Speak e-Commerce and enter: A glossary of key terms – Part 2

April 27, 2023
8 min read
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Welcome to our second installment of the series Speak eCommerce and Enter, a basic glossary of key eCommerce terms and acronyms that can make you go OMG WTF. We've put together this guide to help you understand the most important terms and definitions in eCommerce along with practical tips on how to apply them. This time, we’ll begin with the acronyms that define the primary models of eCommerce and then cover some key rates and metrics. Here we go.

B2B, B2C, and a variation thereof

In the world of eCommerce, there are two primary business models: B2B and B2C. The main differences between the models are the parties involved and the nature of the transactions.

B2B stands for business-to-business, meaning that a company sells goods or services to another company. This model typically involves larger orders, longer term contracts and longer sales cycles. Moreover,  B2B transactions often involve negotiated contracts and pricing, and require specialized knowledge or expertise.

B2C, on the other hand, stands for business-to-consumer and, as the name reveals, involves selling products or services directly to individual consumers. B2C transactions tend to be smaller in scale but much more frequent, and generally, more impulse-driven and more demanding in terms of UX, which is increasingly important in B2B eCommerce anyway, because B2B users are individuals too. 

There’s a third model. B2B2C stands for “business-to-business-to-consumer”. This combines both B2B and B2C processes and strategies, offering companies more flexibility to expand and access new markets, and offering consumers more choice and convenience. An intermediary business facilitates the sale of products or services between the B2B business and individual consumers, like a relay race of sorts, one company passing the baton to another that takes it to the consumer, at the finish line.

Each of these eCommerce models has its own characteristics, requirements and potentials, but they all imply some common challenges. For example, the need to establish a strong online presence to attract and retain customers, build trust and credibility, and differentiate themselves from competitors. Regardless of the model, users are increasingly expecting  seamless and efficient buying process, including easy navigation, clear product descriptions, and multiple payment and delivery options. Irrespective of the acronym, staying up-to-date with trends and behaviors is essential for businesses to remain relevant and competitive in the dynamic world of eCommerce. 

Rates, rates rates.

Rates play an important role in understanding customer engagement and improving eCommerce success. In our first installment, we discussed Conversion Rates, one of several important metrics in eCommerce and email marketing. Today, we’ll focus on a few other commonly used metrics to track email and eCommerce performance. Read on to find out what they mean.

Accepted Rate and Inbox Placement Rate

OK. The email metric roller coaster ride begins here. Accepted rate is the percentage of emails sent that are successfully delivered, or, in other words, accepted by the recipient's email server. This metric is important to ensure emails are actually getting to their intended destination, and the first step to be able to do something about it if they’re not. 

A high accepted rate is a good indication of list quality. It means your emails are getting through, and your subscribers will have a chance to see your message, click through to your website, and hopefully make a purchase. If it’s low, however, your email might end up in the spam folder or bounced back altogether and you'll miss out on potential sales. Keeping regularly cleaned email lists, following content best practices and making sure subscribers have opted-in to receive content are three simple ways to improve a poor Accepted Rate.

But Accepted Rate does not effectively measure whether emails actually made it to the inbox, the destination that matters. It tells you they get in, but not where they land. There’s another metric to help with that: Inbox placement rate.

This is the percentage of emails that make it past the spam, promotions or other folders, and successfully land in the primary inbox, making it more likely for recipients to see them and engage with the content, resulting in higher open rates, click-through rates (we’ll cover those in a minute), and conversions. It is calculated by dividing the number of emails that successfully land in the primary inbox by the total number of emails that were delivered (not just sent).

Bounce Rate 

What happens to the emails that do not get delivered? They get returned, or “bounce” back. Guess what? There’s a rate for that too.

If we’re talking about emails, bounce rate is the percentage of emails sent that are returned or “bounce” back due to invalid addresses or other technical issues like server errors. It’s an important metric to track because it helps identify issues with the accuracy of the email list.

