Price Points by Omnia Retail

Over the years, Google Analytics has become an undeniable ally to many retailers and brands engaging in ecommerce. The tool can provide a gold mine of data and insights on your website’s performance. For instance, page...

Over the years, Google Analytics has become an undeniable ally to many retailers and brands engaging in ecommerce. The tool can provide a gold mine of data and insights on your website’s performance. For instance, page views and units sold data can be captured for each of your products. These insights can be leveraged to add depth and sophistication to a pricing strategy that can then further drive business results as well. Now, what if I told you that you can use the Google Analytics data to create more profitable and demand-driven pricing strategies? And that Omnia offers you the possibility to connect a Google Analytics API to your portal? If this sounds tempting then keep on reading. In this article, we will walk you through the benefits of connecting GA to Omnia, and how you can use the data in pricing your assortment. Which data and insights from Google Analytics should I start tying to my strategy? Conversion rates: As mentioned above, Google Analytics provides you with insights on ecommerce on a broader scope. However, as a first step, it would be wise to determine which features can be relevant to your pricing strategy. Let’s first take a step back: Imagine a potential customer that clicks on a specific product on your website. They might go through all the steps in your sales cycle but never actually click on the ‘buy product’ part of your website. In this case, the conversion rate is low. If your price is not attractive and in-line with the market, you might end up losing market share. This is where connecting your Google Analytics API to Omnia can truly bring in added value. Conversion rates are an interesting metric to look at and to tie back to your strategy. In a study by a Marketplace Optimization Platform, it was found that conversion rates can have a reverse correlation with your prices. Indeed, in analyzing the prices from Amazon using two-years' worth of data, they were able to see a clear negative relationship between prices and conversion rates. However, this does not necessarily mean that lowering your prices would automatically increase your conversion rates as this analysis doesn’t take into account other factors such as elasticities. Page views/traffic: Your page views are also a good indicator of how popular a product is. Indeed, you can use this data to determine which products are popular and bring traffic to your website. Additionally, the Omnia Pricewatch export data can even provide you with insights on the market and popularity scores. Could it be that your competitors are not selling something or that they ran out of stock? Gaining this perspective can help you in adjusting your strategy and perhaps consequently gain extra margin on these products. The traffic on your website is also a metric that could influence your strategy as it can indicate which products are most attractive. An extra layer would be to cross-check the low conversion rates with the high page views as it can surely indicate that something is making your prospect click away rather than buy from you. In this case, it will most likely be a higher price than anticipated or a price too low that might impact your price perception, lowering the trust of your audience. Units sold: Another important metric that Google Analytics provides is units sold, which help to measure the popularity of your products. Also, a product that has high page views but sells a few is typically one that you might need to look into. Naturally, one would ask themselves why is this product not selling? The same applies to products with low conversion rates and low units sold. Are those products worth discounting or would it be wiser to find a way to make them more visible on your website and incentivize the customer to buy them? All in all, the metrics presented here are just a few of the ones that you can take advantage of when connecting the Google Analytics API to your Omnia portal. However, the true value lies in analyzing these metrics with respect to one another as they are, more often than not, interdependent. How to include conversion rates and page views in your strategy? Now that we know which metrics are to be followed and can have a direct correlation with your pricing strategy, let’s look at how to include them in your strategy. High-runner strategy: A high-runner strategy essentially focuses on the products that have ‘the highest numbers of views, clicks, and purchases, and which are eagerly sought after by the public’. Naturally, flagging these products using Google Analytics is easy. You would want to focus on products that have the highest number of page views, but also the ones with the highest conversion rates. The idea behind this strategy is that you would be competitive enough to maximize traffic on these products. However, in order not to lose margin, the high-runner strategy also entails trying to push your low-selling products (low page views) as add-ons to the highly elastic ones. Therefore, in order to make the best of this strategy, you need to obtain data from Google Analytics and use it in Omnia to flag these products and include them in your strategy. Bundling: Another strategy that can be optimized by adding conversion rates is bundling. As bundling is mostly about selecting one high-performer product as an anchor and adding in extra (low-selling) products