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• Privacy-enhancing technologies : Balancing data utility and security

  18 juillet, par Joe

  In the third quarter of 2024, data breaches exposed 422.61 million records, affecting millions of people around the world. This highlights the need for organisations to prioritise user privacy. 

  Privacy-enhancing technologies can help achieve this by protecting sensitive information and enabling safe data sharing. 

  This post explores privacy-enhancing technologies, including their types, benefits, and how our website analytics platform, Matomo, supports them by providing privacy-focused features.

  What are privacy-enhancing technologies ? 

  Privacy Enhancing Technologies (PETs) are tools that protect personal data while allowing organisations to process information responsibly. 

  In industries like healthcare, finance and marketing, businesses often need detailed analytics to improve operations and target audiences effectively. However, collecting and processing personal data can lead to privacy concerns, regulatory challenges, and reputational risks.

  PETs minimise the collection of sensitive information, enhance security and allow users to control how companies use their data. 

  Global privacy laws like the following are making PETs essential for compliance :

  • General Data Protection Regulation (GDPR) in the European Union
  • California Consumer Privacy Act (CCPA) in California
  • Personal Information Protection and Electronic Documents Act (PIPEDA) in Canada
  • Lei Geral de Proteção de Dados (LGPD) in Brazil

  Non-compliance can lead to severe penalties, including hefty fines and reputational damage. For example, under GDPR, organisations may face fines of up to €20 million or 4% of their global annual revenue for serious violations. 

  Types of PETs 

  What are the different types of technologies available for privacy protection ? Let’s take a look at some of them. 

  Homomorphic encryption

  Homomorphic encryption is a cryptographic technique in which users can perform calculations on cipher text without decrypting it first. When the results are decrypted, they match those of the same calculation on plain text. 

  This technique keeps data safe during processing, and users can analyse data without exposing private or personal data. It is most useful in financial services, where analysts need to protect sensitive customer data and secure transactions. 

  Despite these advantages, homomorphic encryption can be complex to compute and take longer than other traditional methods. 

  Secure Multi-Party Computation (SMPC)

  SMPC enables joint computations on private data without revealing the raw data. 

  In 2021, the European Data Protection Board (EDPB) issued technical guidance supporting SMPC as a technology that protects privacy requirements. This highlights the importance of SMPC in healthcare and cybersecurity, where data sharing is necessary but sensitive information must be kept safe. 

  For example, several hospitals can collaborate on research without sharing patient records. They use SMPC to analyse combined data while keeping individual records confidential. 

  Synthetic data

  Synthetic data is artificially generated to mimic real datasets without revealing actual information. It is useful for training models without compromising privacy. 

  Imagine a hospital wants to train an AI model to predict patient outcomes based on medical records. Sharing real patient data, however, poses privacy challenges, so that can be changed with synthetic data. 

  Synthetic data may fail to capture subtle nuances or anomalies in real-world datasets, leading to inaccuracies in AI model predictions.

  Pseudonymisation

  Pseudonymisation replaces personal details with fake names or codes, making it hard to determine who the information belongs to. This helps keep people’s personal information safe. Even if someone gets hold of the data, it’s not easy to connect it back to real individuals. 

  

  Pseudonymisation works differently from synthetic data, though both help protect individual privacy. 

  When we pseudonymise, we take factual information and replace the bits that could identify someone with made-up labels. Synthetic data takes an entirely different approach. It creates new, artificial information that looks and behaves like real data but doesn’t contain any details about real people.

  Differential privacy

  Differential privacy adds random noise to datasets. This noise helps protect individual entries while still allowing for overall analysis of the data. 

  It’s useful in statistical studies where trends need to be understood without accessing personal details.

  For example, imagine a survey about how many hours people watch TV each week. 

  Differential privacy would add random variation to each person’s answer, so users couldn’t tell exactly how long John or Jane watched TV. 

  However, they could still see the average number of hours everyone in the group watched, which helps researchers understand viewing habits without invading anyone’s privacy.

  Zero-Knowledge Proofs (ZKP)

  Zero-knowledge proofs help verify the truth without exposing sensitive details. This cryptographic approach lets someone prove they know something or meet certain conditions without revealing the actual information behind that proof.

