How to analyze sales data

How to Analyze Sales Data
How to Analyze Sales Data

Why do sales data analysis matters in eCommerce?

As a digital web store owner using Easy Digital Downloads, you can generate different types of sales data such as order data, vendor data, customer data, product data, revenue data, profit data, vendor data, geographic data, and any other important data you can get and make use of for your Easy Digital Downloads WordPress web stores.

Now, you may have several eCommerce data in you, taken and generated from your EDD stores, but what significance can it bring to you? What can you get out of it? How those numbers can actually help your business grow? Do you know how to efficiently use those data for effective decision making?

In most cases, these data are not properly understood and used for business growth. It’s even eye-soring to look at these numbers, especially when you do not have enough knowledge of what to do next. You probably don’t want to spend your days looking at trend-charts because all you want is revenue to come in. But how can we optimize our sales conversion this way?

In this article, we will teach you a very important strategy that you must do in order to effectively scale up and optimize your digital downloads web store just by using your generated sales data. We will help you start using the conclusions you’re making on your sales data and get the most out of your sales analytics.

Unlocking your true potential with eCommerce Sales Analytics

Sales Data Analysis in eCommerce provides businesses with a deeper understanding of customer habits and preferences. It shows everything that’s working and not working with your digital downloads web store. Without practicing sales analytics, it is like you’re driving with your eyes closed. That’s scarier than looking at a huge amount of numbers and ratios from your sales data.

In other words, if you analyze sales data, it can give you a conclusion as to how are your products are doing? Why is your sales trend going up or down for a specific time period? What does your customer in a specific location want? Why some of your vendors are not doing well? And many other questions that can give light to your business decision-making.

Most retailers want to know the right levers to push and pull to increase sales and customer satisfaction. eCommerce Sales Analytics will allow digital web stores to boost sales and conversions by running targeted campaigns to promote products among the different audience or customer segments that in turn, will eventually maximize their profits.

Also, upon analyzing their customer history and behavior, they can discover additional untapped sales potential that they can also work on and try. But most importantly, these sales analytics will help them to do better in everything – products, vendors, marketing campaigns and many other sales and business aspects.

Important Questions you might want to get answered

You may now wonder what in-depth analysis you must observe when using sales data in order to come up with a better decision that will help your business grow. To get you started, here we enumerated a few of the very important questions you might want to get answered in order to come up with better and effective economic decisions.

Single Vendor Stores

  • Which of your products sell best and why?
  • How did your Average Revenue Per User develop over time and why?
  • Which geographies show the highest revenue per user?
  • Which times of the year do your products sell best?
  • Why are conversion rates for some products better than others?

Multi-Vendor Stores

  • Which vendors show the best conversion from free to paid products?
  • Which of your vendors can bring you the most sales and profits?
  • Which products convert best from free to paid products?

Which of your products sell best and why?

If you want to optimize your sales conversion, keep revenue coming in and do better with your products and business as a whole, this is a very important question you have to get answered. Why? If you know which of your products sell best, there are a lot of implications you can learn and make use of to increase your sales revenue.

How to know which of your products sell best?

Upon analyzing specific sales data that you have gathered in your Easy Digital Downloads WordPress Webstore, you can try to come up with conclusions as to which of your products sell best. Here are the important observations you must conduct to answer this question:

a. Compare your product sales revenue over weeks, months or years. Watch how your sales trend goes by. This will show which of your products are selling consistently and which are slowly falling behind others.

(Example Illustration)

In this example, we can conclude that the Butterfly Garden Template and Animal Lover Template have both the lowest sales starting from January to June 2019 compared to all other templates for sale. Knowing this, we can now closely observe these two products and see what could be the reason for this conclusion.

b. Compare your conversion rates by product. You can do this in two ways:

  • Observe product conversion rate of visitors turning into customers. This could be done by dividing the number of visitors to the number of orders per product. In most cases, it’s not possible to have this data by product. You will just have to use the overall number of orders divided by the overall number of visitors. The number of visitors mostly comes from Google Analytics while the number of orders comes from the payment history of your EDD store.
(Example Illustration)

In this example, we can observe that three of our products get the highest conversion rate among other products. Those three products received a huge number of visitors and orders getting a higher conversion rate in the process.

