So the shopping season is now well and truly underway and, for many businesses, this means it’s the busiest time of the year for many e-commerce stores.
We’re here to talk a bit about Google Analytics, but first, a little backstory…
The British Pound in 2016
In retrospect, 2016 has been a bold year when it comes to world politics and economics. Unless you have been living in a cave this year, there is no doubt you have heard about some large political news and movements this year.
In the UK, the British people voted to leave the European Union in a monumental referendum result dubbed Brexit. While this vote happened on 23rd June, the fallout across the political spectrum has been spectacular and provided a degree of uncertainty in the UK market.
Due to the leave vote, the British Pound took a big hit in the markets as investors transferred their stock in GBP to other, more traditional, safe havens such as buying gold. Using currency pair charts from exchange rate experts, Travelex, to compare the British Pound (GBP) to the Euro (EUR) and US Dollar (USD) we can see how the GBP’s value fell post Brexit.
Source: Travelex GBP to EUR Chart
Source: Travelex GBP to USD Chart
Across multiple currencies the GBP fell in value at the end of June, with a second fall around October thanks to a ‘flash crash’ caused by automated trading. This fall in value has affected international trade – and that is important for any business trading in multiple countries and currencies.
Trading overseas? Don’t panic – Google Analytics has you covered!
If you trade in multiple currencies, GA can pull from Google’s vast amounts of data to convert revenue data into your preferred currency. When set up correctly, GA will register the currency in a transaction and convert the value based on the date’s exchange rates.
This means that, if you need to report in a single currency, it’s very easy to do so without having to convert manually. Likewise, you’re able to create multiple views and profiles in local currencies to analyse without conversion.
However, reporting in a single currency can have its flaws from an analysis point of view, especially if large amounts of transactions come in the form of a different currency.
Evolving average order values
With the Pound’s sharp fall in value post-Brexit, average order values are likely to be quite skewed when compared year on year.
Imagine if your website sells a single product and that product sells for 100 units of whatever currency. In Euros, the rates would dictate that, compared with last year, the same product for the same 100 Euro price is now worth around £15 more than it was last year.
Compared with the US Dollar, selling a product for $100 would now also net around an extra £15 compared to last year.
Both the Euro and the US Dollar have seen around 22% increases year on year, so you should expect your average order values in these currencies to be up by around 20% when converted, if you haven’t changed your pricing structure in the last year. This will also contribute to extra revenue from these currencies.
Why analyse currency?
Does this really matter when Google Analytics automatically converts to the correct currency? From a top-line perspective, no, the extra revenue boost will be good for targets – but it may also mask poor performing campaigns.
This extra level of analysis and consideration will allow you to properly investigate your marketing campaigns on a deeper level and conclude success or failure, not based on a current volatile world market.
Currencies generally move in the very long term and in an average year it’s unlikely to be noticeable unless you’re comparing against long-term trends, but the crash this year will affect year on year analysis while the markets re-stabilise.
USD and EUR currencies should see ~20% improvements in average order values and revenue when converted back to pounds; this is good for exporters.
But when analysing, it’s important to not over-forecast next year and also not to jump to conclusions when foreign currency may shift Analytics figures.