  Take ZCash as a real-world example. While Bitcoin publicly displays every financial transaction detail, ZCash offers privacy through specialised proofs called Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge (zk-SNARKs). These mathematical proofs confirm that a transaction follows all the rules without broadcasting who sent money, who received it, or how much changed hands.

  The technology comes with trade-offs, though. 

  Creating and checking these proofs demands substantial computing power, which slows down transactions and drives up costs. Implementing these systems requires deep expertise in advanced cryptography, which keeps many organisations from adopting them despite their benefits.

  Trusted Execution Environment (TEE)

  TEEs create special protected zones inside computer processors where sensitive code runs safely. These secure areas process valuable data while keeping it away from anyone who shouldn’t see it.

  TEEs are widely used in high-security applications, such as mobile payments, digital rights management (DRM), and cloud computing.

  Consider how companies use TEEs in the cloud : A business can run encrypted datasets within a protected area on Microsoft Azure or AWS Nitro Enclaves. Due to this setup, even the cloud provider can’t access the private data or see how the business uses it. 

  TEEs do face limitations. Their isolated design makes them struggle with large or spread-out computing tasks, so they don’t work well for complex calculations across multiple systems.

  Different TEE implementations often lack standardisation, so there can be compatibility issues and dependence on specific vendors. If the vendor stops the product or someone discovers a security flaw, switching to a new solution often proves expensive and complicated.

  Obfuscation (Data masking)

  Data masking involves replacing or obscuring sensitive data to prevent unauthorised access. 

  It replaces sensitive data with fictitious but realistic values. For example, a customer’s credit card number might be masked as “1234-XXXX-XXXX-5678.” 

  The original data is permanently altered or hidden, and the masked data can’t be reversed to reveal the original values.

  Federated learning

  Federated learning is a machine learning approach that trains algorithms across multiple devices without centralising the data. This method allows organisations to leverage insights from distributed data sources while maintaining user privacy.

  For example, NVIDIA’s Clara platform uses federated learning to train AI models for medical imaging (e.g., detecting tumours in MRI scans). 

  Hospitals worldwide contribute model updates from their local datasets to build a global model without sharing patient scans. This approach may be used to classify stroke types and improve cancer diagnosis accuracy.

  Now that we have explored the various types of PETs, it’s essential to understand the principles that guide their development and use. 

  Key principles of PET (+ How to enable them with Matomo) 

  PETs are based on several core principles that aim to balance data utility with privacy protection. These principles include :

  Data minimisation

  Data minimisation is a core PET principle focusing on collecting and retaining only essential data.

  Matomo, an open-source web analytics platform, helps organisations to gather insights about their website traffic and user behaviour while prioritising privacy and data protection. 

  Recognising the importance of data minimisation, Matomo offers several features that actively support this principle :

  • Cookieless tracking : Eliminates reliance on cookies, reducing unnecessary data collection.
  • IP anonymisation : Automatically anonymises IP addresses, preventing identification of individual users.

  

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  • Custom data retention policies : Allows organisations to define how long user data is stored before automatic deletion.

  7Assets, a fintech company, was using Google Analytics and Plausible as their web analytics tools. 

  However, with Google Analytics, they faced a problem of unnecessary data tracking, which created legal work overhead. Plausible didn’t have the features for the kind of analysis they wanted. 

  They switched to Matomo to enjoy the balance of privacy yet detailed analytics. With Matomo, they had full control over their data collection while also aligning with privacy and compliance requirements.

  Transparency and User Control

  Transparency and user control are important for trust and compliance. 

  Matomo enables these principles through :

  • Consent management : Offers integration with Consent Mangers (CMPs), like Cookiebot and Osano, for collecting and managing user consent.
  • Respect for DoNotTrack settings : Honours browser-based privacy preferences by default, empowering users with control over their data.

  

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  • Opt-out mechanisms : These include iframe features that allow visitors to opt out of tracking. 

  Security and Confidentiality

  Security and confidentiality protect sensitive data against inappropriate access. 

  Matomo achieves this through :

  • On-premise hosting : Gives organisations the ability to host analytics data on-site for complete data control.
  • Data security : Protects stored information through access controls, audit logs, two-factor authentication and SSL encryption.
  • Open source code : Enables community reviews for better security and transparency.

  Purpose Limitation

  Purpose limitation means organisations use data solely for the intended purpose and don’t share or sell it to third parties. 