  • Observe the conversion rate of products from Free to Paid Version.

(Example Illustration)

In this example, we can also observe that three of our products get the highest conversion rate among other products in terms of Free to Paid Downloads.

c. Another important metric to observe is the Average Revenue Per User (ARPU).  Compare your ARPU per product over weeks, months or years. You can calculate this by dividing your Total Revenue by the Number of Customers per product.

(Example Illustration)

In this example, we can see four products that have the highest ARPU calculated. This means that those customers are most likely to spend more on those products than your other products.

How did your Average Revenue Per User develop over time and why?

The acronym ARPU stands for Average Revenue Per User. This metric is used by businesses to measure the factors that are contributing to the organization’s overall revenue. It is also a great way for a business to continuously track their annual growth progress.

ARPU measures the amount of money that a company can expect to generate from an individual customer. It’s calculated by dividing the total revenue of the business by its total number of users.

Analyzing how your ARPU develops over time is also an important factor to observe as this can:

  • Help you know how much you make off your customers in comparison by products.
  • Know which products are profitable than others.
  • Decide whether to update/upgrade products with very low ARPU or just discontinue selling it.
  • If you are conducting competitor research, you can also use this metric since this is an easy, high-level way to compare how much one company makes off its users compared to another.
  • You can get a revenue forecast if in case you might need to make adjustments if you think your ARPU will change over time.

Now, in order to properly decide using your ARPU, you need to do the following observations.

a. Which of your customers show the highest ARPU earned? This is to know which specific customers you’re getting the highest ARPU. This can lead you to take further steps such as providing more discounts or incentives for these customers, learn their purchasing patterns and behavior, where are these customers are located, what product type do they like most and others.

(Example Illustration)

In this example, we have calculated the ARPU by customer. We can now conclude as to which of them are willing to spend more in your web store than others.

b. Which of your products show the highest ARPU earned? Knowing which products that give you this highest ARPU lets you learn and observe why and how these products are getting such high ARPU, and just like what we did before, apply the same to all of your products in order to increase sales revenue.

(Example Illustration)

In this example, we can see four products that have the highest ARPU calculated. This means that those customers are most likely to spend more on those products than your other products.

Now after doing those analyzations above, we can try to answer the question as to why average revenue per user develops over time. Possible answers that we can observe are:

  • There are changes in the product mix of your web store. 
  • There are changes in customer repurchase frequencies. 
  • Successfully attracted higher or cheaper products in your product portfolio.
  • Sold excellent product packages and bundles instead of single products.
  • Targeted better customer segments who are willing to spend more money in your web store.
  • Etc.

Since tracking your ARPU is a great way for digital web store owners to continuously track and observe annual growth progress, we must learn how to correctly do it so that we can come up with solutions and strategies needed to optimize our digital web stores more.

Which geographies show the highest revenue per user?

After establishing your digital product web store, you might actually conduct marketing campaigns to almost all parts of the world, just to reach every potential customer who might be interested to buy from your web store. But, as the months go by, marketing campaigns with very large coverage may no longer be needed, especially when paid advertisements and huge marketing budget is at stake. We now need to decide which specific locations we must prioritize in our marketing campaigns that we know will be effective in getting visitors that turn into customers.

Our goal now is to know which specific countries or states show the highest revenue per user that our web store is getting. How can we do that? We can apply below analyzation strategies to answer our question.

a. Filter your sales data by geography and compare the following metrics: 

  • Conversion Rates
  • Average order value
  • Reorder rate
  • Etc.

(Example Illustration)

In this example, we have calculated the conversion rate per country, by dividing the number of orders received to the total number of visitors attracted coming from each of those countries. Based on this analysis, the United States brings the highest conversion rate of visitors turning into customers.

(Example Illustration)

In this example, we have calculated the ARPU per country, by dividing the total number of revenues received to the total number of customers coming from each of those countries. Based on this analysis, the United States and Canada bring the highest ARPU.

b. If you are operating a Digital Product Marketplace, you should consider revenue after deducting vendor commissions for a better and accurate sales comparison. Deducting commissions clearly shows which of these countries bring you the highest profit among others.

