end of year commercial review
End-of-year reviews are a vital part of any business, especially in "brand recovery" environments where the goal is to reverse a decline in performance. A recent client of mine was facing a year-over-year (YOY) decline caused by various factors:
Lack of investment
Lack of innovation
Poor stock control
Inadequate systems
No KPI measurement
In previous blog posts, I’ve outlined my role in addressing these challenges and creating a roadmap for growth—focusing on stopping the decline in sales, traffic, and customers. As we reached the end of week 1 in January, I took time to assess the eCommerce KPIs and identify key areas to improve.
2018 eCommerce KPIs Review
To make data-driven decisions, it’s essential to define and monitor the right KPIs. For this client, the focus was on several key metrics that aligned with their growth strategy:
New Customers - A significant improvement of +32% YOY, compared to a -43% decline, was driven by an increased focus on SEO and better rankings for non-brand search terms.
Second Orders - A remarkable +19% YOY improvement, up from -36%, was achieved by targeting customer segments for entry-level products and adjusting second-order marketing strategies to match their first purchases.
At-Risk Customers - The number of at-risk customers dropped from -6% to -30%, thanks to more relevant offers being sent out before customers reached an “at-risk” status.
Lapsed Customers - The rate of lapsed customers decreased from -6% to -26%, as we focused on offering more relevant incentives to keep customers engaged.
Won-Back Customers: A dramatic increase from +46% to 152% YOY was achieved by improving the relevance of promotions for various customer segments.
Sessions/Traffic - Traffic had been in decline for four years. Although 2018 saw a decrease in traffic, it was less than the previous year. Stricter regulations on promotions also had an impact.
Conversion Rate - Conversion increased by +9%, driven by improved stock levels and more targeted traffic. The more relevant the traffic, the higher the conversion rate.
Revenue - While revenue still saw a YOY decline, it was less severe than in previous years, as the business shifted focus from blanket discounting (e.g., 20% off everything) to more targeted offers like “3 for 2” deals.
Units per Order - Introducing the “3 for 2” promotion, which had been absent for various reasons, led to a 22% increase in units per order.
Leads - Leads saw a jump from +115% to +158%, driven by improved visibility of overlays and better discounts for first-time customers.
Organic Traffic - Organic traffic increased by +11% YOY, thanks to investment in SEO, which also helped drive new customer numbers—up from 50% to 65% of all new customers coming from organic traffic.
Direct Traffic - Direct traffic saw a decline of -19%. As mentioned, the brand had been in decline for years, which affected both direct and brand-related traffic to the website.
Email Traffic -Email volumes were restricted by regulatory changes for 5 months of the year, limiting the ability to send promotional emails. Only informative emails were allowed during this period.
2018 - Issues to Address
A crucial part of an end-of-year review is to identify the key issues that need to be addressed to improve performance in the following year. Here are the main challenges I identified with this client:
Legal Restrictions: Operating in a highly regulated market, this client faced limitations on what they could say online. Some of these restrictions were subjective, and a clear promotional strategy needs to be developed within these legal boundaries.
Direct Traffic - As noted, the brand has been in decline, leading to a drop in both direct and brand traffic. To revive the brand, we need investment in marketing campaigns and strategies that will drive traffic and rejuvenate its online presence.
Financial Reporting - Accurate financial reporting is crucial, but this business struggled with providing consistent, reliable reports on sales performance. Addressing this gap is essential for better decision-making.
Development Roadmap - E-commerce is ever-evolving, and I believe a clear development roadmap is necessary before the trading year begins. This roadmap should be budgeted and include a strategic impact plan for the website.
Management - Clear ownership of sales and revenue KPIs is critical. In this case, management confusion arose with multiple teams (eCommerce team, department head, and agency) involved in driving development. Defining ownership upfront can prevent miscommunication and inefficiency.
Trading/Planning - E-commerce planning typically takes place in September/October, where previous performance is reviewed and future strategies are mapped out, including development work to increase sales and average order values (AOVs).
Budget Build: Building a realistic budget involves understanding what extra revenue new channels or activities will bring. This revenue should be modelled and included in the annual budget to track KPIs effectively.
Brand Decline - When a brand has been in decline for years, it takes more than just new products to revive it. A focused investment in re-igniting the brand and a clear set of KPIs for improving direct and brand traffic are essential for success.
Retail Integration - For this client, integrating eCommerce with physical retail stores presented a huge opportunity. However, due to outdated systems, this integration hasn't yet been implemented. Multichannel integration is key, as multichannel customers typically have the highest AOV.
Non-Brand SEO: Non-brand SEO was a major success, driving traffic to the site. However, non-brand traffic can be harder to convert as these customers are unfamiliar with the brand. With limited non-brand traffic potential, conversion rates are lower, which presents an ongoing challenge.
In conclusion, the end-of-year review helped highlight areas of improvement and opportunities for growth in the coming year. By tracking the right eCommerce KPIs, addressing the issues in reporting, management, and brand positioning, and implementing targeted strategies, the business can set a strong foundation for recovery and long-term success.