  Matomo adheres to this principle by using first-party cookies by default, so there’s no third-party involvement. Matomo offers 100% data ownership, meaning all the data organisations get from our web analytics is of the organisation, and we don’t sell it to any external parties. 

  Compliance with Privacy Regulations

  Matomo aligns with global privacy laws such as GDPR, CCPA, HIPAA, LGPD and PECR. Its compliance features include :

  • Configurable data protection : Matomo can be configured to avoid tracking personally identifiable information (PII).
  • Data subject request tools : These provide mechanisms for handling requests like data deletion or access in accordance with legal frameworks.
  • GDPR manager : Matomo provides a GDPR Manager that helps businesses manage compliance by offering features like visitor log deletion and audit trails to support accountability.

  

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  Mandarine Academy is a French-based e-learning company. It found that complying with GDPR regulations was difficult with Google Analytics and thought GA4 was hard to use. Therefore, it was searching for a web analytics solution that could help it get detailed feedback on its site’s strengths and friction points while respecting privacy and GDPR compliance. With Matomo, it checked all the boxes.

  Data collaboration : A key use case of PETs

  One specific area where PETs are quite useful is data collaboration. Data collaboration is important for organisations for research and innovation. However, data privacy is at stake. 

  This is where tools like data clean rooms and walled gardens play a significant role. These use one or more types of PETs (they aren’t PETs themselves) to allow for secure data analysis. 

  Walled gardens restrict data access but allow analysis within their platforms. Data clean rooms provide a secure space for data analysis without sharing raw data, often using PETs like encryption. 

  Tackling privacy issues with PETs 

  Amidst data breaches and privacy concerns, organisations must find ways to protect sensitive information while still getting useful insights from their data. Using PETs is a key step in solving these problems as they help protect data and build customer trust. 

  Tools like Matomo help organisations comply with privacy laws while keeping data secure. They also allow individuals to have more control over their personal information, which is why 1 million websites use Matomo.

  In addition to all the nice features, switching to Matomo is easy :

  “We just followed the help guides, and the setup was simple,” said Rob Jones. “When we needed help improving our reporting, the support team responded quickly and solved everything in one step.” 

  To experience Matomo, sign up for our 21-day free trial, no credit card details needed. 

• How to Choose the Optimal Multi-Touch Attribution Model for Your Organisation

  13 mars 2023, par Erin — Analytics Tips

  If you struggle to connect the dots on your customer journeys, you are researching the correct solution. 

  Multi-channel attribution models allow you to better understand the users’ paths to conversion and identify key channels and marketing assets that assist them.

  That said, each attribution model has inherent limitations, which make the selection process even harder.

  This guide explains how to choose the optimal multi-touch attribution model. We cover the pros and cons of popular attribution models, main evaluation criteria and how-to instructions for model implementation. 

  Pros and Cons of Different Attribution Models 

  

  First Interaction 

  First Interaction attribution model (also known as first touch) assigns full credit to the conversion to the first channel, which brought in a lead. However, it doesn’t report other interactions the visitor had before converting.

  Marketers, who are primarily focused on demand generation and user acquisition, find the first touch attribution model useful to evaluate and optimise top-of-the-funnel (ToFU). 

  Pros 

  • Reflects the start of the customer journey
  • Shows channels that bring in the best-qualified leads 
  • Helps track brand awareness campaigns

  Cons 

  • Ignores the impact of later interactions at the middle and bottom of the funnel 
  • Doesn’t provide a full picture of users’ decision-making process 

  Last Interaction 

  Last Interaction attribution model (also known as last touch) shifts the entire credit allocation to the last channel before conversion. But it doesn’t account for the contribution of all other channels. 

  If your focus is conversion optimization, the last-touch model helps you determine which channels, assets or campaigns seal the deal for the prospect. 

  Pros 

  • Reports bottom-of-the-funnel events
  • Requires minimal data and configurations 
  • Helps estimate cost-per-lead or cost-per-acquisition

  Cons 

  • No visibility into assisted conversions and prior visitor interactions 
  • Overemphasise the importance of the last channel (which can often be direct traffic) 

  Last Non-Direct Interaction 

  Last Non-Direct attribution excludes direct traffic from the calculation and assigns the full conversion credit to the preceding channel. For example, a paid ad will receive 100% of credit for conversion if a visitor goes directly to your website to buy a product. 

