How To (Really) Measure E-Commerce Success

Nordstrom Tech SVP on E-Commerce (Part 3)

Through the years, conversion rate tends to be the most common measurement for e-commerce success. Simply put, if your campaigns are driving sales, then the model is deemed to be working. However, this doesn’t necessarily create lifetime value for customers and keep them coming back for more. In today’s retail landscape, it’s more important than ever for organizations to maximize loyalty.

Getting back to the virtuous engagement cycle, the ability to measure the effectiveness of varying touchpoints is critical to building lifetime value for customers. In addition, this can be much more complicated to measure than simple conversion rate. Ultimately, there are qualitative values and other personal interactions that can build lifetime value in ways that cannot be measured by conversion rate.

First, I will describe an e-commerce transaction that looks like a complete loss for a retailer. Let’s say you purchase a shirt online and end up returning it to your local store without an exchange. From a retailer’s perspective, there’s no value in this transaction. Furthemore, the retailer must absorb related fees – including credit card processing, shipping and in-store re-stocking.

If conversion rate is your measure for success in this scenario, it would be deemed a failure.

However, we’ve realized that bringing customers into any of our retail locations presents an opportunity. Said differently, there are ways for e-commerce “mistakes” to ultimately pay off in creating lifetime value. For example, if the customer has a hassle-free return experience, you’re able to make a positive impact even if the transaction is a loss. Most importantly, retailers can tailor every in-store interaction to drive opportunities that build lifetime value over time.

In summary, this practice is borrowed from a marketing technique called “multi-touch attribution” or MTA. In other words, we are leveraging portions of the e-commerce experience to highlight in-store services and vice-versa. For example, when you buy a pair of designer jeans, we mention our alteration services to provide an additional touchpoint when they pick up the jeans in-store. This is a perfect example of providing value to a customer and adding more value to the sale.

Simply put, you want to make use of every touch point to build personalized interactivity for customers. As a result, you create a more compelling experience that is ultimately more profitable for your business.

Click here for Part 1

Click here for Part 2