But Bounce Rate also refers to the percentage of visitors to a site that leave without taking any further action (such as clicking to view another page). It is calculated by dividing the total amount of one-page visits with the total amount of overall visits to the webpage or website during a certain time-frame. It doesn’t necessarily mean people didn’t read or look at your page, just that they only read or looked at that first page and then “bounced back”. Perhaps they found what they wanted (like checking a term on our Speak e-Commerce and Enter series, for example) or that they wanted to go back to the search results page to be more specific. Or it could mean the site needs improvement, such as mobile optimization, faster loading times, or better content. Here's more on Bounce Rate from our partners at BigCommerce.

Open rate

OK, so let’s go back to our email journey, assuming it didn’t bounce. Accepted. Check. Made it to the Inbox. Check. Next: Open. Open rate is a metric that measures how many people looked at your email. It's the percentage of emails sent that are actually opened. This means they saw your name and subject line and were interested enough to read more. Say you send out a marketing email to 100 people and 30 people open it. Your open rate is 30%. (That’s actually on the high end of the average range, so well done you). 

A high open rate is good because it means the email caught people's attention, but open rate alone doesn't tell the whole story. It could be misleading, especially if not tracked over time. It is necessary to look at other metrics, like click-through rate and conversion rate, to get a better sense of how well an email campaign is performing. If you're not happy with your open rate, there are plenty of things you can do to improve it, such as A/B testing different subject lines or tweaking the timing. 

Oh, yes, A/B testing. Let’s go over that one too.

A/B testing

We’ll be taking our marketing strategy in the science lab today. A/B testing, also known as split testing, is an important part of any eCommerce strategy. It is crucial for optimizing product pages, checkout processes, and other elements of the customer journey. 

A/B tests are experiments that compare two different versions of a webpage, product page, or email campaign in order to measure which one performs better. The goal is to identify the changes that will result in higher conversion rates and maximize sales for businesses.

K, back to the rates, and to the emails. Signed, sealed, delivered, and opened. What’s next? The clicks.

CTR (Click-Through Rate) and CTOR (Click to Open Rate)

Click-through rate tells you how many people clicked on a link in your email out of the total number of people who received it. It’s calculated by dividing the number of unique clicks by the number of emails delivered, then multiplying by 100. 

Measuring CTR is crucial. Fishing analogy coming in. You cast your email, page or ad out into the sea. A low CTR means you've cast your line out, but nobody's biting. Time to re-think your email design, copywriting, or call-to-action. In other words try a different lure, cast your line in a different spot, or change the bait. A high CTR means you've reeled the fish in and now they’re taking a look at what you have to offer, because we’re talking about people, not fish. Anyway.

There’s another metric that provides better insight into user intent and engagement: CTOR, or Click to Open Rate. It’s similar to CTR, but with a twist. 

Whereas CTR measures clicks as a percentage of emails delivered, CTOR measures the number of people who clicked through on a link or CTA out of the total number of emails opened. It is calculated by dividing the number of unique clicks by the number of unique opens, and multiplying the result by 100. 

They are both quite useful because they help diagnose, and potentially fix different issues.

A low CTR could mean you are sending emails to the wrong people, or that subject lines and pre-headers need improvement, whereas a low CTOR, however, could mean you need to work on making emails more engaging, by improving the email design and layout and refining your copy and CTAs.

Now, with an analogy (perhaps also loosely related to fishing)

Imagine you're part of a fundraising event with various stands set up to promote different causes. Bounce rate represents the number of people who didn’t get the invitation or for some reason, never made it past the bouncer at the entrance, whereas Accept rate is the number of people who received your invitation and actually attended the event, though they may or may not have visited your stand specifically. Inbox placement rate, on the other hand, is the people who did make it to your stand, and Open rate is the people who walked up to your stand and looked at what you have to offer. Finally, CTR and CTOR are people who engaged with your stand. Perhaps they took a brochure, asked for information, or even made a purchase or donation. In other words, they clicked.

Stay tuned

Stay tuned for our next installment in our Speak eCommerce and Enter glossary series, with more definitions and examples of key eCommerce terms to improve your online presence and feel more confident about those confusing acronyms. Oh, and contact us if you have any questions or comments. We like ideas. They make us click.

Tagged: ecommerce · glossary

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