  Last Non-Direct attribution provides greater clarity into the bottom-of-the-funnel (BoFU). events. Yet, it still under-reports the role other channels played in conversion. 

  Pros 

  • Improved channel visibility, compared to Last-Touch 
  • Avoids over-valuing direct visits
  • Reports on lead-generation efforts

  Cons 

  • Doesn’t work for account-based marketing (ABM) 
  • Devalues the quality over quantity of leads 

  Linear Model

  Linear attribution model assigns equal credit for a conversion to all tracked touchpoints, regardless of their impact on the visitor’s decision to convert.

  It helps you understand the full conversion path. But this model doesn’t distinguish between the importance of lead generation activities versus nurturing touches.

  Pros 

  • Focuses on all touch points associated with a conversion 
  • Reflects more steps in the customer journey 
  • Helps analyse longer sales cycles

  Cons 

  • Doesn’t accurately reflect the varying roles of each touchpoint 
  • Can dilute the credit if too many touchpoints are involved 

  Time Decay Model 

  Time decay models assumes that the closer a touchpoint is to the conversion, the greater its influence. Pre-conversion touchpoints get the highest credit, while the first ones are ranked lower (5%-5%-10%-15%-25%-30%).

  This model better reflects real-life customer journeys. However, it devalues the impact of brand awareness and demand-generation campaigns. 

  Pros 

  • Helps track longer sales cycles and reports on each touchpoint involved 
  • Allows customising the half-life of decay to improve reporting 
  • Promotes conversion optimization at BoFu stages

  Cons 

  • Can prompt marketers to curtail ToFU spending, which would translate to fewer qualified leads at lower stages
  • Doesn’t reflect highly-influential events at earlier stages (e.g., a product demo request or free account registration, which didn’t immediately lead to conversion)

  Position-Based Model 

  Position-Based attribution model (also known as the U-shaped model) allocates the biggest credit to the first and the last interaction (40% each). Then distributes the remaining 20% across other touches. 

  For many marketers, that’s the preferred multi-touch attribution model as it allows optimising both ToFU and BoFU channels. 

  Pros 

  • Helps establish the main channels for lead generation and conversion
  • Adds extra layers of visibility, compared to first- and last-touch attribution models 
  • Promotes budget allocation toward the most strategic touchpoints

  Cons 

  • Diminishes the importance of lead nurturing activities as more credit gets assigned to demand-gen and conversion-generation channels
  • Limited flexibility since it always assigns a fixed amount of credit to the first and last touchpoints, and the remaining credit is divided evenly among the other touchpoints

  How to Choose the Right Multi-Touch Attribution Model For Your Business 

  If you’re deciding which attribution model is best for your business, prepare for a heated discussion. Each one has its trade-offs as it emphasises or devalues the role of different channels and marketing activities.

  To reach a consensus, the best strategy is to evaluate each model against three criteria : Your marketing objectives, sales cycle length and data availability. 

  Marketing Objectives 

  Businesses generate revenue in many ways : Through direct sales, subscriptions, referral fees, licensing agreements, one-off or retainer services. Or any combination of these activities. 

  In each case, your marketing strategy will look different. For example, SaaS and direct-to-consumer (DTC) eCommerce brands have to maximise both demand generation and conversion rates. In contrast, a B2B cybersecurity consulting firm is more interested in attracting qualified leads (as opposed to any type of traffic) and progressively nurturing them towards a big-ticket purchase. 

  When selecting a multi-touch attribution model, prioritise your objectives first. Create a simple scoreboard, where your team ranks various channels and campaign types you rely on to close sales. 

  Alternatively, you can survey your customers to learn how they first heard about your company and what eventually triggered their conversion. Having data from both sides can help you cross-validate your assumptions and eliminate some biases. 

  Then consider which model would best reflect the role and importance of different channels in your sales cycle. Speaking of which….

  Sales Cycle Length 

  As shoppers, we spend less time deciding on a new toothpaste brand versus contemplating a new IT system purchase. Factors like industry, business model (B2C, DTC, B2B, B2BC), and deal size determine the average cycle length in your industry. 