(Example Illustration)

In this example, we have calculated the profit by deducting Vendor Commissions to the Total Earnings by each country. This example now shows that the United States still brings the most profits even after deducting your vendor commissions for those sales earned.

Now with all those analyzations above that, we have conducted using our sales data per geography, we can now conclude as to what countries our web store is earning the best revenues and profits. This is now the ideal time to decide and plan specific marketing campaigns and target those countries where our products are best purchased. In this case, we can increase our sales revenue by concentrating our marketing campaigns in certain regions where revenue and profits are actually coming, instead of spending the time and effort in regions which our products don’t sell well.

Another thing, if you have successfully generated product data by geography, we can also take a look and observe the following:

  • Which of your products best sell to which country?
  • Which products are sold to which states (e.g. relevant for the US)?

If you have enough data to analyze the two points above, it is then very important to specifically know which of your products best sell to which country or state. This may depend on what product type or category these products belong to. In conclusion, you can have a clearer understanding as to what kind of products are in demand for these people living in a certain country or state who had purchased from your web store, and therefore work your way towards developing similar products whom they might also like in the future. 

Which times of the year do your products sell best?

If you are running your digital product web store for quite long already, you may see and experience certain fluctuations in your sales throughout the whole year. Some months, you seem to do well, other months, you simply get no sales. This is also an important matter to put your attention to, that can surely affect and contribute to your business decision-making.

First of all, what should we do in order to answer our question above? You can conduct data gathering and analyzation by following the below points.

a. Compare your product sales revenue data per week.

(Example Illustration)

In this example, one conclusion we can get is that Week 4 shows the lowest sales for both Marketing and Finance Template and All About Business Template than from the rest of the weeks.

b. Compare your product sales revenue data per quarter.

(Example Illustration)

In this example, we can conclude that the 1st Quarter of 2019 brings you the most sales revenue among all other quarters, while the 4th Quarter of 2019 brings you the lowest sales revenue for the year.

c. Compare your product sales data analysis data per month.

(Example Illustration)

In this example, we can conclude that the Butterfly Garden Template and Animal Lover Template have both the lowest sales starting from January to June 2019 compared to all other templates for sale.

d. Conduct sales data analysis per year.

(Example Illustration)

In this example, we can conclude that the year 2015 brings you the most sales revenue, while the year of 2018 brings you the lowest sales revenue from 2015 to 2018.

Which vendors show the best conversion from free to paid products?

When running a digital product marketplace, your vendors may issue products with both free and paid versions. Free versions are products that have limited features and benefits compared to the Paid Versions. In this case, customers may first try the product’s free version. Later on, few or many of those customers will return and purchase the product’s paid version. Reasons may be:

  • The product itself is well developed and presented.
  • The free version successfully attracted the user in purchasing the paid version.
  • The paid version has excellent features that are very useful and helpful to the user.
  • Effective marketing campaigns have been made to this product.

Now, to answer our question of which of your vendors shows the best conversion rate from free to paid products, we need to generate sales data of each of your vendors and compare their free to paid version downloads and purchase and see which of them has the best conversion rate.

(Example Illustration)

In this example, we can observe that eFinancialModels gives the highest conversion rate from Free to Paid Product Downloads.

Which of your vendors can bring you the most sales?

This question is very important for all marketplace owners as this encompasses vendor management in operating a successful multi-vendor marketplace. As we know, the first step in managing our vendors is to observe and monitor their sales behavior. We need to know whether they do well in sales or not. Afterward, we can take the necessary actions to help them earn more. Remember, when our vendors earn, we also earn. Thus, vendor management is very essential in operating a digital product multi-vendor marketplaces towards an increase in sales revenue.

Now, to know which of your vendors can bring you the most sales and profits, we need to analyze their sales and profits data to come up with an effective decision for vendor management.

a. Compare your vendor sales revenues per month.

