How to Use Enhanced Ecommerce of Google Analytics to Measure Product Demand?

Product Demand Analysis ThumbnailActionability of data is always a concern for all the stakeholders of the company including business owner, Marketer, Analysts and Ecommerce product managers.

As I explained in my last blog post, Enhanced Ecommerce in Universal Analytics has open a whole new world with powerful insights but still the question remains – what actions business owners can take from these insights to generate more revenue?

One of our Ecommerce clients raised the same concern when we implemented Enhanced Ecommerce on his store. Client wanted to analyze the performance of his products in terms of its demand and revenue & use the insights generated to improve their product placements, Marketing efforts and profit margin.

We then carried out Product Demand analysis for the client in which we used Products Performance report of Enhanced Ecommerce to calculate product demand. We combined the product demand with product revenue data we generated several actions which had the potential to optimize client’s revenue.

(Quick Note: You Might want to check out our Google Analytics Plugin for WooCommerce, Magento & Shopify)

In the following blogpost, I will walk you through to what is Product Demand Index, How product Demand index is calculated and what actions you can take from the analysis.

Quick Navigation:

What is Product Demand Index?

Customers interact with the product offerings in various ways – Product View, Add To Wishlist, Add To Cart, Buy.

If we were to understand the demand for each product in our inventory, each of these metrics taken in isolation would give us only an incomplete picture of the demand. But taken cumulatively, we get a more accurate view of demand as represented by customer actions. We call this cumulative metric as the Demand Index.

More specifically, Demand index is defined as a rank given to each products based on various metrics that indicates its popularity such as Pageviews, Add To Carts, Add To Wishlist, Purchases.

Demand Index= Ratio of PVs to Unique PVs + CTDR + BTDR + Add To Wishlist rate

Where,

  • CTDR= Cart To Detail Rate is the ratio of Add To Carts to Product Detail Views
  • BTDR= Buy To Detail Rate is the ratio of Unique Purchases to Product Detail Views
  • Add To Wishlist Rate= No. of Add To Wishlists/ Product Detail Views

These four data points are collected for each product.

How to arrive at Product Demand Index?

Arriving at product demand index is fairly easy and you can calculate the same by following the instructions mentioned in the below 4 steps:

Step 1:

To arrive at Product Demand, first collect the following data points from the Enhanced Ecommerce product performance report. You need collect some data points from other reports as well:

  • CTDR
  • BTDR
  • Add To Wishlist Rate
  • Ratio of PV/UPV

Step 2:

Next add all the above data point to arrive at the product demand Index as shown in the above formula. Now based on their Demand Index give them the Demand Rank. (Higher the Demand Index, Higher the Rank)

Step 3:

To arrive at the sales rank, give each product a Rank based on product revenue metrics. (Higher Product Revenue, Higher the Sales Rank)

Step 4:

Once you complete the above steps, your table will look like this:

Enhanced Ecommerce Product Demand Analysis

* This calculation has been carried out for Sample data set to show here as an output example

What Insights/ Actions Items You Can Generate from the Product Demand Analysis?

Till now we have seen how you can calculate demand and sales rank for each products based on Enhanced Ecommerce and other analytics data.

But the most important question here is what insights you can generate from this data and what actions you can take from it.

To generate the insights, categorized your products in to 2*2 matrix using Demand and Sales Rank and once you do that following are the set of action you can take for each of these products:

Demand & Sales 2 by 2 matrix for products

Product with high Demand but low sales

If your products fall in this quadrant, following actions can be taken:

  • For such products where high demand is not resulting into sales, Ecommerce store owners can provide discounts in order to increase the sales
  • Other action that can be taken for such products is to increase Review score as for most of the e-comm. Many research shows positive relationship between Product Reviews and Purchases. One such research from iPerceptions show that 63% of customers are more likely to make a purchase from a site which has user reviews.
  • A High Demand indicates people are browsing the product, adding it to cart etc but that is not resulting into a sale so as an advanced analysis we can try to make a funnel for such products and understand where they are dropping off.

Products with high Sales Rank and Low Demand

If your products fall in this quadrant, following actions can be taken:

  • From the analysis, you can also identify products with high sales rank but lower demand rank. It means that this products if given more exposure can lead to higher demand rank and to improve the demand rank following actions can be taken
    • Such Products can be placed at prominent positions on the Category Listings so that their CTR increases. Such products can be highlighted via various products listing such as Recommendations

Products with high Demand and Sales Rank

If your products fall in this quadrant, following actions can be taken:

  • Other actions that can be taken from this analysis is Changing the prices of the products with higher demand and sales rank to achieve higher profit margin. I know that the price optimization of the products is much complex but its certainly an option that we can consider

Other Actions

  • Comparing week by week performances of products can also lead to several insights and actions
  • For the products for which demand rank is showing significantly decline over the period of couple of weeks and thus also affecting the sales rank, emails or referral campaigns can be run to improve the exposure

So, this is an overview of Demand Index Analysis through which you can generate actionable insights for your Ecommerce store.

I’d highly appreciate your viewpoint on this if you have carried out something similar for your store/client. Also, I am sure that you have already think upon some other metrics that can be included in the Demand Index, please share it and it help us in making index more meaningful. 🙂

Happy Analyzing!

Interested in learning more about Enhanced Ecommerce? Check out our Post – 32 Resources to Help You Become an Expert at Enhanced Ecommerce

How to Use Enhanced Ecommerce of Google Analytics to Measure Product Demand? by
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Nilang Patel
Nilang works as a Business Analyst at Tatvic. His interests include Web Analytics, Digital Marketing, Conversion Optimization, A/B testing, AdSense, E-commerce and providing meaningful data analysis to generate valuable business insights.

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