4 Ways to Improve Your Gross Margin Using Google Analytics
October 7, 2021 -
What is gross margin?
Gross Margin = (Total Revenue – Cost of Goods Sold)/Total Revenue).
To improve gross margin, you can increase total revenue or decrease the cost of goods sold. Google Analytics data can easily help with insights on how to increase revenue.
How can Google Analytics help you to increase your company’s revenue? Note that almost all of the examples below are based on GA360 where Enhanced Ecommerce was implemented.
Move products with the highest cart-to-detail and buy-to-detail rates closer to the user
One of the ways is to look at your product acceptance reports where cart-to-detail rate and buy-to-detail rate are taken into account.
Cart-to-detail rate is product adds divided by views of product details
Buy-to-detail rate is unique purchases divided by views of product detail pages
When enhanced ecommerce is properly implemented in Google Analytics, you can evaluate which products have the highest cart-to-detail and buy-to-detail rates and move products with the highest percentage closer to the user. For example, these products would be perfect for your landing page, as recommended items, or first items on the category pages. You can find this information in the ‘Product Performance’ report among ‘Ecommerce’ under the ‘Conversion’ section in GA360.
Personalize discount based on the user’s progress along the funnel – don’t leave revenue on the table
By assigning users to the audiences that are aligned with the progression of the user towards the purchase or the most important action that you want them to take, you can target these groups with promotions where the amount of discount decreases with each step. For example, you decided to divide users into three groups:
- New users who came to the website, browsed but didn’t added anything to the cart and left
- Users who browsed and added to cart and left
- Users who added their payment information and address but didn’t purchase at the end
Create a custom segment for each group and convert that segment into the audience. Now, if you have connected DV360 or Google Ads to GA360, you can target these audiences with specific campaigns. By assigning personalized discounts to each group, you won’t waste a discount on users who are likely to convert anyway. This helps you to increase this revenue in the end.
Help customers to enjoy the experience on the website by optimizing mobile pages speed load – don’t lose revenue to slow load
If you noticed conversion rate is quite low on mobile but the amount of traffic is considerable, the speed load might be a reason for the low conversion rate. It’s basic, but there are websites out there that load very slow and even if a user converts for the first time because he desperately needs the product, I’m sure he will be reluctant to repeat the painful experience of slow load and will go somewhere else.
To quickly assess if the page or screen page is the problem, go to Behaviour > Site Speed > Overview report and compare Avg. Page Load Time (sec) by device category. To do so, apply two segments (Mobile Traffic and Desktop Traffic) to the Site Speed reports.
Avg. Page Load Time (sec) is the average amount of time (in seconds) it takes for pages from the sample set to load, from initiation of the pageview (e.g. click on a page link) to load completion in the browser.
If you see that the Avg. Page Load Time is slower on Mobile, contact your Mobile team to find ways to improve the speed. I guarantee your mobile revenue will increase with speed improvement.
Repeat successful promotions to increase Average Order Value – Promotion does not always mean lower revenue per transaction
If enhanced eCommerce is implemented in Google Analytics, you can leverage the ‘Order Coupon’ report under ‘Marketing’ in the ‘Ecommerce’ section in GA360. Review Avg. Order Value to understand which promo codes got the highest basket size. You can filter by the Avg. Order Value choosing only above average values and then sort by Revenue. This way, you will be able to quickly see which Order Coupon Codes lift up your revenue and continue to use them in your marketing activities.
On the other hand, if you filter Avg. Order Value that is lower than average, you can find the promo codes that are pushing your revenue down.
Bonus tip: Segment your promo code data by User Type (new vs returning) and Device Category (mobile vs desktop) to understand which promo codes and where bring the most value.
Avg. Order Value is the average value of transactions that is calculated as Revenue (might include tax and shipping based on your implementation) / Transactions.
This is just the tip of the iceberg of how Google Analytics data can help you to find ways to increase revenue and ultimately improve your gross margin.