to be able to sell more off. The bundling strategy is an interesting one as it gives you the opportunity to sell more of your long-tail products, but also provides the customer with the opportunity to get the best value for money with regards to a set of products. So how can Google Analytics data help you achieve this? It’s simple, in a similar manner to the high-runner strategy, you will need conversion rates and page views. In this case, you can either choose a popular product and build your bundle around it. For instance, a Samsung TV (with a conversion rate of 11%) with its wall mount (conversion rate of 4%) and corresponding HDMI cable (with a conversion rate of 6%) . Another idea is to go for one that can’t be considered your best seller but building a bundle that includes it could boost up its sale. Another good example is a Philips epilator that you can bundle up with all of its accessories. Indeed, these might not get the best traffic but if you add them to the bundle, you will be able to sell more units. Stock-based strategy: As its name indicates, a stock-based strategy is one that is entirely built around the stock levels of your products. Indeed, in most cases, a product that is low in stock would not be priced the same as one that you have many units of. However, with Google Analytics data, you can add more depth to this otherwise simple strategy. Let me explain: combining your stock levels with page views can provide you with a different perspective on how to price each product. For instance, a product with low stock and high page views surely indicates that it’s one where margins can be maximized. On the other hand, a product with low conversion rates but a high stock probably calls for a reduction in price to make sure to dispose of some units and save on logistics cost. By taking into account simple measures such as conversion rates and website traffic, the stock-based strategy becomes more accurate as it includes the intricacies of a product’s popularity. Where can you see this data in Omnia? Performance screen: Once you configure the API, you can find your Google Analytics data in the Performance tab in Omnia. This is a truly insightful dashboard as it enables you to cross-check multiple variables that are all related to your ecommerce performance. For instance, you can monitor a category’s revenue vs. its conversion rates. Indeed, you will be able to see which categories of products achieve the highest or lowest conversion rates and how your revenue is impacted by it. This will give you insights on which pricing strategies to use for them. For example, a product that has a high conversion rate but shows low revenue. If you cross-check it with page views, you might have a perfect candidate to test out the high-runner strategy (i.e. drop the price on that product to achieve higher volumes without forgetting to cross-sell it with other low-conversion rates products). In short, the Performance dashboard is your first step into defining what strategy to pursue based on the conversion rates and traffic, but also the best place to have a holistic view of the Google Analytics data with regards to your sales and revenue. Even though most associate conversion rates and website traffic with marketing, these metrics can be relevant in pricing as well and enable you to have a strategy that is more tailored towards online performance. Connecting Google Analytics’ data to your pricing tool is bound to offer you valuable insights on not only how you are positioned in the market, but also on how to adjust prices to increase performance. Reports: Omnia offers various reporting possibilities, and it would be a shame not to use them to their fullest. The good news is that all the data points we have discussed can be aggregated in reports. Below are a few ideas of reports you can create using the Google Analytics data: Overview of products with high page views but low sales: Two variables that are interesting to look at side-by-side are page views and units sold. Indeed, one can tell you a lot about the popularity of your products while the other one opens your eyes to their potential. By adding the page views to your reports, you can see which products have the potential to sell more (high page views) but which are underperforming (low sales). The same applies to popular products that are low in stock. It might be the trigger event you need to restock to stay ahead of the curve. Overview of most popular products: A report that could prove beneficial to your marketing team is one that groups all your most popular products. As mentioned earlier, conversion rates combined with page views are a good indicator of the popularity that a product has. Therefore, the idea is to create a report that highlights these metrics per product. As the possibilities are endless, you could also add data such as stock levels and marketing costs to these reports and have a clear overview of which products are worth investing in marketing campaigns for. Final thoughts The data from Google Analytics can be truly insightful in helping you build a more sophisticated pricing strategy that uses performance measures. It allows you to be more proactive with regards to your products’ trends and split your assortment based upon live and legitimate interest from customers. Hence, it is highly advised to experiment with this data in Omnia to gauge which strategy can help you achieve your desired business goals. If you are interested in any of the things mentioned in this article, our CSM team and Customer Service will be happy to help!