The most successful ecommerce businesses harness metrics to make informed decisions.
These metrics store all the information about your business’ performance, such as the number of sales by day, week, and month, and the average value of all items purchased at any given time. By tracking these metrics, you can make informed decisions about future investments and changes in your business strategy.
However, it doesn’t mean that you should analyse and follow every possible metric. In times of information and data overload, it’s extremely crucial to choose the ones that have the biggest influence on your company and can contribute to an increase in sales.
To help you make the right decision, I have prepared a list of the most important e-commerce metrics to track and optimise, as well as some hints on how to determine which e-commerce metrics matter the most for your business.
Which Ecommerce Metrics Matter for Your Business
As I mentioned before, monitoring numerous metrics is just a waste of time if they don’t have a meaningful influence on your company. My recommendation is to shorten the list of metrics you follow and choose just the ones that consistently impact your business goals. It may be advisable to identify the KPIs (key performance indicators) to check how effective your company is at achieving specific goals.
If you’re still struggling to decide what metrics you need to track, you should consider these three issues.
Firstly, you should determine whether, if the metric changed, it would have a big impact on your company. If a measurement point isn’t so significant to the bottom line, it may not be worth the effort to track and analyse it.
Secondly, you should pin down whether the metric you consider contributes to the strategic goals of your business. Try to determine which metrics matter the most and can significantly accelerate your way to success.
Thirdly, you should understand that many metrics are interconnected, and improving one of them can influence the others. Check whether metrics of your choice will also have an impact on a larger scale.
Most Important E-commerce Metrics
The metrics chosen for this article are the ones majority of highly successful ecommerce managers focus on. Bear in mind that these are proven and valid groundworks, not some latest trends in digital marketing.
It’s advisable to start with these (or at least only the ones you consider necessary for your organisation) and then search for more if the need arises.
Simply put, your conversion rate is the percentage of visitors who make a purchase. This is the metric that the majority of e-commerce businesses worry about the most.
Conversion rate can be calculated by simply dividing the number of conversions (those who made a purchase) by the total number of visitors.
The average sales conversion rate for U.S. ecommerce businesses hovers at around 2,6 percent. However, you must remember that it may vary in different industries.
Customer Lifetime Value
Viewing your customers by the one sale only is one of the biggest mistakes you can make. You need to see the big picture, and the Customer Lifetime Value (CLV) metric can help you with that.
The CLV metric measures the total amount of revenue your customer can produce over the entire course of your relationship with them. There are three different methods of calculating the CLV, but you can always use some online calculator.
If you want to increase your store’s CLV, you can try to improve the average order value or try to strengthen the relationship between your store and customers to increase loyalty and acquire repeat buyers.
Average Order Value
Unsurprisingly, your average order value refers to the average value of each purchase made in your store. To calculate yours, simply divide the sum value of all sales by the number of carts.
Undoubtedly, you want your customers to spend as much as possible. To find ways to increase it, you need to know your average order value.
To do so, you may try to recommend products that complement their purchases or offer free shipping for higher total purchases.
Email Opt-in rate
Even though some marketing specialists have already announced the death of e-mails, email marketing is still one of the most powerful tools for e-commerce stores. What’s important for many business owners is that the mailing list doesn’t make you dependent on other platforms to drive traffic.
To track email opt-ins, there are two different ways:
- Use the built-in analytics in your email marketing tool
- Set up a conversion goal in Google Analytics to track your opt-in’s “thank you” page.
Shopping Cart Abandonment Rate
It’s very sad to watch potential buyers fill a shopping cart just to abandon it before making a purchase. And that’s why you should pay special attention to the shopping cart abandonment rate.
Shopping cart abandonment is more common than you think. According to Barilliance, around 78% of shoppers abandon their carts. To minimise the number of unfinished purchases, you can try to simplify the shopping experience or use remarketing to bring undecided shoppers back to your store.
However, don’t underestimate the importance of this metric. You should determine why customers abandon their carts, as it may point to bigger problems that are troubling your site.
Customer acquisition cost
Customer Acquisition Cost is the total amount you typically spend to bring in a new customer. You can calculate your CAC by dividing your total marketing spend by your number of customers. That’s an overall figure, however. It’s also useful to calculate your CAC by source.
To make money, your customer acquisition cost needs to be less than your customer lifetime value. Ideally, your acquisition cost should be less than your average order value, so you make money off every new customer.
Onsite activity metrics
Last but not least, make sure to monitor visitors’ activity on your website. If they abandon your store quickly, there must be some reason for that. Maybe there are some problems with page load speed or general usability?
By following and analysing visitor actions, you can find out why and where they’re leaving to introduce some improvements to your store, and consequently, increase revenue.
Make Use of Your Data
Running an online store can be quite a challenge. However, once you master the management of data and information about purchases and customers, it will be way easier to analyse any issues and solve any challenges you may need to face.
Hopefully, this list of the most important e-commerce metrics to track and optimise will help you make the best possible decisions and focus on e-commerce metrics that matter the most for your business.