  Statistically, low-ticket B2C sales can happen within just several interactions. The average B2B decision-making process can have over 15 steps, spread over several months. 

  That’s why not all multi-touch attribution models work equally well for each business. Time-decay suits better B2B companies, while B2C usually go for position-based or linear attribution. 

  Data Availability 

  Businesses struggle with multi-touch attribution model implementation due to incomplete analytics data. 

  Our web analytics tool captures more data than Google Analytics. That’s because we rely on a privacy-focused tracking mechanism, which allows you to collect analytics without showing a cookie consent banner in markets outside of Germany and the UK. 

  Cookie consent banners are mandatory with Google Analytics. Yet, almost 40% of global consumers reject it. This results in gaps in your analytics and subsequent inconsistencies in multi-touch attribution reports. With Matomo, you can compliantly collect more data for accurate reporting. 

  Some companies also struggle to connect collected insights to individual shoppers. With Matomo, you can cross-attribute users across browning sessions, using our visitors’ tracking feature. 

  When you already know a user’s identifier (e.g., full name or email address), you can track their on-site behaviours over time to better understand how they interact with your content and complete their purchases. Quick disclaimer, though, visitors’ tracking may not be considered compliant with certain data privacy laws. Please consult with a local authority if you have doubts. 

  How to Implement Multi-Touch Attribution

  Multi-touch attribution modelling implementation is like a “seek and find” game. You have to identify all significant touchpoints in your customers’ journeys. And sometimes also brainstorm new ways to uncover the missing parts. Then figure out the best way to track users’ actions at those stages (aka do conversion and events tracking). 

  Here’s a step-by-step walkthrough to help you get started. 

  Select a Multi-Touch Attribution Tool 

  The global marketing attribution software is worth $3.1 billion. Meaning there are plenty of tools, differing in terms of accuracy, sophistication and price.

  To make the right call prioritise five factors :

  • Available models : Look for a solution that offers multiple options and allows you to experiment with different modelling techniques or develop custom models. 
  • Implementation complexity : Some providers offer advanced data modelling tools for creating custom multi-touch attribution models, but offer few out-of-the-box modelling options. 
  • Accuracy : Check if the shortlisted tool collects the type of data you need. Prioritise providers who are less dependent on third-party cookies and allow you to identify repeat users. 
  • Your marketing stack : Some marketing attribution tools come with useful add-ons such as tag manager, heatmaps, form analytics, user session recordings and A/B testing tools. This means you can collect more data for multi-channel modelling with them instead of investing in extra software. 
  • Compliance : Ensure that the selected multi-attribution analytics software wouldn’t put you at risk of GDPR non-compliance when it comes to user privacy and consent to tracking/analysis. 

  Finally, evaluate the adoption costs. Free multi-channel analytics tools come with data quality and consistency trade-offs. Premium attribution tools may have “hidden” licensing costs and bill you for extra data integrations. 

  Look for a tool that offers a good price-to-value ratio (i.e., one that offers extra perks for a transparent price). 

  Set Up Proper Data Collection 

  Multi-touch attribution requires ample user data. To collect the right type of insights you need to set up : 

  • Website analytics : Ensure that you have all tracking codes installed (and working correctly !) to capture pageviews, on-site actions, referral sources and other data points around what users do on page. 
  • Tags : Add tracking parameters to monitor different referral channels (e.g., “facebook”), campaign types (e.g., ”final-sale”), and creative assets (e.g., “banner-1”). Tags help you get a clearer picture of different touchpoints. 
  • Integrations : To better identify on-site users and track their actions, you can also populate your attribution tool with data from your other tools – CRM system, A/B testing app, etc. 

  Finally, think about the ideal lookback window — a bounded time frame you’ll use to calculate conversions. For example, Matomo has a default windows of 7, 30 or 90 days. But you can configure a custom period to better reflect your average sales cycle. For instance, if you’re selling makeup, a shorter window could yield better results. But if you’re selling CRM software for the manufacturing industry, consider extending it.

  Configure Goals and Events 

  Goals indicate your main marketing objectives — more traffic, conversions and sales. In web analytics tools, you can measure these by tracking specific user behaviours. 

  For example : If your goal is lead generation, you can track :

  • Newsletter sign ups 
  • Product demo requests 
  • Gated content downloads 
  • Free trial account registration 
  • Contact form submission 
  • On-site call bookings 

  In each case, you can set up a unique tag to monitor these types of requests. Then analyse conversion rates — the percentage of users who have successfully completed the action. 

