should know in order to be successful in this industry. Customer lifetime value, cross-selling, and A/B testing are just a few of the concepts that we have covered in this article. By understanding these terms and knowing how to apply them to your business, you can improve your sales and revenue.