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Digital marketing uses a lot of specific terms that you need to be familiar with and understand. We compiled a collection of the most frequent terms and notions you will find when using Samba.ai to improve your eCommerce performance. With every term, you find a definition and a short explanation, example or best-practice tips.
A/B Testing (split testing or bucket testing) is a method of comparing two versions of content, such as email header, banner or part of a webpage, such as CTA button, to determine which one is better converting.
AIV (Average item value): the ratio of the total value of the order to the number of items.
It lets you know if your customers are buying cheaper or more expensive items, regardless of their number. Your average order value may be high but if it is composed of low-price (and low-margin) items, you may want to improve this.
AOV (Average order value): the ratio of the total value of orders (of one customer or all of them) to the number of their orders.
It informs you about how much your customer usually spends on one order.
ANI (Average number of products in an order) : total number of purchased items divided by the number of orders.
It is important to know in order to improve marketing and logistics. The higher the number of products in an order, the simpler the logistic process for you.
Bounce rate: how many emails have not been delivered divided by the total number of email
Important metrics when it comes to mailings. It should be less than 10%.
Hard bounce: email that failed to be delivered permanently. It can be a non-existent or incorrect address (such as gmial.com etc), it should be removed from your list. However, before that, you should try another method of contact with this client (like web push or sms campaigns) to engage him once more
Soft bounce: Temporarily undeliverable emails. It can be caused by spam filters, but also email inbox server error or manual filtration provided by the user. At Samba.ai you have the opportunity to monitor such cases to be sure that your hard work will not be wasted by that. We also use Mailgun as our SMTP provider who informs us immediately of any cases of larger impacts and allows us to quickly switch you to other whitelisted servers. So with Samba.ai you can be not only sure that you’ve sent the campaign but also you’ve delivered it.
Campaign: set of marketing activities intended to achieve a specific goal or revolving around one topic.
A Christmas promotion, name-day, retention campaigns may be typical examples. It is useful to think not only of ad hoc campaigns (seasonal, new products) but also of continuous campaigns (up-sell, cross-sell…)
Customer Lifetime Value (CLV): the total amount of money a customer is expected to spend in your business
This is the most important figure that lets you decide how much you can invest in new customers or in retaining existing ones.
You can calculate it simply for existing customers (average value of a purchase X number of times the customer will buy each year X average length of the customer relationship (in years) and approximate for new ones.
Churn rate: the percentage of accounts that cancel or choose not to renew their subscriptions
The rate at which customers stop doing business with you, also called the rate of attrition. It informs you how many of your customers you lose per year.
CTR (Click-through-rate) : the rate of clicks on at least one link in delivered emails or on displayed banners.
This important metric informs you about the quality of your content for the chosen public. You may improve it by creating better ads or emails.
Cohort: a set of customers with a common identifier
This identifier may be geographical location, the date of the first purchase or medium spent. When customizing your communication to different cohorts (such as dog lovers or seniors), you may significantly improve your conversion rate.
Cross-selling: sell related or complementary products to an existing customer.
One of the most effective (and the least expensive) methods in eCommerce marketing.
Conversion rate: number of people who completed the desired action to the number of contacts that were asked to perform the action. You want to track the conversion rate of your website (number of customers or subscribers to the number of visitors) and the conversion rate of your campaigns to improve them.
Coupons: offer of discount or other benefits to a customer
A method to acquire new customers (i.e. with a pop-up window on the webpage) or incite an existing one to another purchase.
Customer: anybody who has bought goods or services from an eCommerce.
It is useful to always get as much insight into your customers and divide them in cohorts so you can communicate with them in a more effective way.
Double-opt - an abbreviation specifying the method of verifying the correctness and ownership of the e-mail address when the user is subscribing to newsletters. In this case, the method consists of automatically sending an email with a link confirming the willingness to register on the website.
Heatmap: representation of your website visitors behaviour.
It lets you gather insights from the interaction of the visitors to identify common patterns and improve the webpages.
E-Mailing: marketing strategy that uses emails to promote products or your brand to existing or potential customers.
One of the most efficient ways to improve your retention rate and prevent churn of your customers.
Open rate: number of customers that opened your message to the number of messages sent.
This number may reflect the effectiveness of your subject lines, and is also affected by send time and frequency.
Opt-in: permission to send marketing communication to customers and potential customers.
Required by law, the opt-in checkbox should be part of every email gathering form. It needs an action to register and concerns only the start of eCommerce communication with a contact. Also, check the “Double-opt in”
Opt-out: withdrawing consent for receiving marketing communication
It usually means a way how a contact can unsubscribe from an email list. Opt-out (unsubscribe) option needs to be part of every communication.
Retention rate: number of customers buying from you to the total number of customers.
The opposite of churn, retention rate informs you how many of your customers shop from you repeatedly, over a chosen period of time. It describes the ability of a company to retain its customers over a specified period.
Upselling: marketing activities focused on encouraging customers to purchase comparable higher-priced products than the one in which the client is already interested. Also, Upselling campaigns - similar to cross-selling - can be focused on providing higher profits from one order by proposing complementary products.
RFM (Recency, Frequency, Monetary): customers scoring segmentation methodology using three main views on the customer:
- How much time has passed since the last order?
- How many times has a client returned to our eshop?
- How much has a client spent at our shop on average per order?
Focused on CLV, this customer segmentation is used by eCommerce focused on customer retention more than acquisition. We have discussed RFM in depth here.
Solvency rate - this is a type of rating which allows you to quickly segment your clients between economy (promotions product-oriented), standard and rich (premium products oriented) clients. Of course, it’s already implemented in Samba.ai, so stop wasting your margin by proposing discounts to clients who’re not interested in them, because they just want to buy expensive premium products from their favorite brands!
Value of the email address:
email revenue / # subscribers = revenue per subscriber (RPS). We have discussed this topic in depth in this article.
ROI (Return on investment) : rate of revenue from a campaign to invested money
You can calculate ROI as (revenue from email campaign – money invested in campaign)/ money invested in campaign * 100
ROMI (return on marketing investment): Revenue from email campaign / ((cost per email * total emails sent)
+ overhead + incentive cost) * 100%
ROAS (Return On Advertising Spend, (ROAS): gross revenue divided by the cost of a campaign
This metric measures the efficacy of an advertising campaign. The value should be higher than one - optimally around 4 and in the best case exceeding 10. You can simply understand it as how many dollars you earn for a dollar spent.