  To collect sufficient data for multi-channel attribution modelling, set up Goal Tracking for different types of touchpoints (MoFU & BoFU) and asset types (contact forms, downloadable assets, etc). 

  Your next task is to figure out how users interact with different on-site assets. That’s when Event Tracking comes in handy. 

  Event Tracking reports notify you about specific actions users take on your website. With Matomo Event Tracking, you can monitor where people click on your website, on which pages they click newsletter subscription links, or when they try to interact with static content elements (e.g., a non-clickable banner). 

  Using in-depth user behavioural reports, you can better understand which assets play a key role in the average customer journey. Using this data, you can localise “leaks” in your sales funnel and fix them to increase conversion rates.

  Test and Validated the Selected Model 

  A common challenge of multi-channel attribution modelling is determining the correct correlation and causality between exposure to touchpoints and purchases. 

  For example, a user who bought a discounted product from a Facebook ad would act differently than someone who purchased a full-priced product via a newsletter link. Their rate of pre- and post-sales exposure will also differ a lot — and your attribution model may not always accurately capture that. 

  That’s why you have to continuously test and tweak the selected model type. The best approach for that is lift analysis. 

  Lift analysis means comparing how your key metrics (e.g., revenue or conversion rates) change among users who were exposed to a certain campaign versus a control group. 

  In the case of multi-touch attribution modelling, you have to monitor how your metrics change after you’ve acted on the model recommendations (e.g., invested more in a well-performing referral channel or tried a new brand awareness Twitter ad). Compare the before and after ROI. If you see a positive dynamic, your model works great. 

  The downside of this approach is that you have to invest a lot upfront. But if your goal is to create a trustworthy attribution model, the best way to validate is to act on its suggestions and then test them against past results. 

  Conclusion

  A multi-touch attribution model helps you measure the impact of different channels, campaign types, and marketing assets on metrics that matter — conversion rate, sales volumes and ROI. 

  Using this data, you can invest budgets into the best-performing channels and confidently experiment with new campaign types. 

  As a Matomo user, you also get to do so without breaching customers’ privacy or compromising on analytics accuracy.

  Start using accurate multi-channel attribution in Matomo. Get your free 21-day trial now. No credit card required.

• 7 Ecommerce Metrics to Track and Improve in 2024

  12 avril 2024, par Erin

  You can invest hours into market research, create the best ads you’ve ever seen and fine-tune your budgets. But the only way to really know if your digital marketing campaigns move the needle is to track ecommerce metrics.

  It’s time to put your hopes and gut feelings aside and focus on the data. Ecommerce metrics are key performance indicators that can tell you a lot about the performance of a single campaign, a traffic source or your entire marketing efforts. 

  That’s why it’s essential to understand what ecommerce metrics are, key metrics to track and how to improve them. 

  Ready to do all of the above ? Then, let’s get started.

  What are ecommerce metrics ? 

  An ecommerce metric is any metric that helps you understand the effectiveness of your digital marketing efforts and the extent to which users are taking a desired action. Most ecommerce metrics focus on conversions, which could be anything from making a purchase to subscribing to your email list.

  You need to track ecommerce metrics to understand how well your marketing efforts are working. They are essential to helping you run a cost-effective marketing campaign that delivers a return on investment. 

  For example, tracking ecommerce metrics will help you identify whether your digital marketing campaigns are generating a return on investment or whether they are actually losing money. They also help you identify your most effective campaigns and traffic sources. 

  Ecommerce metrics also help you spot opportunities for improvement both in terms of your marketing campaigns and your site’s UX. 

  For instance, you can use ecommerce metrics to track the impact on revenue of A/B tests on your marketing campaigns. Or you can use them to understand how users interact with your website and what, if anything, you can do to make it more engaging.

  What’s the difference between conversion rate and conversion value ?

  The difference between a conversion rate and a conversion value is that the former is a percentage while the latter is a monetary value. 

  There can be confusion between the terms conversion rate and conversion value. Since conversions are core metrics in ecommerce, it’s worth taking a minute to clarify. 