(Example Illustration)

In this example, we can conclude that with PS Plugins and Bizz Templates, the month of February brought the lowes sales revenue. But in contrast, the month of February brought the highest sales revenue for Hayes WPTemp.

b. Compare your vendor profits after deducting commissions.    

(Example Illustration)

In this example, we have calculated the profit by deducting Vendor Commissions to the Total Sales by each vendor. This example now shows that PS Plugins brings the most profits even after deducting your vendor commissions for all those sales earned.

After analyzing who of your vendors are bringing you the most sales and profits, you can then come up with a decision on how to better manage your vendors. Some strategies you can apply are:

  • Send out Mailchimp Education Series to your vendor once again containing tips and strategies on how to effectively market their products.
  • Check how your vendors present their products on your website. This may include product description, featured image, sufficient image galleries, and others.
  • Check if your vendors’ products are well developed, and if not, guide and give them tips on how to improve their products.
  • Etc.

Since vendor management is very important when operating a digital product marketplace, conducting the analyzations above is essential to come up with decisions on how to particularly manage your vendors and therefore help them earn more.

Which products convert best from free to paid products?

If you want to specifically observe your vendor’s product and see how it is going, you can look up which of your vendor’s products has the best conversion rate from free to paid version. This means the conversion of customers who get the free version and returned to purchase the paid version. We can answer our question by doing the following analysis:

(Example Illustration)

In this example, to get the conversion rate, we have divided the total number of free downloads to the total number of paid downloads per product. Now, we can observe that All About Business Templates converts the most from Free to Paid Product Downloads.

Why are conversion rates for some products better than others?

There are numerous reasons as to why some of your products are doing well than the rest. Once you have conducted the above analysis for your products, you can now directly observe those products as to why it sells better in comparison with all of your other products. Some of the possible reasons are:

  • The product description is well presented and explained.
  • An eye-catchy product image is used.
  • The product itself is very well developed and made.
  • Extensive marketing campaigns were done in the product.
  • You had paid more for that product advertisement than the others.
  • Etc.

Besides the overall presentation and development of your best selling products, you can also consider what product type or category your best selling product is in, then compare to your other products which do not sell well. In one of our examples above, products that have the best conversion rates fall under the product category of Business-related Templates. We can, therefore, put our focus on these categories and develop more products within the same category, which we know will probably sell the best.

So what we can do after learning these reasons? We can now use these observations and apply them to the rest of the products which do not sell very well. How? Check how your other products are presented on your website in comparison with your best seller products. You can follow the steps below:

  • Update product presentation (description and images)
  • Check marketing done with each product and see if you needed to apply more marketing campaigns to your other products as well.
  • Decide whether you still continue selling that specific product, or just discontinue.
  • Upgrade product itself for a reason that it might not be well-developed.

Just apply the above points for all your other products in comparison to your best selling products. This way, you are already optimizing your products and therefore get a higher sales revenue than before.

Another important thing, in order to successfully perform all of the above analysis for your digital product web stores, we have to make sure that we have all appropriate and necessary sales, product and vendor data. Without all of those data, we can not do analyzations in the first place which we know are very helpful in coming up with an effective business decision.

But how can we get all of those important data? We recommend you to try out the EDD Enhanced Sales Reports Plugin which has a Free Version available on WordPress.org. But, if you want to get an even extensive sales reporting with a lot more reporting features and customization, do not hesitate to try our EDD Enhanced Sales Report Pro Plugin. Kindly check the product page for the full plugin details.

Conclusion: Make the most out of your Sales Analytics

Being able to correctly and effectively analyze sales data can have a major impact on how you run your digital product marketplace. Through your sales analytics, you can gain valuable insight into your operations. Through key capabilities, like real-time updates and data visualization, you can make better-informed business decisions that will surely help your business grow.

In this article, how to analyze sales data, we have taught you an important strategy that you must do in order to effectively scale up and optimize your digital downloads web store – that is analyzing your generated sales data. Correctly analyze your sales, product and vendor data and definitely, you will get the most out of your sales analytics and observations. Apply the learnings you get from your sales analytics to all of your products, customers, and vendors, and work hard to get an increase in sales revenue and profit.

Take a look on other Easy Digital Downloads WordPress Plugins below:

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