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“We don't say that brands should monitor and measure all [digital shelf metrics]. It's about finding the ones that are available to you in that market, in that channel, in that retailer, and using them to advance your business, help you make decisions, and help you create a competitive advantage.”
— Gregor Murray, Vice President of Strategy, Digital Commerce Global
Brands can use a range of digital shelf metrics to assess their ecommerce performance, but not every metric is created equal.
At least that’s what Gregor Murray thinks.
Murray is vice president of strategy at Digital Commerce Global (DCG), a firm with fast-moving consumer goods (FMCG) and consumer packaged goods (CPG) domain experts who perform digital commerce capability benchmarking for consumer brands.
Murray and his team created a digital shelf metric framework that focuses on content, search, marketing, availability, robustness, and trust (CSMART). It’s a tool to help consumer brands make their digital shelf metrics actionable.
Murray joined a recent episode of the “Unpacking the Digital Shelf" podcast to discuss some critical aspects of the framework. The episode, titled “Making Metrics That Matter Actually Matter,” provides tips for how brands can drive customer engagement, more sales, and greater profitability by identifying the metrics that matter most to their business.
Brands can rely on so many different ecommerce benchmark metrics to measure their digital shelf performance, but it’s still challenging for them to pinpoint the metrics that have a meaningful day-to-day impact on their business.
“There are at least 100 different measures out there when it comes to the digital shelf — some of which are widely available and others are unique to different retail platforms and different retailers,” Murray says.
DCG created the CSMART framework to address this complexity. The acronym stands for:
Each pillar aligns with several digital shelf metrics, but Murray says not all of these metrics will apply to every business.
“We don't say that brands should monitor and measure all of them,” Murray says. “It's about finding the ones that are available to you in that market, in that channel, in that retailer, and using them to advance your business, help you make decisions, and help you create a competitive advantage.”
Murray argues that one of the underlying problems brands deal with is focusing too much on lagging metrics instead of leading metrics.
Retailers have conditioned brands to think in the past and look at historical data on sales volume, availability, and distribution to forecast future performance. While this approach is valuable, it’s also incomplete.
“Sales doesn't necessarily mean that customers are hugely engaged in your business or in your brand. It doesn't necessarily mean that your brand is particularly healthy into the future,” Murray says. “With CSMART, what we wanted to do was not only look at the past and those historic measures, we wanted to look at the future, as well.”
Where upstart and digitally native brands are more focused on leading measures — Airbnb, for example, tracks the average number of nights booked for every given day, week, or month in each of its markets — other brands aren’t so forward-looking.
Murray says that more brands need to embrace this approach and prioritize leading metrics in their decision-making.
“Digital commerce for FMCG and CPG shouldn't be any different. We should be looking at the leading measures, as well, and understanding ‘is our business healthy in the long term?’ even if our sales are technically in growth [mode],” he says.
Murray outlined the following three leading digital shelf metrics brands need to hone in on.
While the AWOP isn’t a new ecommerce benchmark metric, it’s an incredibly valuable one for brands to track and better understand. The AWOP measures how many units customers buy and how much they spend each time they place an order.
“The reason why this is an important metric to measure and to report is because, while it will fluctuate over time — we'll have periods of seasonality, we’ll have periods of dips — if it's moving forward, if it's moving upward, you are creating a [healthier] brand. You're creating a much more sustainable business,” Murray says.
He adds that brands should look at historical trends and seasonal patterns around average weight to purchase and then set growth goals for this metric. Some methods for driving growth for AWOP include offering premium items or personalized products and leveraging media to optimize the shopper journey and drive consumers to the point of purchase. These actions would align with both the CSMART framework content and marketing pillars.
Average selling price — or the total amount of money a brand has sold divided by the total number of units it has sold through — is another long-time industry metric. This metric is so crucial that it’s the top data point Amazon uses to measure vendor performance on its platform.
“The simple logic is that as long as average selling price is increasing, and as long as your costs remain the same, you are making more money and you're creating a more profitable business,” Murray says.
Murray adds that your brand doesn’t have to sell everything at full price or on promotion to increase your ASP. Instead, you can work more collaboratively with retailers and consider creating items like higher-price-point bundles to sell online.
This approach works especially well if your brand tracks its ASP by retailer and can pinpoint where this metric is increasing, delivering an opportunity for mutual profitability.
You also can diversify your assortment and offer items, such as personalized products, for which customers are willing to pay a little more. Personalization company Your Surprise, for example, gives customers the option to personalize gifts across 10 different categories.
“There are lots of things you can do in digital commerce that you can't do in a normal physical store, but because [you] can offer that sort of flexibility for [your] customers, you can charge a premium for it and the customer will still be happy to pay it,” Murray says.
Customer lifetime value — which is how frequently a consumer purchases from your brand in relation to your costs to acquire that customer — is a critical metric that many digitally native brands focus on, Murray says.
But legacy CPG and FMCG brands need to prioritize this metric, too. Murray admits this metric has historically been difficult for brands to obtain, even with data from shopper loyalty programs, “but there are other measures that are available to manufacturers that can get you to a very close approximation,” he says.
Brands can take their average weight of purchase and frequency number, both of which are usually available from Kantar, and multiply the two together to get LTV over a defined period.
For example, if a customer spends $25 four times a year, but it costs you $200 to acquire them, then you’re losing money.
Murray says in this situation, a brand would need to look for ways to optimize its marketing costs or AWOP to drive more value from this particular customer.
LTV, ASP, and AWOP are all critical metrics that can help determine the robustness, or financial health, of your business. Murray says no matter where your organization starts, the most important thing is to begin tracking these metrics, setting targets for where you want to be, and identifying the levers you can pull to get there.
“You get to a point where, for the CSMART, for example, yes, there are lots of different measures in them. Some of them are leading. Some of them are lagging,” Murray says. “But all of them can work together if your organization chooses to work together to influence those measures.”
With so many ecommerce benchmark metrics to track and not enough time or resources to do it, brands need to take a less-is-more approach in this area.
"It's very easy to engage an organization around one metric, two, or three,” Murray says. “It's very difficult to get an organization engaged around five, 10, or 20 different measures."
Along with narrowing their focus, brands should regularly review their data. Murray says it’s best to review leading metrics and internal progress monthly at minimum with a cross-functional group of stakeholders. Organizations can then implement changes on a weekly or biweekly basis to drive up these metrics.
“That sounds like a lot of hard work for a lot of manufacturers, I do appreciate that … But if you want to create that step-change growth that most people expect from digital commerce but actually has started to slow down quite a lot recently, it's going to require that level of effort.” — Gregor Murray, Vice President of Strategy, Digital Commerce Global
Despite the work it will take, Murray is confident these efforts will yield significant rewards for brands over the long run.
“The thing that I really look forward to is, at some point in time, I'm going to go to a conference and a manufacturer is going to stand up and start talking to me about when they implemented their leading measure and how they've gone about doing it,” he says. “I'm going to sit there and know that it came through us to them. They've run with it, and now they're so proud of it that they're standing up and talking about it. That's success for me, and I really look forward to that day.”
To hear more of Murray’s insights on ecommerce benchmark metrics and the CSMART framework, listen to the full episode.