  Conversion rates measure the percentage of people who take a desired action on your website compared to the total number of visitors. If you have 100 visitors and one of them converts, then your conversion rate is 1%. 

  Here’s the formula for calculating your conversion rate :

  Conversion Rate (%) = (Number of conversions / Total number of visitors) × 100

  

  Using the example above :

  Conversion Rate = (1 / 100) × 100 = 1%

  Conversion value is a monetary amount you assign to each conversion. In some cases, this is the price of the product a user purchases. In other conversion events, such as signing up for a free trial, you may wish to assign a hypothetical conversion value. 

  To calculate a hypothetical conversion value, let’s consider that you have estimated the average revenue generated from a paying customer is $300. If the conversion rate from free trial to paying customer is 20%, then the hypothetical conversion value for each free trial signup would be $300 multiplied by 20%, which equals $60. This takes into account the number of free trial users who eventually become paying customers.

  So the formula for hypothetical conversion value looks like this :

  

  Hypothetical conversion value = (Average revenue per paying customer) × (Conversion rate)

  Using the values from our example :

  Hypothetical conversion value = $300 × 20% = $60

  The most important ecommerce metrics and how to track them

  There are dozens of ecommerce metrics you could track, but here are seven of the most important. 

  Conversion rate

  Conversion rate is the percentage of visitors who take a desired action. It is arguably one of the most important ecommerce metrics and a great top-level indicator of the success of your marketing efforts. 

  You can measure the conversion rate of anything, including newsletter signups, ebook downloads, and product purchases, using the following formula :

  

  Conversion rate = (Number of people who took action / Total number of visitors) × 100

  You usually won’t have to manually calculate your conversion rate, though. Almost every web analytics or ad platform will track the conversion rate automatically.

  Matomo, for instance, automatically tracks any conversion you set in the Goals report.

  

  As you can see in the screenshot, your site’s conversions are plotted over a period of time and the conversion rate is tracked below the graph. You can change the time period to see how your conversion rate fluctuates.

  If you want to go even further, track your new visitor conversion rate to see how engaging your site is to first-time visitors. 

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  Cost per acquisition

  Cost per acquisition (CPA) is the average cost of acquiring a new user. You can calculate your overall CPA or you can break CPA down by email campaign, traffic source, or any other criteria. 

  Calculate CPA by dividing your total marketing cost by the number of new users you acquire.

  

  CPA = Total marketing cost​ / Number of new users acquired 

  So if your Google Ads campaign costs €1,000 and you acquire 100 new users, your CPA is €10 (1000/100=10).

  It’s important to note that CPA is not the same as customer acquisition cost. Customer acquisition cost considers the number of paying customers. CPA looks at the number of users taking a certain action, like subscribing to a newsletter, making a purchase, or signing up for a free trial.

  Cost per acquisition is a direct measure of your marketing efforts’ effectiveness, especially when comparing CPA to average customer spend and return on ad spend. 

  If your CPA is higher than the average customer spend, your marketing campaign is profitable. If not, then you can look at ways to either increase customer spend or decrease your cost per acquisition.

  Customer lifetime value

  Customer lifetime value (CLV) is the average amount of money a customer will spend with your ecommerce brand over their lifetime. 

  Customer value is the total worth of a customer to your brand based on their purchasing behaviour. To calculate it, multiply the average purchase value by the average number of purchases. For instance, if the average purchase value is €50 and customers make 5 purchases on average, the customer value would be €250.

  Use this formula to calculate customer value :

  

  Customer value = Average purchase value × Average number of purchases

  Then you can calculate customer lifetime value using the following formula :

  

  CLV = Customer value × Average customer lifespan

  In another example, let’s say you have a software company and customers pay you €500 per year for an annual subscription. If the average customer lifespan is 5 years, then the Customer Lifetime Value (CLV) would be €2,500.

  Customer lifetime value = €500 × 5 = €2,500

  Knowing how much potential customers are likely to spend helps you set accurate marketing budgets and optimise the price of your products. 

  Return on investment

  Return on investment (ROI) is the amount of revenue your marketing efforts generate compared to total spend. 

  It’s usually calculated as a percentage using the following formula :

  

  ROI = (Revenue / Total spend) × 100

  If you spend €1,000 on a paid ad campaign and your efforts bring in €5,000, then your ROI is 500% (5,000/1,000 × 100).

