June 20, 2017
Here at Magento Business Intelligence, we’ve helped hundreds of merchants make smarter decisions using their data. Some metrics, like sales, gross margin, and average order value, are important to every merchant. Depending on your business, however, there may be additional dimensions in your data that can give you a unique competitive edge. Today, we’ll focus on one dimension that’s especially relevant to merchants in the UK: geography. Below are three ways that merchants in the UK and surrounding countries can use their geography to their advantage.
Cross border shipping analysis
Most UK merchants have a healthy customer base outside of the UK, and this makes for an important and easy-to-define dimension for customer segmentation: country. As a customer, ordering from a merchant that lives in another country can have big implications around price, shipping, inventory availability, and more. As a merchant, marketing to customers outside of your country also has big implications on your logistics, acquisition channels, and even your legal terms.
Make sure you’re able to calculate Customer Lifetime Value (CLV) for each of your customers. This is the most important metric about your customers because it captures things like average order value and repeat purchase rates all in one number. Once you have CLV available, look at the CLV of the customers in each country that you sell to and look for trends. Are customers from certain countries reliably worth more than others? Do they come back to buy more? If you have acquisition cost data, do they cost more to acquire? The answers to these questions should be informing how and where you invest capital to acquire customers, domestically and internationally.
Currency conversion analysis
Changes in currency conversion rates can have a big impact on your profitability, especially if you hold inventory. They can also impact customer demand in countries with different currencies from the one you charge. Look at foreign currency conversion rates to give you a picture of how different conversion spot rates may impact demand. This can help clarify how much risk exposure your business has to fluctuating exchange rates and when you may want to alter your acquisition strategies based on a local currency’s impact on demand.
When dealing with a high number of international buyers, there may come a time when it makes sense to translate your site into multiple languages. This requires investment, so you’d better be sure it’s worth it! You can understand your potential ROI better by analyzing the countries where your products are selling well. Do they have a large population that does not speak the default language of your site? If so, you can quantify the increase in market size you will create by investing in the translation and internationalization of your site. This is a great example of data-driven strategy.
If you’re looking for a platform that allows you to build, study, and collaborate around metrics like these, sign up today for a free demo of Magento Business Intelligence, or join my session at MagentoLive UK 2017 where I'll be covering the new dashboards included in the new Magento BI Essentials tier.