E-commerce sites like Svpply and ModCloth have changed the game when it comes to social shopping. Gone are the days when creating a website with a few images and a shopping cart will entice customers to spend. Instead, more customers want to engage with brands as part of the buying process. One brand that understands the importance of customer engagement is premium yoga pant powerhouse, lululemon. The company just announced stunning growth for its fourth quarter and fiscal year call last month. Its stock climbed to an all-time high of $76.66 – up 66 percent since December 2011. Most of lululemon’s growth came from e-commerce, which has had 103 percent year-over-year growth. Part of its incredible success is due to the carefully crafted shopping environment the company has created. Customers feel like they’re shopping in their best friends’ closets. The site is built for engagement, and the sales figures prove it. In order for brands to measure customer engagement they need to come up with key metrics that make sense for their specific business objectives. However, identifying these metrics can be challenging as the social shopping revolution has changed the way customers interact with websites. Guy Nirpaz, CEO of Totango, notes that user engagement can be summed up in three key metrics: how much time a visitor is spending on your site, how often they visit your site, and what activities they do while they are on your site. According to Nirpaz, activities include clicking on links, expressing interest in an item, and sharing an item on social networks. Michael Foroobar of ScoutMob goes a little further and notes that companies need to measure both depth (frequency) and breadth (coverage) of engagement. Meaning you need to measure what feature of the social shopping experience customers frequently use, as well as how frequently features are used in relation to each other. However, Darryl Collins, managing director of Banjax Ltd and Gingerparts investor, disagrees, instead taking the side of traditional e-commerce sites. Collins believes that brands need to measure two engagement metrics: the sales figures and the conversion rate – it all comes down to the purchase. Although he correctly identifies the conversion as the number one goal of an e-commerce site, Collins misses the fact that we need to measure how customers got to that decision. Here are a few ways in which companies can measure engagement. – Build a cohort analysis, which measures the behavior of a group of people who have something in common over a period of time. When it comes to user engagement, measure cohorts by join time. A cohort analysis can be studied next to sales figures to determine engagement trends, including who your most valuable customers are. – Look for behavior trends in customers that purchase more items, more often. Once you understand who your most valuable customers are you can work to get other customers to replicate this behavior on your site. – By measuring social sharing, you can turn casual browsers into marketing machines. Reward evangelists who share your content the most, even if they don’t buy often. Not only are they driving traffic and sales, but they’re loyal. Why is it important to measure engagement on your e-commerce site? One word: Facebook. According to Webtrends, the social network is poised to turn e-commerce into f-commerce in the next few years. Facebook knows how much value its traffic drives to commerce sites. Between 2010 and 2011, Internet Retailer Top 200 retailers saw a 203 percent increase in traffic from Facebook to their sites. Companies have to start measuring engagement on their sites in order to have base numbers to improve upon before Facebook snatches up the interest of potential customers. Customer engagement is more critical than ever when it comes to shopping online. If companies don’t measure it, they can’t leverage it.