  With a web analytics tool like Matomo, you can quickly see the revenue generated from each traffic source and you can drill down further to compare different social media channels, search engines, referral websites and campaigns to get more granular view. 

  

  In the example above in Matomo’s Marketing Attribution feature, we can see that social networks are generating the highest amount of revenue in the year. To calculate ROI, we would need to compare the amount of investment to each channel. 

  Let’s say we invested $1,000 per year in search engine optimisation and content marketing, the return on investment (ROI) stands at approximately 2576%, based on a revenue of $26,763.48 per year. 

  Conversely, for organic social media campaigns, where $5,000 was invested and revenue amounted to $71,180.22 per year, the ROI is approximately 1323%. 

  Despite differences in revenue generation, both channels exhibit significant returns on investment, with SEO and content marketing demonstrating a much higher ROI compared to organic social media campaigns. 

  With that in mind, we might want to consider shifting our marketing budget to focus more on search engine optimisation and content marketing as it’s a greater return on investment.

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  Return on ad spend

  Return on ad spend (ROAS) is similar to return on investment, but it measures the profitability of a specific ad or campaign.

  Calculate ROAS using the following formula :

  

  ROAS = Revenue / Ad cost 

  A positive ROAS means you are making money. If you generate €3 for every €1 you spend on advertising, for example, there’s no reason to turn off that campaign. If you only make €1 for every €2 you spend, however, then you need to shut down the campaign or optimise it. 

  Bounce rate

  Bounce rate is the percentage of visitors who leave your site without taking another action. Calculate it using the following formula :

  

  Bounce rate = (Number of visitors who bounce / Total number of visitors) × 100

  Some portion of users will always leave your site immediately, but you should aim to make your bounce rate as low as possible. After all, every customer that bounces is a missed opportunity that you may never get again. 

  You can check the bounce rate for each one of your site’s pages using Matomo’s page analytics report. Web analytics tools like Google Analytics can track bounce rates for online stores also. 

  

  Bounce rate is calculated automatically. You can sort the list of pages by bounce rate allowing you to prioritise your optimisation efforts. 

  Don’t stop there, though. Explore bounce rate further by comparing your mobile bounce rate vs. desktop bounce rate by segmenting your traffic. This will highlight whether your mobile site needs improving. 

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  Click-through rate

  Your clickthrough rate (CTR) tells you the number of people who click on your ads as a percentage of total impressions. You can calculate it by dividing the number of clicks your ad gets by the total number of times people see it. 

  So the formula looks like this :

  

  CTR (%) = (Number of clicks / Total impressions​) × 100

  If an ad gets 1,000 impressions and 10 people click on it, then the CTR will be 10/1,000 × 100 = 1%

  You don’t usually need to calculate your clickthrough rate manually, however. Most ad platforms like Google Ads will automatically calculate CTR.

  What is considered a good ecommerce sales conversion rate ?

  This question is so broad it’s almost impossible to answer. The thing is, sales conversion rates vary massively depending on the conversion event and the industry. A good conversion rate in one industry might be terrible in another. 

  That being said, research shows that the average website conversion rate across all industries is 2.35%. Of course, some websites convert much better than this. The same study found that the top 25% of websites across all industries have a conversion rate of 5.31% or higher. 

  How can you improve your conversion rate ?

  Ecommerce metrics don’t just let you track your campaign’s ROI, they help you identify ways to improve your campaign. 

  Use these five tips to start improving your marketing campaign’s conversion rates today :

  Run A/B tests

  The most effective way to improve almost all of the ecommerce metrics you track is to test, test, and test again.

  A/B testing or multivariate testing compares two different versions of the same content, such as a landing page or blog post. Seeing which version performs better can help you squeeze as many conversions as possible from your website and ad campaigns. But only if you test as many things as possible. This should include :

  • Ad placement
  • Ad copy
  • CTAs
  • Headlines
  • Straplines
  • Colours
  • Design

  To create and analyse tests and their results effectively, you’ll need either an A/B testing platform or a web analytics solution like Matomo, which offers one out of the box.

  

  Matomo’s A/B Testing feature makes it easy to create and track tests over time, breaking down each test’s variations by the metrics that matter. It automatically calculates statistical significance, too, meaning you can be sure you’re making a change for the better. 

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